They all failed. So far, the $10 billion spent since 2001 on trying to develop alternative fuels that Bush bragged about in his speech has also produced nothing. “That’s scarcely an advertisement for even more lavish subsidies,” commented energy expert Jerry Taylor of the Cato Institute. If there are commercially viable energy alternatives, the market will discover them without the clumsy guiding hand of government. Ethanol, the corn-based, government-subsidized fuel, has long been a favorite alternative, but still doesn’t make economic sense. As many industrial-policy programs do, the subsidies have become chiefly a favor to an important political constituency — midwest farmers, especially those who vote in the Iowa caucuses.
More high-minded reasons are adduced for Bush’s energy push, most importantly the need to reduce our dependence on foreign oil. But the top exporters to the U.S. are our nonthreatening neighbors, Canada and Mexico. This is why Bush singled out Mideast oil. Assuming he’s fine with oil from U.S. allies Kuwait and Iraq, that leaves Saudi Arabia as a disfavored exporter; but whether we buy its oil or not, it is going to sell massive amounts of it on the world market. One theory holds that declining oil prices driven by reduced U.S. consumption will undercut undemocratic governments in the Middle East, but these governments proved durable even when prices plummeted in the mid-1980s, and some of them aren’t oil states (Syria, Egypt, the Palestinian Authority).
The best result would be if Bush’s “oil addiction” tack heads into that special dustbin reserved for grandiloquent, quickly forgotten State of the Union gestures. Here’s hoping that a few years from now as many people remember that Bush wanted to power cars on wood chips as recall that he once planned to put a man on Mars.
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