Politics & Policy

Strength Needs Energy

Fixing failed policy.

As I’ve talked with other industrial and business leaders in the U.S. over the past several years, I’ve come to one inescapable conclusion: This country is in the middle of what could be a long and painful energy crisis.

It’s a crisis that goes beyond the very real misery many may feel this winter when they struggle to pay home heating bills. And it’s well beyond any discomfort Americans are feeling now when they go to fill up their cars and SUVs at the gas station.

The real energy crisis we face today is much graver because it has ballooned into a manufacturing crisis. It is now undermining the very things that have made this country so great for so long — its economic prowess, its education system, its strong history of innovation and invention, and, last but certainly not least, its basic national-security and influence in the world.

It doesn’t have to end that way, of course. There are solutions. But, we have to act soon if we hope to have any chance of saving our once mighty manufacturing economy, the basis of our great democracy and influence in the world.

Until lately, this crisis has been almost invisible to the average American. Like a microscopic parasite, though, it’s been slowly weakening American industry and eating away at our economy. This country has lost more than three million manufacturing jobs since the year 2000 in large part because we don’t have a coherent national energy policy. My own industry has suffered woefully. We went from a trade surplus of more than $20 billion to a deficit of more than $9 billion in the past decade.

The chemical industry is not alone, of course. Basic manufacturers across the country are facing similar circumstances. Energy costs are making them less and less competitive around the world. And at the end of the day, they have few good choices: move their businesses to geographies with more reasonable energy costs or shut down.

Since more than 70 percent of all business R&D comes from the manufacturing industry, losing our country’s manufacturing base also means a lost investment in future innovations and technological advancements. In essence, our nation will give up its competitive advantage to an aggressive marketplace, with emerging economies all vying for an increase in its global market share.

I believe there is another way. We still have an opportunity to correct this problem. We created it after all. It was our collective policies and our collective insatiable consumption that caused the problem. Now it’s within our collective power to fix it. How? Let me recommend two ways to start.

First, we must reduce energy demand. This is not only the most practical first step; it’s also the easiest to implement, the most cost-effective to carry out and one of the most helpful in the long run for both energy security and our climate.

Every industrial sector, every residential sector, every appliance maker, every auto manufacturer and, yes, every consumer must be encouraged — and rewarded — for reducing demand. The cheapest energy is the energy we don’t use.

Second, we must diversify our energy supplies at home. That means, for instance, opening up previously restricted areas to safe and environmentally responsible development. There is an ample supply of clean-burning natural gas off our own shores to help us move toward a more energy secure future. Instead of paying for high-priced oil imports — which is the same as exporting money and jobs — we can use our own, clean domestic resources to fuel our own economy here.

In addition, I believe we should use revenues from these new sources to help fund a series of research projects to aggressively pursue alternative energy resources. We have the best minds and best scientists in the world — we should use them to help break our dependence on fossil fuels and chart a future path for this country that is more secure and sustainable.

There is more we can do, of course. We must make coal a more sustainable energy source. We must increase our work on renewable energy and pursue responsible alternatives such as bio- and nuclear energy. And, perhaps most importantly, we must do all of this within a framework of reducing our impact on global climate change.

But the time for talk is over. We need action and we need it now.

My greatest concern is that our lack of comprehensive action is already having a devastating effect on basic manufacturing, which is, after all, the foundation of our economy. If the foundation crumbles, the other great pillars it supports could collapse, too.

We’ll lose our advantages in intellectual property, information technology and computing. We’ll see our science-based education system continue to erode … because without manufacturing and all that accrues to it, many engineers and scientists will have no place to work. In short, we’ll lose our comparative advantage to compete.

If that happens, we’ll be little more than a two-coast economy: finance and services in the East and entertainment in the West, with government in Washington. And there is certainly no security in that. The mightiest and most diversified economy in the world will be based on theme parks, sports, and entertainment events, and providing capital to the true growth economies which will be based on manufacturing and science. And government’s main job will be to divide up the pieces of an ever-shrinking pie.

— Andrew Liveris is chairman and CEO of the Dow Chemical Company.

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