The title of the Wall Street Journal op-ed was positive, “Make the Most of the U.S. Energy Boom.”
One would expect the article to support fracking and increased oil and natural gas production.
Instead, it promoted renewables and electric vehicles under the guise of supporting America’s energy boom.
The op-ed claims it’s necessary to reduce the use of oil so as to cut CO2 emissions: Specifically it said, “Petroleum fuels also account for a larger share of America’s energy-related carbon-dioxide emission than any other fuel.”
Cutting CO2 emissions is at the heart of the call to reduce the use of oil.
The other message of the op-ed is that we can de-link the economy from oil, and achieve “true energy security”.
“True energy security” is a myth. It now joins other slogans, such as peak oil, and energy independence, that mislead, rather than inform.
There is no strategy that can completely protect the world from higher oil prices if there is a major shut down of oil supply, such as could occur if the Strait of Hormuz is closed.
Closing the Strait of Hormuz would cut off at least 20% of the world’s oil supply, and the price of oil would rise dramatically. The strategic petroleum reserve (SPR) could help dampen the increase for a few months, but a major reduction in oil supply will result in higher oil prices … there is no way to prevent it, which is why “true energy security” is a myth.
Switching to EVs, or wind power, or biofuels, won’t protect against such an event.
It’s true that OPEC manipulated the markets in the past, and we should never forget that.
At the same time, Saudi Arabia, by increasing production, has often helped keep the price of oil from rising, most recently during the Libyan revolution, and been an important ally of the United States in that effort.
It’s also true that the United States is about to become the largest producer of oil in the world. This gives America the strength to thwart OPEC, or anyone else, who tries to manipulate the market.
Local interruptions or manipulations can be dealt with if the United States and Canada are major producers of oil.
A strong America with growing energy reserves can resist foreign foes or foreign cartels.
Now, the op-ed calls for “establishing oil displacement as a national goal”, with “strong leadership from Washington”.
What’s most galling is that the two who wrote the op-ed are both major beneficiaries of the free market system.
Fred Smith had a revolutionary idea, and the free market system allowed him to achieve his dream, while becoming very rich in the process.
George Schultz, as a member of President Reagan’s cabinet, was part of a team that espoused the free market system.
Now, these two people are looking to Washington to establish policies that abort the free market system.
They want Washington to “support the emerging demand revolution in oil-displacement technology.” They mention natural gas to replace gasoline, but they also mention EVs.
They say, their revolution will “require a concerted national effort that prioritizes investment in the development of advanced energy technologies — such as low-cost advanced batteries for electric vehicles and more-efficient home refueling units for natural gas vehicles.”
Who decides the priorities, and who decides where the investments are to be made? According to the op-ed, it’s Washington and not the free market.
Why turn to Washington when it’s been Washington that has inhibited our ability to produce natural gas, the alternative to oil espoused by the op-ed. Washington, for example, has restricted where companies could explore for natural gas on federal lands. The EPA in Washington has been trying to restrict fracking, which is the source of our new found riches.
It’s been Washington that promoted ethanol and cellulosic ethanol, and created the bizarre spectacle of oil companies being fined because they couldn’t blend a product that doesn’t exist.
In its attempt to promote favored technologies, Washington has made bad choices with investments in failed companies, such as A123, Solyndra and Beacon Power.
Washington is the problem, and shouldn’t be looked to as the solution.
America’s best course of action is to continue to increase the production of oil and natural gas, and allow market forces to decide whether alternatives are worthwhile.
Market forces are already stimulating the use of natural gas, CNG and LNG, in transportation vehicles, without instructions from Washington.
Fracking made this possible, and its success was the result of private entrepreneurs working in the free market system.
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