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Only A Recession Can Deliver Obama's Energy Targets

So far, recessions have been the only surefire way America has cut back on its fuel consumption and the need for oil imports.
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Like many in the White House before him, President Barack Obama charted out a plan last week to reduce America's dependence on foreign oil. And like his predecessors, his road map to cut U.S. oil imports by one-third over the next decade comes against the backdrop of sharply rising oil prices and supply disruptions from an increasingly volatile Middle East.

Unfortunately, we have heard this song many times before. In 1973, President Richard Nixon unveiled "Project Independence" in response to the OPEC oil embargo that was triggered by the Arab-Israeli war. President Jimmy Carter called the need to lessen U.S. dependence on Middle Eastern oil the moral equivalent of war in response to the supply disruptions that followed the Iranian Revolution. President George Bush Jr. referred to America's dependence on foreign oil as nothing short of an addiction.

Over the past four decades, U.S. presidents have waxed eloquent about the need to reduce the country's dependence on imported oil. Yet the U.S. economy still relies on imports for more than 50% of the 19 million barrels of oil burned every day. As a result, the U.S. remains as vulnerable to soaring oil prices as it was during the OPEC shocks in the 1970s.

In many ways, Obama's plan is reminiscent of his predecessors by supporting more government subsidies for energy alternatives such as nuclear and bio fuels. Higher fuel efficiency standards will be mandated for cars and trucks. And, of course, there will be increased reliance on offshore drilling for deep water oil and on hydraulic fracturing in pursuit of America's new wonder fuel: shale gas.

Unfortunately, these initiatives have in one way or another been tried before by previous administrations. And many look less credible than they have in the past.

As the Fukushima nuclear disaster threatens Japan with a Chernobyl-like legacy,
President Obama is unlikely to find much support for more nuclear power in a country that already has more nuclear plants (and more radioactive spent fuel lying around) than any other in the world.

And so far the diversion of food production to energy generation, like the 12 billion gallons of corn-based ethanol that America pumps out every year, has had a far greater impact on raising food and fertilizer prices than on lowering energy prices.

While greater fuel efficiency is a laudable goal, past improvements in fuel efficiency have only encouraged Americans to drive more each year -- about 30% more than at the time of the OPEC oil shocks. And they haven't been filling up their tanks with shale gas either, which has only a quarter of the energy density of either gasoline or diesel.

So far, recessions have been the only surefire way America has cut back on its fuel consumption and the need for oil imports. But, of course, that is not an option any U.S. president can pursue.

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