Yesterday the President signed into law the new Energy bill - inaptly named "The Energy Independence and Security Act." It will do two main things, one modestly good and one incredibly bad. First, it will raise CAFE standards to 35 miles per gallon by 2020 (gains will certainly be incremental, though it likely does spell the death knell to the SUV as we have known it). Second, it mandates the annual production of 36 billion barrels of biofuels by 2022.
What is most noteworthy is what was not included in the bill, provisions that were stripped out at the last minute under industry pressure and the threat of a veto by the President. Not included were incentives for the production of renewable energy which would have been paid for by new taxes on the oil industry, as well as a mandate that 15% electrical generation be achieved through renewable sources. Anyone who opened a newspaper during the past few weeks could not have failed to notice the steady publication of full page ads from utility, oil, and manufacturing industries opposing the legislation. The President threatened a veto because he opposed the new taxes that this bill would impose on the "consumer." After all, who can consume when prices are high?
The short-sightedness of these arguments need hardly be rehearsed. Higher taxes on oil would have provided a significant "price signal" for research and investment in alternative energy sources, but more importantly, would have provided an incentive for people to begin changing their behavior - using less, buying smaller cars ahead of any CAFE mandates, thinking twice before they buy the McMansion 40 miles from work.
The argument criticizing higher taxes as protection for the consumer is so laughable it makes one want to cry. People will be paying more for their energy, but because of the mandates for biofuel production, it will pinch at the supermarket and not most obviously at the pump. Bush won't get blamed for higher energy prices - people will likely fail to make the connection between the provisions of this bill and the rising cost of basic foodstuff. As this New York Times article of two days ago describes, "the nation [is] about to commit itself to decades of competition between food and fuel for the use of agricultural land."
The effects of the rise in the cost of groceries as we commit to burning our food out our automobile tailpipes is already being felt among the world's and the nation's poorest people: already there is increasing starvation in Africa, food riots in Mexico (ethanol production has been called "the tortilla tax") and firm evidence that the high price of corn is dissuading food banks from purchasing surplus food for the poorest among us.
Further, given the amounts of energy inputs that the production of corn requires - energy that will continue to have to be imported from abroad - how can anyone suppose that this bill represents "energy security and independence?" This energy bill reminds me of the way that developers name tract housing subdivisions - by calling them "Fox Run" and "Maple Woods" you distract attention from the fact that those are the things you are actually destroying. So too, "security" and "independence."
The only way of achieving either of those things would be to use less. The only realistic way that we will use less would be for energy prices to rise significantly enough to prompt us to alter our behavior. Once again we've missed a chance to behave like grownups. Our adolescent self-indulgence is nothing new: we've shown an aversion to adult behavior since the end of World War II. There's some "comfort" in knowing that prices will rise regardless, and we will eventually alter our behavior. However, the longer we wait, the harder that adjustment will be, and the more people will suffer now around the world and the more likely we ourselves, or our children, will suffer serverely as we continue our reckless energy gluttony.