Energy Bill Leaves Conservation on Back Burner The energy bill just signed by President Bush is supposed to encourage domestic production and holds the promise of alternative fuels. But the new law does little to curb U.S. consumption -- the real key to energy independence, Ron Elving says in the latest Watching Washington column.
NPR logo Energy Bill Leaves Conservation on Back Burner

Energy Bill Leaves Conservation on Back Burner

President Bush signs the energy bill in Albuquerque, N.M., Aug. 8, 2005. Reuters hide caption

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In one of those coincidences that look corny in novels but happen all the time in real life, the price of oil hit an all-time high this week just as President Bush was signing the new energy bill into law.

That new law, by the way, is officially "The Energy Act of 2005: A bill to ensure jobs for our future with secure, affordable and reliable energy."

The signing ceremony, of course, was not immediately responsible for the spike in the crude markets. But the two events were far from unrelated.

At root, the new bill respects, and so preserves, current American attitudes toward energy use. That means our demand for oil will continue to increase, driving worldwide demand. That means not only an overheated market now but a high likelihood of much higher prices in the future.

Crude prices are about 40 percent higher than a year ago and just beginning to make themselves felt in the market for refined products. This past weekend, a gallon of regular in the U.S. averaged $2.34. That was 46 cents higher than last year, an increase of nearly 20 percent. Yet we're still using more gasoline.

Against this background of high demand, the benchmark barrel of "light sweet crude" (the grade that needs the least refining) was brought to the brink of the $64 mark by a confluence of bad news. A fire in a U.S. refinery, more saber rattling over Iran and another storm in the Caribbean all took a toll. But topping the negatives was the U.S. decision to close its embassy and consulates in Saudi Arabia due to the threat of terrorist strikes.

Saudi Arabia is as important to global supply as the U.S. is to global demand. So if the top producer with the biggest reserves becomes vulnerable to interruption, there's no telling how high prices will go.

In such a scenario, the new energy law would be of little use. Actually, the new law does remarkably little to affect the price or supply of energy in any form in the short run. Even the bill's chief sponsors said so, and the president acknowledged as much in the moments before he reached for his pen.

"This bill is not going to solve our energy challenges overnight," the president said. "High gasoline costs and rising dependence on foreign oil have developed over decades. It will take years of focused effort to alleviate those problems."

The president said the new law would provide "a strategy to help us do that." But in fact, the law is largely a product of the same mindset that allowed these high costs and dependence to develop in the first place — a mindset of production and consumption.

Yes, the new law includes a nod to renewable energy. But the basic philosophy is once again to make domestic fossil fuels more profitable. That's supposed to make more energy happen within the U.S. borders, eventually lowering prices and providing more breathing room in times of tight supply.

But even in a best-case scenario, this approach only buys time. Eventually, our fossil fuel supplies will be depleted and the price-dependency squeeze will be worse than ever.

Ah, but buy enough time, in the White House scenario, and we will have developed alternative fuels, "cold cracking" refineries and hydrogen cars. We will be making gas from coal and importing cheap liquid natural gas from South America. It can all be done without substantially lowering our economic expectations, either as a country or as individuals. All will be well, in time.

This sort of beat-the-clock strategy offers drama and suspense, but does it really "ensure jobs for our future with secure, affordable and reliable energy"? Is there another strategy with greater potential for doing so?

Let's go back to that biggest-supplier, biggest-user dynamic between the Saudis and the United States. Here's the yin and yang of it: Just as any disruption in Saudi flow tightens the market, any decrease in American demand creates the opposite effect. If the Saudis have great market power for good or ill, so in our own way do we.

In the long run, the big factors in world demand are the emergent industrial powers (China, India) and the unslakable thirst of the American motor culture. There may not be much we can do about China and India's demand, and growth in these countries has enormous benefits for their populations and for the global economy. But we could do more on our own to assert our energy independence in the most efficient and effective way possible — by using less energy.

Everyone knows that weaning Americans from their SUV lifestyle is a daunting task. But it is as necessary an aspect of national defense as any program run by the Pentagon. As two conservative Republicans with a background in oil, President Bush and Vice President Cheney could speak to the need to conserve with more credibility than any White House occupant since Teddy Roosevelt.