EDITORIAL: A new energy ‘crisis’

OPINION:

Big Oil, particularly in the Middle East, never had it so good, and now some of the sheiks sound like they’ve never had it so bad. A gallon of Perrier, Poland Spring or Mountain Valley Water costs more than a gallon of crude, and Big Oil ain’t seen nothin’ yet. The shale revolution continues to shake up old assumptions and change things as revolutions always do.

The abundance of U.S. natural gas, in many ways a more satisfactory fossil fuel than either coal or oil because it’s cleaner, has dynamited the worldwide energy market. Whether the Obama administration likes it or not, the export of oil and gas will be a crucial factor of the new energy reality. There will be a growing economic pressure to sell American low-price oil and gas to nations that have yet to take advantage of new mining technologies.

Energy prices are under assault everywhere. Stock markets, with investors dependent on high energy costs and their profitable producers, are crushed under the torpedoing of the old price structure. Fuel economies, sometimes at the insistence of government fiat, must deal with the effects of the slowing of energy demand.

In the long run, lower energy prices will be an enormous boon to the economies of the United States and beyond. But as John Maynard Keynes once observed, “in the long run we will all be dead.” Projections of energy supply and demand have in the past been notoriously wrong. They may be again. In the great gasoline shortage of the early 1970s, with long lines of motorists waiting to buy a few gallons of gasoline, there was something close to consensus that soon the Earth’s oil would be depleted and the internal-combustion engine would be a relic for display at the Smithsonian. That didn’t happen. The United States has always prospered on abundant and inexpensive energy.

Geopolitical developments overseas seem for the moment to be encouraging. Iraq’s fabulous oil and gas reserves are coming back on stream after years of war and destruction. Disappearing sanctions against Iran will mean more oil on the world market.

Our “friends,” the Saudis, have opened all the valves to produce oil at record levels. The intent was to hammer the American shale gas and oil producers, with their higher costs of extraction than those on the Persian Gulf. Despite (or because of) difficulties and cutbacks, American shale oil entrepreneurs have been adept at making technological fixes to maintain their role in the new struggle for prices and markets.

But a fog of propaganda, based on the kind of idiocy so prevalent in gasoline “shortage” of four decades ago, continues to envelop talk about energy. Electric cars, for example, may eventually become a reality with new battery developments. But recharging the electric car off a baseboard plug demands that more electricity be produced by someone, somewhere. Coal until recently was the fuel of choice for electricity-generating plants, and is now slowly fading as more and more quick-fix gasoline generators go into service and environmental constraints demand cutbacks in the burning of coal. No pain, no gain. The pain is abundant in poverty-stricken coal mining states and the rest of the country must attend to that.

Progress is rarely achieved without considerable pain. Government subsidies for wind and solar will continue to feed trendy environmental pressure on innocent and naive members of Congress, of whom there is a discouraging sufficiency. That, too, is part of the energy “crisis.”