A Quick-Read Energy Plan

Originally posted on June 27, 2008.  This is my sixth revision.

Incredulously, Congress adjourned Friday for a five week recess without passing an energy bill that addresses the current crisis.  I urge the President to call them back into an emergency session to pass a comprehensive plan.

John McCain's plan is called the Lexington Project.  My plan's a little different, but the basic idea is the same:  Aggressive domestic oil & natural gas drilling followed by intense efforts to increase nuclear, wind, solar & hydrogen power.

Because America does great things with the energy it uses, it's important to U.S. and the world to reduce energy costs as much as possible as fast as possible. 

My plan will do that and jump-start alternative sources, replace foreign oil sources with domestic and improve energy efficiency:

1. Sell 1% of the SPR, per month, until oil is < $100 barrel.
2. Spend the SPR money, about $1 billion / month, to jump-start alternatives like Picken's wind project, solar and hydro. 
3. Make a 9pm EST Primetime announcement that the U.S. will begin drilling in the OCS and ANWR effective immediately.  Announce that it will be a national priority to help oil companies get rigs out to those sites as fast as possible and that, if necessary, the military will assist, shipping lanes will be interrupted, etc., in other words, rally the nation!  It's important & urgent to save our economy...Let's act like it!
4. Offer $100 billion for the first person or company to invent an inexpensive  way to retrofit existing cars to get > 100 mpg.  It's great if auto makers offer new cars that get high mpg but for every new car sold there are thousands already on the road. 
5. Build the largest nuke plant in the world in the Nevada desert, right next to the Yucca Mountain Repository, and plug into the national grid.  Why risk transporting the nuke waste any farther than necessary?
6. Identify the 10 worst users of energy, efficiency-wise, make them famous and use carrots and sticks to make sure the list is completely different next year.
7. Abandon all efforts at biofuels - that was a really stupid idea.  Not only is producing food energy-intensive but we need all the food we produce to feed people, not cars.  USE FOOD FOR PEOPLE.
8. Remove regulatory burdens preventing new oil & gas refineries from being built and existing ones from being expanded. 

So why do we need an energy plan?  Is there a crisis?  Some prominent Democratic leaders, including Barack Obama, would like you to believe high energy prices are punishment for 5% of the world's population using 25% of the world's oil or bitter medicine necessary to force us to finally do the right thing:  conserve. 

This explains their lack of action. 

Others, including myself, have a different take on things:

America does great things with the energy it consumes!

The U.S. economy produces over $13 trillion of goods and services  - more than Japan, Germany, China & the U.K. combined!  We create most of the world's great inventions.  We produce most of the world's food - food is energy-intensive.  We use lots of energy to help maintain a fantastic military that helps keep the world safe.  Our incredible economy creates lots of wealth, a big chunk of which is donated to help feed and clothe the rest of the world. 

We also produce most of the world's medicines, music, movies and manufactured goods.  Does that surprise you?  You may have been misled into thinking the U.S. has lost all it's manufacturing to China.  Actually, in real dollars, American manufacturers produced $1.53 trillion worth of goods in 2005—up from $900 billion in 1992.  Let me repeat, we manufacture 70% more goods than we did in 1992 in real dollars - that takes energy, lots of it. 

So, why shouldn't we use the most energy?   We create the most goods and services (and inventions, music, film, food, medicines, aircraft, etc..)  In addition, we're extremely efficient using our energy.  By 1999, we were able to produce the same goods and services we did in 1972, using 74% less energy.  In other words, Mr. Obama, we already conserve, have been for years, we just call it being "efficient", and we do it to save our companies and families money. 

We should celebrate our economy and what we produce, not feel guilty about much energy we use to produce it!

This plan has huge benefits for the United States:

1. Selling SPR oil and opening up the OCS and ANWR sends a huge message to world oil markets that the U.S. is finally serious about using all it's available resources to meet it's energy needs.  Although the OCS/ANWR oil will not be delivered immediately, speculators trade on trends and the trend for oil prices will finally start heading down. 
2. Exactly how much will prices drop?  Oddly enough, a Democrat in Congress may have answered that question.  Peter Welch (D-VT),  sponsored H.R. 6022 to stop adding oil to the SPR.  He says that, not purchasing 70,000 barrels per day, "may reduce gas prices 5 to 24 cents per gallon".  Every Senate Democrat voted for it, including Obama and Hillary, and Bush signed it.  So, Democrats have agreed, on record, how much the price of gas will drop (21 cents) when the supply of oil increases by 100,000 barrels.  Remarkable!
3. Using Congressmen Welch's math, just selling SPR oil should save 49 cents / gal.  Do you know anyone that wants to save 49 cents a gallon?  EVERYONE!  As far as OCS/ANWR, we looked at the 2006 OCS Assessment and the 1987 ANWR report, and they'll yield 2 to 4 million barrels per day.  Using Rep. Welch's math, oil from OCS/ANWR may push the price of gas to below $1 per gallon.   It may not be that much, but the more U.S. oil we produce, the lower the worldwide price, the more the world loves U.S. - it's economic science.   
4. This should drop not just the price of oil, but nearly all U.S. consumer prices.  A solid plan until lower price kick in should help calm consumer fears about the future of the U.S. economy.  Right now, the only thing standing in the way of providing the American people cheap energy again is the Democratic leadership in Congress, you know, the ones with a 9% approval rating, an approval rating so low the term "historic" is getting old.  The usual suspects refusing to drill include Nancy Pelosi, Harry Reid, Hillary Clinton and, of course, their Presidential nominee, Barack Obama.  Increasingly, voters are getting more and more angry.  
5. The SPR has about 700 million barrels of oil so 1% equals 7 million bbls.  At $142 per bbl, selling 1% per month of the SPR  will net about $1 billion dollars per month for investment in alternative energy .  Oil, gas, coal, natural gas and nuclear will meet our near term needs (next 30 years) while we transition to alternative energy (wind, solar, hydro).
6. Aggressive domestic drilling replaces foreign oil with domestic and that prevents hundreds of billions of US dollars from going to countries hostile to our interests, lowers our trade deficit, improves our economy and creates hundreds of thousands of US jobs
7. The more oil produced in the U.S. the more control we have over how it is produced.  For example, U.S. deep sea drilling standards minimize damage to the environment if there's an accident.  Right now, we have no control over how a well drilled off the coast of Nigeria is regulated.
8. Abandoning bio fuels will reduce pressure on food prices and help get food to those who need it most - the hungry.
9. This plan generates billions of dollars for alternative energy research without any money from the federal budget - this helps keep our deficit down, interest rates down and the dollar up - all good for U.S. consumers.
10. One nice side benefit of increased domestic production is that all our allies, Europe, Japan, Australia, South America, Afghanistan, will also benefit from lower worldwide oil prices after we increase US output.  They will be grateful that we have finally taken pressure off not just gas price but prices overall and avoided a worldwide recession, if not depression.

Our leaders, and our voters, have a choice.  Empower America (pun intended) with my plan or continue to gamble that alternative energy, OPEC lawsuits, humiliating US oil companies executives (who control less than 6% of the world's oil reserves) and even more conservation will pay off soon.  Barack and the Dems have no plan to address our growing near-term energy needs and, given the pain that $5 gas will cause us, that's remarkable. Sacrificing all that America offers the world, holding fast to extreme environmentalism when American families are suffering, seems to me to be a mistake of monumental proportions.