Mitt Romney has lately taken to grounding his energy policy in “energy independence”. This is rather unfortunate since earlier he had avoided the demagoguery implied in energy independence.
As is evident from yesterday’s post on oil imports, it should be obvious that the concept of energy independence is bankrupt. What do you think is meant by energy independence? Ordinarily, one might suppose that it means that the United States (or as Mr. Romney sometimes refers to North American energy independence) is self-sufficient with regard to the supply and consumption of energy. If this is what is meant, then it is a silly idea. As pointed out in Prof. Nordhaus’ brilliant article on the integrated global oil market, oil markets are like a bathtub. The only thing that matters is how much oil is in the bathtub. It doesn’t matter where it goes in or where it comes out. The price of oil will depend on how much oil is in the tub and how much oil is removed from the tub. Thus any country that pretends to disengage itself from global oil markets will pay a heavy price by such disengagement.
It is possible that something else is meant by the term energy independence. While ambiguous, what is probably meant is that America should fully exploit its abundant natural resources and that such reliance would put the United States in a better energy position than it currently finds itself. Secondarily, what might be also meant is that the United States should regain its position as the global technological and business leader in energy. Energy resources are plentiful but they are not infinite. As the globe consumes easy-to-reach energy resources, increasingly sophisticated technological means will be necessary to access more difficult-to-find energy resources. The development of fracking technology in the US is a good example of how the US can lead both the technological and business sphere.
caem believes we need a new and better word to describe this concept. The words we have been using is Energy Exceptionalism, a homage to American Exceptionalism. In contrast to Autarkism/Securitism (national self-sufficiency or energy independence), Envirocentrism, and Laissez-faire (complete reliance on free markets), caem pioneers Energy Exceptionalism, an actionable philosophical framework based on principles that would solve the Nation’s energy problems, achieve global sustainability, and restore American global leadership in energy. Energy Exceptionalism relies on economic principles that recognize:
- the benefits of robust, level playing field competition in energy markets;
- the critical role of innovation, technology, and adaptivity in meeting energy challenges;
- dysfunction in energy markets caused by market failures (monopoly and environmental externalities) and government failures (subsidies, mandates, and overkill);
- the wisdom of cautionary government intervention disciplined by the lessons of energy policy history; and
- the necessity of US global leadership in the energy sector.
Is there anything that Governor Romney would disagree with in Energy Exceptionalism?