Energy Independence Is Stupid (Updated)

One of the things that annoys me is the periodic nonsense about becoming energy independent. This idea that we can “wean ourselves off of oil” is just utter nonsense. The reason for this is that if there were economically viable alternatives to oil as a source of energy that source would be in use today and it would become more and more prevalent. The reality is 180 degrees in the opposite direction.

Even with oil going over $100/barrel there is no substitute to be found. Ethanol whether form switch grass or corn is a pipe dream. We couldn’t grow enough corn or switch grass to satisfy our demands for oil. While the idea moving to nuclear power is one I like, it wont do much to address our dependence on oil. After all, nuclear power is used primarily to generate electricity and most electric cars are not able to compete with cars that run on gasoline.

All other alternative/green sources of energy rely heavily on government subsidies. In short, we pay twice for these types of power. The first time we pay via taxes, then we pay again when we buy the power, and usually at a premium. Without these subsidies, we wouldn’t see these forms of power. Wind, solar, and biomass all rely on subsidies from some level of government.

Can consider this interesting point about Saudi Arabia: they import 83,000 barrels of gasoline a day. A country that sits on top of the largest know oil reserves has to import gasoline. Energy independence is simply not a realistic nor even a smart policy option.

Energy independence is like walling oneself off from trade with others. Sure your neighbor might be able to produce widgets at a lower cost than you can produce widgets and you can produce doodads cheaper than your neighbor can produce doodads, but dammit you wont trade because you might become dependent on your neighbor and he could exercise undue influence on you. Never mind that this is a double edged sword and cuts your neighbor just as much. Dammit you are going to take your lower standard of living and be happy with it because you are an American!

If any politician were really and truly serious about addressing the issue of energy independence they’d do it via a Pigouvian tax. They’d put a tax on gasoline, and at the same time reduce another tax–e.g. the payroll tax–and thus get people to substitute way from consuming gasoline. But raising a tax on gasoline isn’t popular so politicians have absolutely now spine in following such a policy. They really don’t mean it when they talk about energy independence.

Update (Dave Schuler)

Discussions of energy independence nettle me as much as they do Steve. Unless you’re entertaining the idea of adopting a policy of autarky, complete self-sufficiency and neither importing nor exporting, it’s objectively impossible to achieve energy independence. Regardless of what you do, how little you consume, or how much you produce, you will continue to be influenced by the performance of other consumers and other producers. You won’t be independent. Since the KSA is the lowest cost producer of oil and oil will be important for the foreseeable future, what happens in Saudi Arabia will continue to be important to us.

Every country that’s ever tried autarky has seen the error of its ways. It’s economic idiocy.

I think that when people say “energy independence” they often really mean “energy self-sufficiency”. A decision to be self-sufficient in energy means you consume no more than you produce. I think there’s a reasonable national interest argument to made for doing that so that emergencies in far-off places with unstable governments would be trials but not disasters. But we still wouldn’t be truly energy independent. That’s an objective that’s beyond our grasp.

FILED UNDER: Economics and Business, , , ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.


  1. yetanotherjohn says:

    Of course raising the tax on gasoline and reducing income tax would expose the fact that many more people buy gas than pay income taxes. Exxonmobile paid more in taxes than the bottom 50% paid in income tax.

    Nuclear power is not as widely available in the US due to regulation and a vocal minority protest, not economics. The US imports gasoline due to regulation and a vocal minority protest.

    Perhaps before we try re-cutting the tax pie to keep the tax levels even but then to influence what we consider a good, we should be lowering the regulation levels and thus lowering the costs.

  2. markm says:

    “Perhaps before we try re-cutting the tax pie to keep the tax levels even but then to influence what we consider a good, we should be lowering the regulation levels and thus lowering the costs.”

    If you attempt to lower the regulation levels then that you’ll hear from the vocal minority community thus…aint gunna happen.

  3. Steve Plunk says:

    I agree energy independence is a false goal but working to decrease the cost of energy by producing more would benefit us greatly. Ethanol is a waste of time but nuclear energy and development of our own oil and gas reserves would be a good thing. The greens got to get off our backs and let these things happen.

  4. Anderson says:

    Steve V., I agree that an energy tax would be the only sensible step for energy autarchy, and politically infeasible.

    But surely it’s sensible to research alternatives for the day — not if, but when — the oil runs out, so that we have some idea what direction to go in.

    The only thing I can think of, layman that I am, is nuclear power and electric cars, with greater use of European-style trains for mass transit where feasible. These are not practical yet, but as oil becomes scarcer and scarcer, they will be.

  5. Triumph says:

    Politicians advocating for energy independence are nothing more than pimps.

  6. Dave Schuler says:

    My own view is that a good place to start would be to stop subsidizing behaviors that lead to greater energy consumption. An example of this is that we spend more in highway construction and maintenance than we receive in gasoline tax revenues.

  7. M1EK says:

    The argument can more accurately be framed as allowing political concerns to be decoupled from energy concerns. For instance, were we not desperately hoping the Saudis would keep the price of oil down, we might have had the guts to do something about their actions re: 9/11.

  8. Dave Schuler says:

    Unfortunately, M1EK, for the reasons discussed above, it’s impossible to decouple political concerns from energy concerns. We can reduce the significance of energy concerns or increase them but we can’t decouple the them completely.

  9. John425 says:

    I am not, in any way, shape, or form financially vested in the below named company. I am also not a fan of “alternate” energy per se, but…check out:

    Interesting possibilities.

  10. Bob says:

    No politician has come out and said what needs to be done: “We are going to make existing energy costs more expensive and use the money raised to invest in alternate fuels such as solar.” Instead everyone wants the costs to go and at same time the demand to decrease. Politically need to link security, economics, climate change, and Apple Pie together and put a surcharge on non-renewable energy supplies and redirect that money into renewables. And understand it will take time (as in a decade or two) to make a sizable shift.

    True energy independence might be obtainable but not in my lifetime. We can certainly make very significant reductions in oil imports if we wished but political will has not been there.

  11. Marcel F. Williams says:

    While economic isolation is stupid, becoming energy independent is most certainly not stupid. But more importantly, the US needs to become totally independent of fossil fuels. And the US can do that by mass producing thousands of nuclear power plants in a few remote centralized locations for the production of electricity, gasoline, diesel fuel, aviation fuel, methane, methanol, hydrogen and ammonia. Then the US can not only become energy independent but can also become the major exporter of clean synthetic gasoline, diesel fuel, aviation fuel, methane, methanol, hydrogen and ammonia to Europe, Asia, Africa, and South America.

  12. Dave Schuler says:

    Marcel, you do realize that if the market would support such a move it would already be in progress, don’t you?

  13. M1EK says:

    Dave, I feel utterly confident that if our typical voter used as much gasoline as did the typical Western European, we’d have strong-armed the Saudis to cut this ^&%$&^ out, and bombed the Saudis back into the Stone Age if they refused.

    And, no, don’t give me the nonsense about population density. Most of us don’t ever drive in places like Montana – we go to/from work in metropolitan areas which could be and in many cases are no more disperse than the WE model.

  14. Dave Schuler says:

    Who can reason with your feelings? A little evidence in support of your feelings might be nice.

    You don’t have to go as far as Montana. Illinois has a population density of roughly 85/km compared to France’s 113/km. That’s a substantial difference.

    But, since I already oppose our policies which subsidize a more diffuse population, I’m not making that argument.

  15. anjin-san says:

    This sounds like the GOP vision for America…

    “this might be hard, lets give up”

  16. M1EK says:

    Dave, you can effectively use the land east of the Mississippi plus the West Coast and end up with a population and land area which is not all that far off from the European. And again, even in that still-large-space, most of us spend most of our time on short trips to/from work; not driving through the wilderness.

    In other words, our driving habits are not a function of our geographic space – they’re a function of our decision to subsidize suburban sprawl for 50 years. Our decision to go that way makes our voters particularly vulnerable to spikes in the price of transportation fuels compared to European voters, and thus, our political system can’t muster enough courage to act even slightly against the government in the Middle East that was most responsible for 9/11 (apart from the Taliban themselves).

    It doesn’t HAVE to be that way. Most of us live in metropolitan areas which could be served by transit or could have draconian suburban zoning lifted to reduce average gasoline needs. Intercity rail in most of the country is technically feasible in a high-gas-price environment. But we’d have to decide to unwind 50 years of poor public policy first.

  17. Robbrian says:

    I wonder how the CEO’s of the oil, coal, gas cartels would respond to the question? “Do you care that your children, grandchildren and, their children will likely live in a world bereft of clean air, drowning coastal cities, vanishing polar geography, shortages in energy, rapacious prices for everything, and the gradual disintegration of economic, social and political order as the outcome of your shortsighted energy policies in this the early years of the 21st century????

    I hesitate to answer for them, given their craven approach to contemporary environmental issues. However, it cannot be but obvious to the most casual observer that the world is faced with an immediate environmental crisis. To date every proposed palliative treats symptoms rather presenting global solutions. Reducing carbon emission over x number of years through credits and bartering is a fools errand. It’s like pushing dust around a large table. Alternative, renewable energy solutions pose environmental, aesthetic, and economic pitfalls that in sum raise the cost of usage to the consumer over and above the inefficiencies of current modalities. Ethanol uses more petroleum to achieve the same results as petroleum. Its only saving grace is that it is cleaner as an output, but raises the price of just about everything as an input. Moreover, many of these agriculturally based modalities are controlled by the fossil fuel freaks who currently toy with the government and the public about their efforts to champion renewable energy.

    In the view of many, there should be clearly defined benchmarks for the development of renewable energy policies, programs and funding mechanisms. National/global polices need to address immediate problems with immediate solutions not extensive research/testing, which is the ploy of the fossil fuel mavens with Universities, the government and other small firms lacking leverage. A major criterion for renewable energy solutions must be the extent to which carbon emissions are reduced. A second criterion is that renewable solutions must be clean and relatively cost efficient given other renewable alternatives. In Wendell Berry’s words: “It must become the linchpin for security, economy, equity, and environmental quality. The cheapest, fastest, and smartest approach in the near term is energy efficiency. Next we need a distributed energy system based on renewable energy — not coal and nuclear. We do not know yet how to sequester carbon from coal-fired power plants or how to deal with the toxic byproducts of burning coal; nuclear amplifies the danger of terrorism and requires massive subsidies, and we still don’t know what to do with the radioactive waste. Coal and nuclear are problem switching, not problem solving. Behind the scenes, however, well-funded lobbies are pushing hard for them, while the public interest in smarter choices is more diffuse and far less organized.”

    What then must we pursue as an ultimate solution that is renewable, clean and, can be produced and distributed at costs far below current modalities?? For 85 years the answer has been ocean energy.

    In the U.S. the cost of one kilowatt of electricity ranges from .07 cents to .15 cents per kilowatt hour for fossil fuels. For renewable modalities, the costs range from .09 cents to .23 cents per kilowatt hour. These costs can be offset partially by tax subsidies for consumers and producers, reducing costs/kw to that experienced by the fossil fuel freaks. We have been led to believe that these are the best competitive prices we can expect. Not so!

    In the short-run, energy produced through hydro power is much cheaper. Coulee and similar dams produce electricity at .05 to .07 cents/kw.

    The press is going along with the fossil fuel barons, printing small stories here and there, but not doing any in depth stories, on what should be jumped on as a very big story the minute they saw it. The company, Ocean Resource Group, with offices in Miami, and New Brunswick, puts the technology’s potential on the line, stating we only need 1% of the available power from ocean currents to light up the world.

    Estimates of the worldwide economically recoverable wave energy resource are in the range of 140 to 750 TeraWh/yr for existing wave-capturing technologies that have become fully mature (ETNWG 2003). With projected long-term technical improvements, this could be increased by a factor of 2 to 3 (Thorpe 1999). The fraction of the total wave power that is economically recoverable in U.S. offshore regions has not been estimated, but is significant even if only a small fraction of the 2,100 TWh/yr available is captured.

    The total annual average wave energy off the U.S. coastlines (including Alaska and Hawaii), calculated at a water depth of 60 m has been estimated (Bedard et al. 2005) at 2,100 Tera watt-hours (TWh) (2,100–10 to the twelfth).

    (Currently, approximately 11,200 TWh/yr of primary energy is required to meet total U.S. electrical demand.) WEC devices have the greatest potential for applications at islands such as Hawaii because of the combination of the relatively high ratio of available shoreline per unit energy requirement, availability of greater unit wave energies due to trade winds, and the relatively high costs of other local energy sources. Wave energy can be produced and distributed at .04 to .08 cents/kw.

    However, just think if we could harness the ocean in the form of a series of waterfall over-topping the size of the Grand Coulee Dam where water is either lifted into a catch basin and flows into pen stocks, or arrives at a funnel as would a natural waterfall and then into the pen stocks, we could eliminate carbon dioxide emission almost overnight. Just a little imagination and a great deal of courage could get us there before we are forced to begin mass production of oxygen and gas masks. Ocean waterfalls on the scale of the Grand Coulee Dam would need to be financed by the government, secured by the military, but operated by existing electric power distribution providers. The short-run cost of production and distribution could be offset by temporary subsidies. In the medium term the subsidies would be eliminated (5-8) years after startup.

    The Fossil Fuel Folks will Foam at the mouth, when obscene profits are threatened by 2 cents/kWh electricity generated from the clean, renewable ocean. However, the real money in the new order of ocean energy will be in distribution infrastructure. The fossil Fuel Freaks can buy into the electric power grid distribution system at any point from initial transmission to intermittent storage, to final delivery at our toasters. True, margins won’t be obscene, but there will be profits derived from capturing the 76% of American power users who got sucked into the Fossil Fuel Furnace when Henry Ford mass produced the model T and had to switch from steam driven motors to the internal combustion engine.

  18. Robbrian says:

    There’s power in here… and we don’t have to drill for it.
    New Turbine Can Extract Energy from Flowing Water

    by Sara Steindorf and Tom Regan

    Water comprises 70 percent of the earth’s surface and contains enormous potential as a source of energy in the future. The Amazon River alone, which transports more water than any other, could generate enough electricity to power all the towns and villages along its shore. The same is true of other great rivers around the world. So why aren’t we tapping more from water’s pulse?

    That’s the aim of Alexander Gorlov, a professor of mechanical engineering at Northeastern University in Boston , who is trying to launch an idea that would harness the power of currents and tides. If his deceptively simple-looking prototype – a barrel-shaped 36-by-40-inch turbine – can successfully transform the awesome forces of oceans, rivers, and bays into electricity, it could radically change hydro power. And thus, it could potentially solve the world’s energy problems, says the optimistic Dr. Gorlov.

    Today’s forms of hydro power account for much of the 7 percent of world electrical output not generated by fossil fuels. Although hydro power is a clean and unlimited source of energy, it often comes at a high price. It is currently dominated by models that require huge, expensive dams – which can displace people, flood vast areas, and wipe out fish populations that need open rivers to spawn. In fact, it was Gorlov’s experience with the Aswan Dam in Egypt , which he helped design and construct, that convinced him that these large-scale projects were not the best answer to hydro power generation.

    Holding back further use of hydro power has been the lack of an efficient, inexpensive, and environmentally friendly device to extract energy from water – not to mention the competitively low costs of coal and oil. But the current energy crisis – with rolling blackouts in California and rising fuel prices – might be enough to boost America ‘s appetite for renewable energy. And, Gorlov hopes, for his turbine.

    Gorlov’s helical turbine is based on the so-called Darrieus turbine, developed for windmills in the 1930s. The original never proved practical. The design, with its straight airfoil blades, was efficient but unstable, tending to break easily because of extreme vibrations. When Gorlov tested it in flowing water, however, he found it worked better than any other turbine, although it still had vibration problems.

    After laboratory testing, he found that twisting the blades into the shape of a helix, like a molecule of DNA, would solve the problem. In flowing water, the Gorlov turbine captures 35 percent of the water’s energy, compared with 23 percent for a straight Darrieus turbine and 20 percent for a conventional turbine.

    That may not seem like a huge improvement, but “in this business it’s a lot, because [the turbines] operate all the time, and after a while, the advantages really build up,” says Jim Sysko, resident engineer at Gould Academy , and owner of Small Hydro East, in Bethel , Maine . And unlike other turbines, Gorlov’s device works well regardless of the direction of water flow, making it practical in tidal flows as well as rivers.

    In a tidal pool in Vinalhaven , Maine , Mr. Sysko is currently testing Gorlov’s turbine which is expected to pump 5 kilowatts of energy into the Maine grid starting this fall. That’s not much, but it will be enough to power the 14-bedroom motel directly above it. If the prototype proves successful, Sysko plans to install more turbines along the Maine coast.

    Another test installation is now in operation in a remote area of the Amazon River in Brazil . There, local residents, who are far from the nearest power lines, use the turbines to recharge dozens of car batteries to run their television sets.

    Gorlov also envisions huge underwater “power farms” that could create electricity from hundreds or even thousands of the devices linked to each other in a grid, which is anchored under water.

    In full production, the cost of an installed open-river hydro power system of his turbines, Gorlov says, should be $400 to $600 per kilowatt – less than the cost of constructing other power-generation systems. And that’s before operating costs of fossil-fuel plants are taken into account.

    But Gorlov’s turbines have other advantages, proponents say: When they generate electricity, you can’t see them, you can’t hear them, and they’re virtually disruption-free.

    “A Gorlov turbine could be airlifted into a remote community which is located near a river,” says Peter Roudebush, a multi-system consultant in Boston . “If you put the turbine in the river, it gives the community the chance to generate enough power to meet many of its current needs, as well as generate more power to increase income.”

    “Because this is a product that can also be used in remote locations, it’s extremely important that it … be reliable,” says Ed Kurth of Texas-based GCK Technology, a renewable-energy firm that secured worldwide rights to the patents from Northeastern University in February. “The design we’ll have for mass production will be aluminum. And we plan to have a design that can be put together with common tools, so you can install it in remote locations.”

    But Joseph Ignazio, president of Helical Turbine of Massachusetts, in Cambridge , who was the first to officially test Gorlov’s turbine, in 1996 in the Cape Cod Canal , foresees several challenges.

    The first is storage. While the turbine can be hooked up to an electric grid, the energy that doesn’t get immediately used is wasted. And unlike a gallon of gasoline, for example, there’s no way to harness the energy for later use.

    Adding to this storage problem is the way nature itself works. This issue was raised by Livingston Taylor, a visiting fellow at Harvard University , during a recent conference at Northeastern about the Gorlov turbine.

    “Right now the Mississippi River is running very strong,” Mr. Taylor told the conference. “But how many people here have seen it in September, when … the current has slowed to almost nothing. What happens in that situation to something like the Gorlov turbine?”

    Gorlov’s long-term solution is to use the turbines to break down seawater into hydrogen and oxygen through electrolysis, storing hydrogen in pressurized vessels offshore. The stored hydrogen could then run through a generator to make electricity – just as a gasoline or diesel generator would.

    While the technology for producing hydrogen through electrolysis exists, it is far from a system that could produce hydrogen on a large scale.

    “I think it’s a fantastic idea,” says Sysko. “But even if there was a crash program, it would probably take us at least 10 years to get there.”

    Mr. Roudebush says the storage problem can be easily solved, however, if one looks at what he considers the real problem of the energy crisis: the way the electric grid works.

    “Right now, the big thing about energy is there’s a difference between what is generated in one place and what is demanded in another, and the grid is what transfers that energy,” he says. “When a power-generating plant makes too much energy for the demand, a whole lot of it leaks out in terms of heat in transformers and all kinds of things. When there’s too great a demand, people get brownouts.

    “There’s no reason why the grid can’t be provided with these decentralized generators, like the one Jim Sysko is using in Maine . There could be millions of them powering the system, reducing the demand for more natural gas and fossil fuels, which is the whole issue,” he says.

    Another problem, Mr. Ignazio says, is funding. Renewable-energy development has always played second fiddle to oil, coal, and nuclear energy. And last month, President Bush proposed cutting the national budget for renewable-energy research by a third.

    “We need federal subsidization,” says Ignazio. “With the airplane industry, if it weren’t for the federal subsidies, we’d never be able to fly like we fly today.”

    Yet despite problems like storage and funding, interest in Gorlov’s invention continues to grow. The South Korean government recently asked Gorlov to design an arrangement of turbines for the narrow Uldolmok channel that separates the peninsula from an island. Gorlov came up with a system that could produce more than 80 megawatts – enough to power 80,000 houses – without disrupting the channel’s extensive shipping. Representatives of the government met with Gorlov last month to review the plans, which they expect to include in next year’s national budget. “A big plus to the turbine is that it doesn’t need a dam,” Ignazio says.

    “There are 55,000 sluiceways [artificial channels into which water is let by a sluice] in the US where these turbines could be put to use now,” says Roudebush. “Remember, we’ve got this concentrated version of energy that just flows by us every day. Nature doesn’t waste anything.”

    Copyright 2001 The Christian Science Monitor

  19. Kurt Brown says:

    Steve, I fail to see the logic in the following statement:

    “… consider this interesting point about Saudi Arabia: they import 83,000 barrels of gasoline a day. A country that sits on top of the largest know oil reserves has to import gasoline. Energy independence is simply not a realistic nor even a smart policy option.”

    You seem to be implying that because Saudi Arabia is a major crude oil exporter, and that because they import gasoline, ipso facto, energy independence is unrealistic.

    Crude oil and gasoline are not the same thing. You need refinery capacity that is not dedicated to the export market in order to avoid importing gasoline. It is pretty easy to see (with a bit of light web searching) that Saudi Arabia imports gasoline because of a lack of domestic gasoline refining capacity dedicated to their domestic market. I would bet that if that if you ask Aramco staff economists why this is the case, I’m sure they will show you that gasoline importation is a net economic win for them, since the domestic gasoline market is so small compared to the export market.

    Let me know if I’m confused about the implications of your Saudi factoid.