There's Plenty of Energy in This Race
With gas prices rising and billions of additional dollars flowing to the Middle East to buy oil, energy policy is turning into a battleground in the race for President. On June 17, the presumptive Republican nominee, Arizona Senator John McCain, laid down the gauntlet with a speech in Houston, talking about his vision "to free America once and for all from our strategic dependence on foreign oil."
Of course, this is easier said than done. Every President since Jimmy Carter has vowed to break the U.S. addiction to imported oil, yet the country's dependence continues to grow.
McCain's Plan Includes Offshore Drilling
So, how would McCain do it?
He wants to use more coal. He proposes lifting restrictions on offshore drilling to boost domestic supplies of oil and gas. He wants a big increase in nuclear power. Over the long term, he says, technologies will come along "that one day will free us from oil entirely." But "in the short term, we must take the world as it is and our resources where they are."
And his Democratic rival, Illinois Senator Barack Obama, doesn't get it, McCain charges: "What is certain in energy policy is that we have learned a few clear lessons along the way. Somehow all of them seem to have escaped my opponent. He doesn't support new domestic production. He doesn't support new nuclear plants."
Republicans are hoping that this call for increased drilling will be politically powerful. Senator Pete Domenici (R-N.M.) says "a vast majority of Americans now support deep-sea exploration because they understand that the best way to reduce gas prices is to reduce our dependence on foreign oil." Former House Speaker Newt Gingrich says he's getting 30,000 to 50,000 signatures a day on a petition drive dubbed "Drill Here. Drill Now. Pay Less." When people realize that politicians are standing in the way of bringing down the cost of energy by limiting domestic exploration, "they're just incredulous," he said on a recent talk show. "They think the country can't be this dumb."
Even before McCain delivered his speech, Obama and his surrogates were fighting back. Their main spin: McCain is on the side of Big Oil.
Democrats Want to Reduce Demand
"Time and time again, McCain has stood with the oil companies," charges Tom Vilsack, former governor of Iowa. "McCain does not represent the change we need. This is not a policy that would make us independent of foreign energy." There wouldn't even be any immediate relief at the gas pump, Democrats say. Even if the offshore areas were opened to drilling today, "Americans would not see any oil or reduction in gas prices until late in a second John McCain term," says former Environmental Protection Agency Administrator Carol Browner.
What makes this energy battle somewhat ironic is how many similarities there are between the aims of the Obama and McCain policies. The two candidates share the same basic goal of reducing U.S. oil imports. Obama, for instance, promises to put the country on the path to energy independence by 2030. Both men are also pushing alternatives to fossil fuels, as well as supporting caps on the emissions of global warming- causing greenhouse gases. Such caps will make renewable energy sources like wind and solar more attractive by raising the costs of burning oil and gas.
The crucial differences lie in how the two candidates would go about achieving these goals. When it comes to the current crisis over high oil prices, the new twist in McCain's June 17 speech is his plan to increase domestic supplies. The Democrats, in contrast, say that it's easier and quicker to tame high prices by lowering demand. Reducing "energy consumption—and not the mantra of drilling—is the solution to our energy crisis," says Senator Dianne Feinstein (D-Calif.). Plus, Senator Bill Nelson (D-Fla.) charges, McCain is flip-flopping on this issue since he used to be against additional offshore drilling.
The Nuclear Option
In the candidates' policies over the long term, there is a fundamental philosophical difference. McCain and his advisor Doug Holtz-Eakin are firm believers in the power of the market. The government should not offer tax incentives or other subsidies to wind, solar, ethanol, or other renewable energy sources, they argue. Instead, a climate policy that sets caps on carbon dioxide emissions (and that allows trading of those emissions) would be enough.
Such a policy would raise the price of fossil fuels, making renewable energy more economically competitive. "A cap-and-trade plan would provide automatic incentives for every alternative form of energy," explains Holtz-Eakin. That's why McCain did not vote for the extension of tax credits for wind and solar power last year when they came up in the Senate (and failed to pass by one vote).
McCain isn't completely consistent in his belief in the Invisible Hand. Even as he attacks Obama for wanting the government to pick winners and losers, McCain is in favor of taxpayer support for new nuclear plants. "The only technology McCain wants to subsidize is nuclear power," says Joseph Romm, a former Energy Dept. official in the Clinton Administration.
Obama's Incentives Plan
To Obama and his supporters, alternative energy needs more help than the market forces can offer. In part, they say, that's because oil and gas have been the beneficiaries of decades of subsidies, so the playing field is far from level to begin with. In addition, most new technologies need some initial support to develop them to the point where they can compete without subsidies.
So Obama offers a combination of incentives and mandates. He would require that 25% of the electricity produced in the U.S. come from renewable sources by 2025. He suggests a $150 billion government investment in clean energy over 10 years. He'd even set up a U.S. venture capital fund to support nascent companies. And he wants lower caps on emissions of greenhouse gases than McCain supports, which would make fossil fuel even more expensive.
Which plan will work better? Many economists say that mandates and incentives are essential to meeting the twin goals of reducing energy dependence and combating climate change. But some also worry that a big government-funded effort to develop new technologies might not be the best use of the money. Remember Synfuels?
What is clear is that on this issue, the Presidential race is offering a choice.