One can imagine what the conversation must have been like around the CEO of Exxon-Mobil’s breakfast table the morning after President Bush’s State of the Union address. “So honey,” his wife might have asked, “what’s it feel like to be a tobacco executive?”
Bush’s declaration that the U.S. is addicted to oil is another step toward demonizing the oil industry, in a repeat of what happened to the tobacco industry in the 1990s. The tobacco companies are now so heavily taxed and regulated that they have almost become an arm of the government. Bush intends for no such thing to happen to the oil sector, but as Bill Clinton learned after repeatedly saying he “would end welfare as we know it” without quite meaning it, words have consequences.
The word “addicted,” of course, is morally loaded, implying an unhealthy and irrational dependence. But since oil provides the cheapest and most efficient way to power automobiles, our dependence on it is natural and sensible — the very opposite of an addiction. Bush is the James Frey of energy policy, exaggerating the negative to play to an important market segment — in Bush’s case, the mushy middle of American politics primed to believe the worst about Big Oil.
Bush isn’t proposing any far-reaching proposals to deal with this newfound addiction. President Clinton resorted to microinitiatives — school uniforms, teenage curfews, etc. — when he was in a political tight-spot. President Bush is resorting to microindustrial policy. A few billion dollars here and there on developing fuel alternatives — and also on funding scientific research and education — and everyone can feel good that the federal government is “doing something,” while members of Congress shove the money out the door and energy interests gobble it up.
Bush’s new Advanced Energy Initiative, which is charged with developing better batteries for electric cars and figuring out how to make fuel from wood chips, is redolent of all the past federal initiatives to find alternatives to oil and to gas-powered cars. Who can forget the glories of President Nixon’s Project Independence? Or Carter’s Synthetic Fuels Corporation? Or the first Bush’s U.S. Advanced Battery Consortium? Or Clinton’s Partnership for New Generation Vehicles?
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.