The Secretary of Energy designate, Stephen Chu, is no fan of fossil fuels. He thinks they cause climate change (formerly global warming). He is a fan of renewable energy, even advocating converting solar energy into automobile fuel. But, as the title of this post says, wishing doesn't make it so.
The Wall Street Journal reports that renewable energy contributed only 6.7% of the total US energy demand in 2007, down from 7% in 1981. This in spite of the fact that renewables received almost $4.9 billion in federal subsidies in 2007 alone. Renewable energy sources are not likely to dominate the scene anytime in the foreseeable future.
Meanwhile, the news regarding fossil fuels isn't reassuring either. Pemex just announced that its crude oil output fell 6.5% in November year-over-year, largely because production at its Cantarell field declined at a faster-than-expected rate. As I've noted in a previous post, Cantarell is the third-largest producing oil field in the world, and Mexico is one of our largest foreign suppliers of oil. Mexico can't even agree on how to develop the deepwater fields it is counting on to replace Cantarell. I would be surprised to see significant production from those fields within the next 10 years. Saudi Arabia's major field is half a century old, and it's production either is or soon will be declining.
What should we do? The answer is so obvious that I'm surprised there is even an issue: develop and produce our own supplies of domestic oil and natural gas. The logical place to start is the Eastern Gulf of Mexico. The oil companies already have a lot of experience and seismic data regarding formations in the western Gulf. And the extensive infrastructure already in place (particularly the subsea pipelines) can be extended to accommodate the new production. This will not solve the problem, and it may not have an impact overnight, but doing nothing is not a viable option.
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Actually, doing nothing _is_ a viable option, if your priorities are political rather than economic. Energy prices are low now, and will probably remain so until the recession has bottomed out. Thus, there will be no serious political downside in the near term to Obama's appeasing the green segment of his base. Of course, there will be a hangover during the recovery: the low prices will have suppressed investment in production and refining capacity. Even so, Obama can count on claiming sufficient credit from the recovery to more than compensate for the pain of the hangover, particularly if he succeeds in deflecting the resulting anger onto "greedy oil companies".
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