America: Still No Energy Policy

WASHINGTON – A small news item in the briefs section of The Wall street Journal (Environment – Fuel-Efficient Auto Sales Up, Saturday-Sunday November 21-22, 2009), might give the impression that, regardless of the tiny space allocated, this is good news, an indicator of the kinds of shifts that we would like to see: such as consumers moving away from high consumption cars and buying fuel efficient vehicles. But it is not so. Even in this diminutive news item, the title is misleading, for the actual information indicates that the average consumption of the 2009 auto purchases is 21.1 miles per gallon, while the 2008 average was 21 miles per gallon. So, while technically this is an improvement, in truth it is a ridiculously small improvement, so much so that the news is relegated to a little blurb, even though with in an inappropriately upbeat title.

Fuel efficiency?

And so, what is the big deal about this? Well, the big deal is that after a cosmic upheaval in oil prices and an economic crisis branded as the worst of the worst, while America, recession notwithstanding, continues to spend staggering amounts to import about 60 per cent of our oil, when we look at the actual sales of motor vehicles, puny as they may be, in this ravaged landscape, nothing has changed in terms of consumer predilections.

Whatever cars Americans do buy, they buy the same stuff they used to buy. OK, maybe one should not read too much into this. Maybe we should take into account the fact that in a severely depressed market like this one, with an epic collapse of auto sales, the people who actually buy are the better off and thus less concerned with fuel efficiency, because they have the money to pay for gasoline, whatever the price.

But, even assuming that this is so, this is still truly bad news. What this means is that people have understood nothing about the need to radically transform the foundation of an economy that used to be based on cheap carbon and migrate as quickly as possible to other forms of energy; and that, while the path to a new green economy is long and complicated, a sensible intermediate step is to diminish consumption of the very expensive oil that we do not produce and have to import –something that can be achieved by choosing to purchase more fuel efficient vehicles, for the time being.

No energy policy and no compelling message

Well, no. We are not doing it. We buy fewer cars because we are in debt and have no money. But those of us who have the cash, well, we do exactly as before. Because a new mind set has yet to emerge and become the new standard. 

But if this so, then the whole national debate about energy, its staggering cost, the national security implications of this enormous dependence on imported oil, the threat of climate change, the promises of proliferating green technologies and so on, have not made much of a dent. When choosing to buy a new car, people buy what they used to buy before.

And this not because all these things have not been said. The issue is not about “saying” it. It is really about emphasis, making all this a national priority. It is about conveying to the public a real sense of urgency. There is no doubt that the Obama administration has said all the right words about energy conservation, about pushing renewable sources and about gearing up for the big changes necessary to face climate change threats. But it also true that this is clearly not a top national priority. It is all in there, within the laundry list. But not in a particularly prominent place.

Health care is the political priority

Broadly speaking, the Obama administration reacted swiftly on economic emergency issues. But then, when it came to political action, as opposed to reaction, it consciously chose to invest heavily on social policy issues, pushing strongly for health care reform. So, we did the emergency and quite expensive stuff for the economy (bailouts, tons of cash to banks); but then, when it came to setting a new  political agenda, Obama prioritized health care reform as administration policy item number one.

Now, there is merit in modernizing health care, even though I seriously doubt that, whatever the outcome, this reform will work as advertised, except for covering millions of people regrettably outside of the system. Whatever the outcome, the notion that we can cover more people, give choice, improve care and spend less in the aggregate is another Washington myth that many may desperately want to believe; but that will prove to be an impossibility, because it relies on too many pieces, including increased taxes and lower payments into the Medicare system, falling right into place at the right time. Inevitably, policy makers will discover at some point that certain savings will not be achieved and that certain costs were not accurately calculated. The bottom line is that, reform notwithstanding, the system is fatally geared to generate cost increases. The only way to seriously contain cost is to limit service and this called “rationed care”, whatever the euphemism that may be devised some years down the line to justify it as sensible and scientifically sound.

We missed a whole year

But, whatever the long term consequences of health care, and no matter what ridiculous claims are made now regarding the certain, positive impact on the economy of a more equitable and more efficient health care system, the truth is that the Obama administration during its first year in office has invested most of its political capital on a social issue, while it has done almost nothing to seriously push America towards the new frontier of a new, more modern, technologically advanced post carbon economy, as an integral part of the economic renewal strategy that we desperately need. And this may prove to be a real mistake. A more equitable health system is a good thing to have. But when the country is half bankrupt, with no new strategy on the horizon, while competitiveness lags, long term what good does it do to the average citizen to have a more inclusive health system that may not be affordable?

Serious energy policies will have to wait

As I said, if you look at the overall picture, administration officials can say that it is not so, that, regarding the push to a green economy, “it is all in there”. And in fact it is. But it is literally pocket change. A little bit of money to support this and that. The right words said here and there. But nothing that resembles “A Plan”. Nothing that would even remotely convey to America the conviction that it is indeed urgent and of vital importance to revitalize the foundations of an economy now geared towards decline, or, at the very least, stagnation; and that a strong push towards renewable energy technologies is one of the key ingredients to establish the basis for future success.

Other priorities

Of course, at the very beginning of 2009, we had to deal with the financial crisis. And nobody faults President Obama for having neglected it. Federal aid was delivered, and in massive amounts. We have avoided the sinking of the SS United States. But the hull is full of holes, the engine room is damaged and the crew is despondent. We are afloat; and this is good; when utter disaster seemed to be a plausible scenario.

But instead of sailing into the closest shipyard and deciding to spend all we’ve got on a fundamental overhaul, we put a few patches here and there and decided that, for morale purposes, we wanted to give a salary increase to the crew and presents to all the scared passengers.

This may look kind hearted in the short term. But, in the long term this does nothing to get us the super fast liner that we used to have and that we now need more than ever to stay in the race, never mind keeping our cherished world speed record. (If you were wondering, there was indeed an SS United States. It was the most wonderful liner of the age and it still holds the world speed record. You may still look at it, a sad looking rust bucket moored in Philadelphia).

Obama: social issues first

Of course, governing is a tough balancing act, as there are always a number of totally legitimate priorities competing for scarce resources. President Obama, elected in large part on a message of more equitable redistribution of resources, made the expansion of health care coverage his main political and policy priority for year one. As America is the only developed democracy that leaves out of the system more than 15% of its citizens, this policy choice is not without merit, even though its purported magic impact, that is the miracle of giving more to everybody while paying less for it, is tragically misrepresented and oversold.

There is such a thing as being too late

But, in so doing, “the opportunity cost” of focusing on health care is that we have wasted another year doing almost nothing truly worthwhile on renewable energy and the broader revitalization of the economy. (The take over of General Motors, while it may prove to be beneficial, was an ad hoc measure inspired by social and political concerns. It was not a clear move within a clearly articulated economic strategy). Not only we have not set a new course; but, pitifully, we have not even been able to convince the few Americans who have the money to buy a new car to select a more fuel efficient model. And so:  no policy, no guidance, no effective public policy education.

Let’s hope that we can do better in 2010. Without exaggerating the importance of the economic decline clearly underway, after a certain point, there is such a thing as being too late.

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