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| The Global Freedom Institute |
| The Energy Crisis: Will Bush be Carter, the sequel? (page 2) President Bush may not get the help he wants from the Federal Reserve if inflation begins to spike due to energy prices. His tax cut that appears to have passed through Congress does little until 2005, after his re-election bid. With all of this, the United States may face a recession in early 2002 and it may be more painful than America wants to begin to imagine at this time. However, President Bush does have options to deal with the power crisis in the United States. Michael T. Klare (Foreign Affairs, May/June 2001, Recommended Reading) predicts that future conflicts will arise over resources such as oil and natural gas. With the economic growth of the world today and it being based so heavily on oil and natural gas, this is a high probability. Especially as resources of oil and natural gas become more scarce. Some energy analysts have predicted that the world has about 50 years worth of oil and gas resources. In global terms, that is not long. Even the addition of Alaska, California and Florida coasts won�t significantly impact that number. The federal government must adopt a comprehensive energy policy for the first time in memory. It must deal with short term and long term solutions that focus on traditional resources, such as fossil fuels, and alternative energies to maintain long term sustainability. The federal government should give tax credits to companies for building of power plants (traditional, nuclear, or alternative), development of new oil and natural gas fields, building refineries, research, development and implementation of alternative technologies, purchases of alternative energy sources and alternative energy automobiles (including hybrid cars), the improvement of power grids, pipelines, and development and sales of energy efficient goods. The cut of funds for alternative energy in the Bush budget proposal should be restored or even increased (President Bush�s budget cut alternative energy funding by 50%). President Bush and Congressional leaders should meet with state Governors to try to coordinate energy policies, such as the coordination of gasoline requirements and the encouragement of deregulation all the way down to consumer choice (Knight, G.F.I., 2001). Tax credits are a method for the government to adjust behaviors of people and companies. The use of tax credits for power plants should be conditioned on the actual opening of the power plant to generate power for Americans. It should also be created to follow a sliding scale, weighted to give the largest credit to companies that move to alternative energies (Ex. 10% of cost to traditional gas power plants, 12% to hydroelectric, 15% to geothermal or solar, etc.�these numbers are simply for example, not actual numbers). While new power sources are needed, so are additional means to distribute power efficiently. Thus, new power lines and more efficient power grids will have to be constructed. While alternative energies are a long term solution due to their further need for development, the development of new oil and natural gas supplies are needed because of their short term impact on the problem. Tax credits will give companies incentive to explore and develop new sources of energy. However, finding the oil won�t solve the problem alone. Vice President Cheney�s commission on energy claims that refineries are already running at maximum capacity. Therefore, new refineries must be built to utilize the oil found. Similarly, in order to distribute the oil, new pipelines will have to be built. Creating new power supplies is vital to ending the crisis. However, to both minimize the economic harm of the crisis and create more energy efficiency in America for the long term, conservation methods must be utilized. Conservation will not solve the problem alone, but it will help and create more sustainability. Therefore, tax credits to consumers for purchasing solar panels and energy efficient automobiles will help the crisis and help maintain economic growth. In terms of the overall economy, tax credits for developing and selling more energy efficient and environmentally friendly technologies. This could be the boom for the economy as it comes out of this period of energy crisis and economic slowdown or recession. The potential for markets in America and the world are proven by Germany in the mid-90�s. Germany made the EU economic targets largely based on its exports of environmentally friendly goods. The United States could ignite its own markets with this type of technology. While companies would have to expend resources to buy these technologies, it would create other industries, more jobs, and thus more consumers to spend to support those buying these technologies. Thus, a side benefit of this crisis could be a better environment. During the energy crisis of the 70�s, America did not take advantage of the crisis to shift its long-term focus towards more self-sufficiency based on alternative energies and energy conserving technology. America could be the world leader in these technologies and create another economic base for economic growth. President Bush has an opportunity to provide the leadership to revolutionize America�s energy policy and environmental policy for the better for decades to come. Will President Bush payback his contributors by focusing only on oil, natural gas and traditional power sources? Or will he provide the leadership necessary to resolve energy and environmental issues for decades to come? Energy, economy and the environment can work hand-in-hand, and President Bush can make it happen. -Chris Knight 5/11/01 1 2 Return to Main Page Chris Knight is a Sr. Policy Analyst at the Global Freedom Institute |
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