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Energy: Mission Impossible?

“[W]e have a serious problem. America is addicted to oil.”

– President George W. Bush, 2006 State of the Union address


“For too long our nation has been dependent on foreign oil … It is in our vital interest to diversify America’s energy supply.”

– President George W. Bush, 2007 State of the Union address




     It has figured prominently in the past two State of the Union speeches and has prompted waves of political and media support. But “energy independence” isn’t a simple idea, nor is it a cheap one.


     In 2006, it became a punchline for “Today Show” host Matt Lauer, who said, “I’m Matt, and I’m addicted to oil,” during the NBC broadcast on Feb. 2, 2006.


     What a difference a year makes. Now that leading Democrats and high-profile Republicans are all talking about “energy independence,” the stakes for American energy producers and taxpayers are much higher. The topic was deemed “safe” for bipartisan discussion by ABC’s Martha Raddatz on Nov. 9, 2006.


     Journalists have been quick to press the idea. “Another question five years later, I think a lot of people thought in five years America would be energy independent or at least on its way to independence of the Middle East oil,” Diane Sawyer asked Rudy Giuliani during ABC’s “Good Morning America” on Sept. 11, 2006.


     “Gas prices on the rise again. Many Americans ‘running on empty.’ There’s a lot more talk about energy independence. Some folks are trying renewable sources of energy called biofuels …” began CBS’s Harry Smith, introducing a June 29, 2006, “Early Show” story about “Bio-town,” aka Reynolds, Ind. The town has been held up by the media as an energy-independent utopia. Smith ended the story: “it’s happy days out there in Bio-town.”


     But colorful feature stories about happy days have left audiences ignorant of some crucial facts about the nation’s energy supply.  


     In reality, the United States is actually very self-reliant when it comes to energy. “If we look at total energy – including coal, nuclear and a small but growing share from renewables – the country is over 70% self-sufficient,” wrote Daniel Yergin of Cambridge Energy Research Associates in a January 23 Wall Street Journal commentary.


     “The risks do not owe to direct imports from the Middle East, contrary to the widespread belief,” Yergin wrote. “Some 81% of oil imports do not come from that region. Thus, only 19% of imports – and 12% of total petroleum consumption – originates in the Middle East.”  He noted that Canada and Mexico are the two largest sources of U.S. oil imports.


     But the primary media focus has remained on hostile nations, especially in the Middle East, excluding those facts.


     “What’s happening in Iraq has prompted many people across this country to think long and hard about breaking America’s dependence on foreign oil. It’s not gonna be easy,” said ABC’s Cynthia McFadden on the Nov. 24, 2006, “Nightline.”



Independence has a price – for taxpayers


     Support for “energy independence” has actually meant more taxes on oil and could mean even more costly subsidies for alternative energies like ethanol. And rising prices could have the ironic consequence of driving Americans toward cheaper, imported oil.


     Last week, the House Democrats passed a bill that Speaker of the House Nancy Pelosi said would “roll back subsidies on big oil” and invest in alternative energies. And the media agreed, focusing on getting back at Big Oil.


     “The package would impose $15 billion in fees, taxes and royalties on oil and gas companies,” said CBS’s Russ Mitchell on “The Early Show” January 18. NBC’s Natalie Morales came close to Pelosi’s exact words on the January 19 “Today” show: “The House, meantime, voted to roll back some tax breaks for the oil industry.”


     But there was much more to the bill, as Myron Ebell of the Competitive Enterprise Institute explained.


     “The House 100-hour energy legislation is a lose-lose scheme for American consumers and taxpayers. Speaker Pelosi’s package would make us more dependent on imports of foreign oil by raising taxes on domestic production,” Ebell said in a Jan. 16, 2007 press release.


     American Petroleum Institute’s senior tax-policy analyst Mark Kibbe agreed, “If Congress imposes these additional costs on the companies, it just makes them more likely to look overseas.” He was quoted by the Christian Science Monitor on Jan. 18, 2007.


     Media infatuation with ethanol also led to shoddy reporting that left out U.S. ethanol subsidies. “Right now Congress is giving billions to ethanol, biodiesel, and the nuclear industry,” Doug Koplow of Earth Track consulting firm said in the same Christian Science Monitor article. About $6 billion in 2006 went to subsidize ethanol.


    Bush’s desire to continue “investing” in ethanol can only mean more mandates and subsidies for the energy source – funded by taxpayers.


     “President Bush is proposing a huge expansion of the corporate welfare state,” said Ebell, CEI’s Director of Energy Policy, in a release dated Jan. 23, 2007.


     While Ebell does not believe there is anything wrong with alternative energy, he said, “thirty years of enormous subsidies have not made these technologies competitive in the marketplace.”


     In addition to market inefficiencies there is a larger looming question about alternative energy: Is there really a need for “energy independence”?


     Cato Institute Senior Fellow Jerry Taylor doesn’t think so. In fact, he thinks the entire goal is “ludicrous.” On May 4, 2005, Taylor and Cato Senior Fellow Peter Van Doren shared that opinion in National Review.


     “The hostility directed at ‘foreign’ oil is ridiculous … Even if the United States imported no oil at all (and if we did not restrict trade), supply disruptions abroad would have a similar effect on our economy as if all our oil came from overseas,” they explained.

     


If we drill it …


     There are two more ironies in the political and media support for “energy independence.” One was outlined by John J. Fialka and David Rogers in the Wall Street Journal Jan. 18, 2007.


     “There is also a potential disconnect between the goals of Ms. Pelosi’s agenda: The increase in domestic oil, gas and coal production likely needed to achieve energy independence would entail heightened output of greenhouse gases,” they wrote.


     The other irony is that politicians and the media who advocate less dependence on foreign energy sources also oppose drilling for more domestic oil.


     “[W]e can do a lot more in this country, you know. The 102 billion barrels of known oil reserves and gas reserves that we don’t have access to in this country on federal land and outer continental shelf, we’d like to go produce that,” said John Hofmeister, president of Shell Oil, during the June 18, 2006, “Meet the Press” on NBC.


    But Democratic politicians such as Speaker of the House Nancy Pelosi are not keen on the prospect of domestic drilling. Following a Senate vote regarding drilling in ANWR in 2005, Pelosi issued a press release exuding delight. “I am pleased to see our Senate colleagues secured a crucial victory and joined the vast majority of House Democrats to vote for preserving our pristine Arctic National Wildlife Refuge … Republicans have attempted to defile one of our nation’s most beautiful areas.”


    The media have mirrored that view, echoing environmentalists to make ANWR sound heavenly. ABC reporter Bill Weir called it “truly an awe-inspiring place” during the June 12, 2005, “Good Morning America.”

    

    

Ethanol: Fuel of the future?


     “We must continue investing in new methods of producing ethanol, using everything from wood chips to grasses to agricultural wastes,” said President Bush during the 2007 State of the Union address.


     Ethanol, an alcohol currently being made from corn that can be used as fuel, has taken center stage and has been promoted by the news media as the panacea that would provide energy independence.


     In May 2006, ABC, CBS and NBC all ran positive stories about ethanol and Brazil’s success in switching to ethanol derived from sugar cane so that the country would no longer be reliant on oil imports.


     “[W]hat if there was one solution to all of this [high gas prices], something that could solve America’s energy crisis, strengthen our national security, and help save the planet at the same time?” asked NBC’s Stone Phillips during the May 7, 2006, “Dateline.”


      Phillips left out experts who disagree that ethanol is a planet-saver, but he wouldn’t have had to go to conservative think tanks to find them. Daniel Becker of the liberal environmentalist group Sierra Club has said that ethanol is “no boon for the environment.”


     “It’s not a great deal, because you’re putting so much energy in to get a modest amount of energy out,” Becker said on the April 18, 2006, “CBS Evening News.”


     Still, journalists have been enamoured with Brazil. CBS’s Dan Rather stated that “[b]ecause ethanol is cheaper, the law of supply and demand took care of the rest” in Brazil during “60 Minutes” on May 7, 2006.


     What Rather was really seeing at work in Brazil was the law of subsidies. “The price at the pump was also subsidized to make the new fuel cheaper than petrol,” BBC News business reporter Robert Plummer wrote. According to Plummer farmers were also paid “generous subsidies to grow sugar-cane.”


     The expensive process of getting ethanol to the fuel market includes transportation costs. Ethanol “is made out here on the prairie. It’s too corrosive to put in a pipeline, and so 100 percent of it has to be put on a train or a truck or even a barge to get it to market … [it] could actually raise gas prices this summer,” reporter Wyatt Andrews stated on the April 18, 2006, “CBS Evening News.”


     Another detail left out by those reports is the amount of fossil fuel that it takes to produce ethanol. According to Wall Street Journal columnist John Fund, “Corn farmers have done a good job of disguising the fact that it still takes more than a gallon of fossil fuel – 29% more is the best estimate – to make a gallon of ethanol.”


     Rising demand for ethanol, which is likely to increase if Congress goes along with President Bush’s desire to reduce U.S. gasoline usage by 20 percent by 2017, is also driving up the worldwide cost of corn for food and corn syrup-based sweeteners.


     The media have also fawned over examples of other energy alternatives. ABC’s “Nightline” re-aired a June segment on Nov. 24, 2006, about “Bio-Town,” in Reynolds, Ind., “to revisit the story of one small town in the nation’s heartland that has decided to try and kick its addition to oil and become completely energy independent,” gushed anchor Cynthia McFadden.



BMI Deputy Editor Amy Menefee contributed to this report.



Related links:


State of the Union 2007: A Counterproductive Energy Policy, Heritage Foundation


Cato Institute Scholars Comment on Domestic Policy Proposals in the State of the Union Address