The Impossible Dream of Energy Independence

Energy Analyst Robert Bryce Explains Why Trying to Make All Our Own Power is a Foolish Idea


In his forthcoming book Gusher of Lies: The Dangerous Delusions of "Energy Independence" (PublicAffairs) Robert Bryce, managing editor of Energy Tribune and author of Pipe Dreams: Greed, Ego and the Death of Enron, grapples with what he detects as a growing belief, both among policy elites and the public, in "energy independence."

That's the notion that America should disengage from world energy markets and seek self-sufficiency in energy production. To Bryce, this is not only impossible, but dangerous to even attempt. As he writes in the book's introduction, the quest for energy independence "means protectionism and isolationism, both of which are in opposition to America's long-term interests."

Some of the myths of energy independence Bryce takes aim at are summed up in this January Washington Post op-ed. They include the false belief that U.S. energy autarky can curb terrorism; that government investment in "alternative fuels" can end our use of foreign oil; that we can starve evil petro-regimes of money by refusing to buy their oil; and that less reliance on foreign energy sources can make our energy supply more secure.

Like any decision to isolate ourselves from the free international market, the search for energy independence would, Bryce demonstrates, lead us to waste our money and, yes, our energy doing things more expensively than they can be done by taking advantage of the international division of labor and flow of capital.

reason Senior Editor Brian Doherty, author of This is Burning Man and Radicals for Capitalism: A Freewheeling History of the Modern American Libertarian Movement (PublicAffairs), interviewed Bryce by phone last week.

reason: While "energy independence" has soared to fresh public prominence in this era of soaring gas prices and Mideast wars, it's not a new idea, is it?

Robert Bryce: The first president to promote the idea was [Richard] Nixon in the wake of the oil embargo in 1973. In his State of the Union address in 1974, Nixon said that he was aiming for energy independence by the end of the decade. He hoped that by 1980 the U.S. would not be importing any oil. And every president since Nixon, in one way or another, has espoused a similar idea. But if you look back at the data, the U.S. was a net crude oil importer [as early as] 1913 and ever since we've been a net crude importer with a handful of years [as exceptions]. It's remarkable how much the rhetoric about "energy independence" has had no connection with reality.

reason: What do its proponents think we can get out of energy independence?

Bryce: The main talking points for those who promote energy independence are, one, that if we were just more tech-savvy we can develop lots of new jobs, and that would be great—we can build windmills, solar panels, whatever nifty new whizbang tech is going to replace oil, and that will stimulate the economy.

Second, they love biofuels. We can just grow the fuels we need to replace imported oil and it will be great for farmers and the rural economy. Third, [energy independence proponents] conflate oil and terrorism. Those arguments really came to the fore since the 9/11 attacks. We buy imported oil, some of our suppliers are Islamic petro-states, some Islamic petro-states send some dollars to support radical Islam, therefore oil equals terrorism and "energy independence" is anti-terror.

The idea is that if we could isolate the oil-exporting countries that in theory support terror we'd cut off its lifeline. The connections of Saudi Arabia to the 9/11 terror attacks are real, I'm not denying that. But you cannot, given the complexity and enormous size and interconnectedness of the global crude oil market, separate one actor from another.

S. Fred Singer [of the Science and Environmental Policy Project] came up with the best analogy. He described the global oil market like a big bathtub. All the oil production is dumped into one bathtub and all consumers have straws sucking oil out. [For all economic purposes] it's like we're all sucking from the same common pool. To say you are not gonna buy Saudi oil, or Algerian oil—it's crazy. For example, the U.S. hasn't purchased a dime of Iranian oil—except for a small amount in the early '90s, but for the most part no Iranian oil since 1979. And that hasn't stopped Iran from supporting Hezbollah.

reason: Can increased energy efficiency help us achieve the goal of "energy independence"?

Bryce: To answer that, you need to understand the "Jevons paradox." In 1865 the economist William Stanley Jevons published a book, The Coal Question, which projected that Britain was on the precipice of disaster because it was running out of coal. Sound familiar? But it still hasn't happened. Jevons' discovery was that energy efficiency doesn't decrease demand—it increases it.

We're told that if we just push more efficient technologies like fluorescent light bulbs and drive Priuses that energy use will decline. It's just not true. There's a graphic in my book that shows the decline in the number of BTUs consumed per dollar of GDP [from 19,000 BTUs consumed per dollar of GDP in 1950, to a projected 9,000 BTUs in 2010], but energy consumption continued to grow.

Efficiency can be a great thing for its own sake. It can mean good things for the economy and for people, but it doesn't mean we'll use less energy overall. We'll use more. And not just the U.S., but the Chinese, Vietnamese, Pakistanis.

One anecdote that illustrates the principle: I had a friend who bought a Prius tell me the other day how he used to take the train to New York to see the opera. But now they have a car that gets 40 miles per gallon, so they just drive. It becomes more efficient on a mile per gallon basis, but on a total BTUs consumed basis, no.

reason: How about domestic renewables as a solution to dependence on foreign oil?

Bryce: I'm not opposed to renewables. I have 3,000 watts of solar panels on the roof of my home. I understand the economics of renewables. But an incurable problem for both solar and wind is intermittency. The sun doesn't shine at night. I like to have lights and TV at night. Unless we come up with some incredibly efficient method of storing large amounts of electricity, it's not a viable source because we can't store it.

It's the same problem with wind. I consider wind the electric-sector equivalent of the ethanol hype. At a conference recently I asked a wind guy, "Without subsidies, how many projects now under way [regarding wind] would make economic sense?" He said maybe 30 percent.

reason: You sound skeptical about ethanol as well.

Bryce: The ethanol scam is the longest running robbery of taxpayers in American history. Some recent news reports, which I don't discuss in the book, include a report showing [that] corn-based ethanol releases [more] greenhouse gases than fossil fuels. That's just one indictment of the inefficiency of the whole process. It's also fiscal insanity—providing 51 cent per gallon subsides for making fuel from what's already the most subsidized crop.

In 2005 federal corn subsidies approached $9.4 billion, which is around the entire budget of the Department of Commerce, with 39,000 employees. It also takes orders of magnitude more water to make corn ethanol than [is used for] gasoline production. Given the problems in the West and Southwest with water, it's insane to think we're going to be able to produce sufficient ethanol to make a dent in gasoline use when the amount of water needed is so high.

reason: What about the promise of changes in foreign policy in the Mideast if we could wean ourselves off their oil?

Bryce: People like to think that if only we bought less oil we wouldn't need to be in the Persian Gulf. It sounds appealing. The reality is the U.S. gets 11 percent [of its oil] from the Persian Gulf. From a strategic point of view it was a big mistake assuming militarism is better than markets. The key adjustment is to make markets trump militarism when it comes to the Persian Gulf. We're not the most reliant [on Persian Gulf oil]—it's the Japanese, the French, the rest of Europe, China. If we want to have stability in the Persian Gulf, it's not just for the U.S. It's good for the whole world, so the U.S. needs to understand that it shouldn't be its burden alone.

reason: I thought what you had to say about Saudi Arabian energy independence was interesting.

Bryce: The Saudis in 2005 imported 83,000 barrels of gasoline per day. Here is a country with the single largest oil deposits on the planet and they are importing gasoline. Iran too is importing 40 percent of its gasoline, because it doesn't have enough refining capacity. Iran has the second largest reserves of natural gas and is importing natural gas to northern Iran because its gas reserves are in the south. Do we need better examples of energy interdependence? If even Saudi Arabia and Iran are energy interdependent, why wouldn't we be?

It isn't like energy is the only vital thing we aren't "independent" in. I have a chart in the book which shows, using data from the U.S. Geologic Survey, some mineral commodities. We import 100 percent of more than a dozen—fluorspar, yttrium, strontium, vanadium, arsenic among others. These are industrial commodities we need to power our economy—yttrium in televisions, microwaves, ceramics; strontium for nuclear fuel; manganese in steel and iron. These are things we have to have, and we import 100 percent of them.

The only energy source with zero carbon emissions in electric power is nuclear. And that's another example of interdependence. We import 83 percent of our uranium. There are other countries like Kazakhstan with much larger reserves of uranium than the U.S. which can mine it more cheaply.

"Energy independence" would dictate that if we use nuclear power we must produce our own uranium to fire those reactors. Why would we wanna do that if someone else is a lower-cost producer? If we get to [obtain a resource] for less, why wouldn't we do that? We do it with shoes, iPods, cell phones, watches, fresh flowers, you name it. We rely on global commercial markets for all kinds of things—what's wrong with relying on it for uranium?

reason: What did you think of the recent energy bill in the context of your book's concerns?

Bryce: If I could tell Congress one thing, I'd tell them to forget about doing anything for the energy business. They've done enough damage, don't do any more. The bill is unfortunately named the "Energy Independence and Security Act of 2007." It's got 300 pages of blather about ethanol and biofuels that does nothing for energy independence or security. They mandate 36 billion gallons of biofuels for every year by 2022. It's pure fantasy, the idea that we can hit that target.

Every presidential candidate has talked about energy independence and every one conflated oil and terrorism, except for Ron Paul. Paul as far as I can tell was the only presidential candidate who dared to say something to the effect of, when it comes to energy, we need to let the market work, that supply and demand and prices should make decisions about [how and from where we get energy].

reason: Do you think the current fears about "peak oil" feed into the craze for energy independence?

Bryce: Some time the world will reach a limit in the amount of oil [produced] per day and a decline will start. But the decline is likely to be shallow, not skiing down a steep decline. As we get closer [to peak oil], prices will rise, and as prices rise a pool [of oil] that's previously unecononomical gets worth drilling.

I consider myself a liberal mugged by the laws of thermodynamics, but all [interest in my thesis] has so far come from the [free-market] right. The left doesn't seem to care. They just hate fossil fuels. To me, I see we had huge government support for ethanol mandates, and how has that turned out? Modern leftists [who question the value of freer markets in energy] don't seem to know, for example, the history of the Synfuel Corporation or how the prohibition on using natural gas for electricity worked, or how price controls made for gas lines. With all those government interventions, if the market had been allowed to work, the outcomes would have been a lot better.