Tuesday, June 15, 2004

The Reagan Legacy of Energy Dependence 

Every once in a while it pays to reflect on the basic questions, such as: Why are we in this mess? -- and Why do we give a rat's ass about the Middle East to begin with? -- and Does it have to be this way forever? Or only until the oil dries up? Former Reagan campaign worker James Pinkerton asks these questions and more in a new Salon article, which proves yet again that our old friend the invisible hand often works in unpredictable, not to mention undesirable, ways:
In 1973, during America's first energy crisis, brought on by the Arab oil embargo, President Nixon declared a national goal of "energy independence" by 1980. For the rest of that decade, Republican and Democratic presidents alike emphasized such independence, to be achieved by a combination of statist means -- price controls, conservation decrees, Uncle Sam-funded ventures such as the Synthetic Fuels Corp. But they didn't work. In 1973, oil imports accounted for 26 percent of U.S. consumption; seven years later, in 1980, imports had risen to 38 percent of the national total. In the meantime, oil prices had soared 1,300 percent.

Enter Reagan, a free marketeer and avowed opponent of "utopian schemers." On July 17, 1980, as he accepted the Republican Party's presidential nomination, he declared, "Those who preside over the worst energy shortage in our history tell us to use less, so that we will run out of oil, gasoline and natural gas a little more slowly." The Gipper continued, "Well, now, conservation is desirable ... But conservation is not the sole answer to our energy needs. America must get to work producing more energy." Reagan's idea was to liberate the oil companies from controls, as part of his belief in "getting government off our backs." In my role as a low-level staffer on his campaign, I cheered those libertarian words . . . .

And thus the catch: The free market lowered the price of energy, but since the United States was a high-cost producer, domestic production was a big loser. And the long-term decline in U.S. oil production -- accelerated, too, by environmental concerns -- continued through the Reagan years and has kept on ever since. Today, the United States imports 59 percent of its oil; it has gone from being one-quarter dependent on foreign sources to three-fifths dependent.

And what happens to the dollars we export in return for this oil? Many of them go to our mortal enemies. New York Gov. George Pataki, referring to the trillions that the United States and the West have sent to Arab "oilocracies" over the past 30 years, has spoken of a "terror tax." That is, we send them money and they send us al-Qaida.

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