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Will Obama’s New Energy Blueprint Work?

He’s shifted to a focus on oil prices, but the underlying policies remain the same.
April 4, 2011

In a speech last week, President Obama announced a new outline of his administration’s energy policy, a document called a “Blueprint for a Secure Energy Future.” What’s new about this latest foray into energy policy isn’t the policy itself—which he said is essentially what he’s been pursuing since he took office—but the packaging. Whereas he started out with a clear focus on climate change, the emphasis has shifted to decreasing dependence on imported oil and stabilizing gas prices.

In his speech, Obama announced a new goal: reducing oil imports by one-third. But there isn’t much new in terms of policies to achieve that goal. There are no direct means of ensuring that this ambitious goal is met, such as a cap on oil imports or a tax on gasoline. What’s in the blueprint is largely what’s been a part of the policy all along: fuel economy standards, various government supports for biofuels, and support for alternative vehicles such as electric vehicles.

The other big goal in the blueprint is the clean energy standard that Obama announced in his state of the Union address. This also isn’t new: it is essentially a substitute for the cap and trade policy to limit greenhouse gas emissions that Obama used to support, but that failed to become law. With a clean energy standard, the mechanism for reducing greenhouse gas emissions is requiring utilities to choose from a list of approved technologies for generating electricity.

The clean energy standard is now also a part of the primary focus of reducing oil consumption. It is presented as a way to enable electric vehicles by making electricity generation cleaner.

Will these policies work to reduce oil imports, stabilize gas prices (presumably at affordable levels), and reduce greenhouse gas emissions? Will they even become law or official regulation? I’m working on a longer article to try to make an educated guess. My inclination is to be skeptical. The 1970s oil shocks led to regulations that required the fuel economy of new cars to double by 1985. In 1982, the U.S. imported 3.5 million barrels a day (.xls file). Now it imports more than twice that much: about nine million. The policy may have slowed growth in imports, but it certainly wasn’t enough to decrease them.

Will increasing fuel economy standards, and other policies that have been tried before, such as supporting biofuels, work now? I’m curious what TR readers think.

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