Politics & Policy

With Energy, More Is More

Engines of economic growth. (Warenemy/Dreamstime)
An economic agenda for the new GOP majority

There is no substitute for abundance. A country that produces more food and steel and aircraft and microprocessors is going to be, ceteris paribus, better off than one that produces less. A country with a larger share of its population working is going to produce more than a country with a smaller share of its population working, as has been the unhappy trend in the United States during the presidency of Barack Obama. All the blue-ribbon panels and price-control trickery that the progressive hive-mind can dream up will do little or nothing for the quality and affordability of health care compared with increasing the supply of doctors, hospitals and clinics, pharmaceutical manufacturers, makers of medical devices, and the like. “Less is more” might work in the context of the aesthetic of Ludwig Mies van der Rohe or the poetry of Robert Browning, but in the economy of real things, more is more. And the new Republican majority in Congress is well positioned to implement a more-is-more philosophy in a critical economic sector: energy.

It is difficult to overstate the importance of energy in the U.S. economy: The energy market affects almost every company and every industry, from AAL to AAPL, and we have an abundant supply of it, from oil and gas to coal and other sources. Getting government out of the way and allowing those industries to flourish even more fully than they have is a project that is, unlike some of the more ambitious items on the conservative wish list, well within reach, even with President Obama’s veto pen potentially standing between bill and law.

A little history for context. The immediate postwar U.S. economy was in many ways an atypical and unsustainable situation, given that the country’s commanding position in manufacturing — some 60 percent of the world’s industrial output — was predicated in part on the fact that the rest of the world was trying to rebuild its factories after the ruinous war. That wasn’t going to last forever, but manufacturing wasn’t the whole story, either.

As Paul Johnson points out in his elegant new biography of Dwight Eisenhower, the postwar United States constituted an unparalleled and unprecedented economic force. It was a more-is-more economy, producing a third of the world’s grain and half its cotton, and the lion’s share of its iron, phosphates, copper, and precious metals, outstripping the combined production of the major nations. It was the world’s largest producer of minerals, with four times the output of the second-largest. Everybody remembers (with varying degrees of accuracy) the ready availability of blue-collar factory work at decent wages in those days, but less appreciated is the role that energy played: The United States in those years was the world’s largest petroleum producer, pumping more oil than the rest of the world combined and generating 90 percent of the world’s natural gas. Between 1950 and 1970, total U.S. petroleum production nearly doubled, and then it began to fall off in the early 1970s, a decline that coincided with a general stagnation in the economy — coincidence, but not mere coincidence.

The International Energy Agency calculates that the United States is poised to take the top spot again in 2015, and that by 2020 total U.S. oil production (crude, condensates, and gas liquids) will climb to 11.6 million barrels a day. And that’s great news — but it’s still 100,000 barrels a day less than we were producing in 1970, and that with our radically improved extraction techniques. So that’s relatively low-hanging fruit, not a best-case scenario.

The energy industry isn’t just about hydrocarbons in the ground. Getting those out in an economical and environmentally responsible fashion is an engineering problem that we have a pretty good handle on; Americans tend to be pretty good at engineering problems. But there are other challenges, an important one of which is infrastructure. The most famous energy-infrastructure fight recently has been the one involving the Keystone XL pipeline; Senator Mark Udall’s equivocation on the issue was, if I am reading the Colorado results correctly, an important factor in his defeat by Republican challenger Cory Gardner, who is unequivocal in his insistence that it is time to build the thing already. Before Tuesday’s election, there were 57 senators who supported Keystone XL; in January, there will be at least 61. Barack Obama has made it clear that the political interests of congressional Democrats are a secondary concern to him at best; Republicans have a chance to bring a significant number of Democrats around in a bipartisan consensus that is, for once, on the right side of an issue. If the president wants to stand in the way of that, it’s a good fight for Republicans to have. It’s a chance to remind the country that California has a lot of oil shale and relatively few good blue-collar jobs.

There are other infrastructure fights that aren’t front-page news: U.S. coal producers have been engaged in a Sisyphean effort to build export terminals on the West Coast so that American exports can help feed ravenous Asian markets. Environmentalists and regulators have hobbled these projects on the flimsiest of grounds: Not satisfied with demanding environmental-impact assessments on everything from “tribal cultural resources” to scenic views, the EPA is going well beyond its legitimate mandate and demanding assessments of the projects’ “cumulative impacts to human health and environment from increases in greenhouse gas emissions . . . from Asia to the United States.” The EPA is in essence asking U.S. coal companies to perform an examination of conscience in preparation of repenting the fact that there exists a global market in coal. Chinese and Indian consumers are going to buy and burn coal from U.S. firms, or they are going to buy and burn coal from others. Asia has the demand, we have the supply, and regulators are keeping the two apart. That’s the model for a less-is-less economy.

When it comes to actual, on-the-ground environmental concerns, the energy industry is in many cases well ahead of the regulators, going above and beyond what is required by the letter of the law. That’s good PR and good business: Many energy producers have calculated that the costs of doing more than is required under environmental rules provides relatively cheap insurance against regulatory shutdowns. But the environmental practices that prevail among the industry’s most responsible firms are not universal; Republicans looking at opportunities for environmental reform ought to consider incentives, such as limited regulatory relief, for companies that are voluntarily going well beyond minimum standards of compliance. The current state of the debate on topics such as fracking and other forms of energy exploration often comes down to jobs vs. the environment. But the experience in the Marcellus shale and other producing regions suggests that we can have both. And it wouldn’t hurt Republicans to have an environmental success story to sell.

Republicans also should remind the country that, President Obama’s Jimmy Carteresque performance notwithstanding, this is not the 1970s. France uses nuclear power to generate 75 percent of its electricity; the United States, even though it is the world’s largest producer of nuclear power, manages to generate less than 20 percent of its electricity from nuclear sources. Much has changed in the nuclear-power business since its stagnation in the United States 30 years ago, with the emergence of small modular reactors and other promising technology redefining what is meant by “nuclear power plant.” And President Obama is better on this issue than conservatives might expect, supporting Georgia Power’s plan to build new reactors and issuing generally friendly noises from the White House Office of Energy and Climate Change Policy. The president already has shown himself open to nuclear innovation, and he also wants to see 1 million electric cars on the road — but with our current electricity-generating practices, those nifty Teslas are ultimately 40 percent coal-powered cars, and that surely is not what the president and other environmentalists really want. President Obama won’t be eager to streamline the regulatory process as much as conservatives would like, but on nuclear power the Republicans have an opportunity to take yes for an answer.

The energy industry itself is a generator of enormous wealth, and it pays very good wages for everybody from Ph.D.s to truck drivers. But it is the ripple effect that makes it so important: More abundant energy means that everything that moves by road, rail, or air — i.e., basically everything — is a bit less expensive, that all of our factories are a bit more efficient, that everything made with plastics and petrochemicals — i.e., basically all manufactured goods — is a little more affordable. Those marginal changes can add up to something dramatic in an economy as complex and globally integrated as ours, because it makes the entire economy more efficient. And even with the stepped-up production of the past several years, petroleum imports alone still amount to more than half of the U.S. trade deficit — not Korean electronics and cheap plastic toys from China, but stuff we have in the ground in Pennsylvania and Texas and New York and California. Basically, we’re standing knee-deep in a pile of money, waiting for government’s permission to pick it up. You might not change Andrew Cuomo’s mind about that — or Jerry Brown’s, speaking of 1970s flashbacks — but when it comes to the millions of Americans who are not much enjoying the relative growth rates of their paychecks and their utility bills, Republicans have a pretty solid argument to make for energy abundance.

That shouldn’t be a hard fight to win.

— Kevin D. Williamson is roving editor at National Review.


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