The International House of Bacon

Take a look at recent polling on national priorities, and near the top of the list is gas and oil prices. Energy. Even with gas prices finally starting to drop, the end result is still going to be significantly higher prices on gas in the short term, increased demand for oil in the mid-to-long term, and that doesn’t even begin to scratch the surface regarding electricity needs and the desires, misguided or not, to move toward clean energy sources.

First and foremost, in the context of the election, there are a number of truisms that need to be realized. Regardless of who is elected in November…

* …everyone - even the richest oil company - wants a viable alternative fuel sources that runs cleaner and more efficiently (both energy-wise and financially) than what we use now.
* …we will see a viable alternative fuel source for our vehicles within the next couple decades.
* …demand for oil, especially in Asia, will continue to grow.
* …even if a viable alternative fuel source was released tomorrow, it would take at least 10 years to implement in a meaningful way, and even longer to get any sort of widespread acceptance.
* …most importantly, even with all the alternatives and all the changeovers, we’ll still need oil.

The debate on energy right now seems to completely ignore the first four issues. Barack Obama’s energy policy slate recognizes, at least, that these sorts of things take time (as evidenced by his fast track-style push for alternatives), but without recognizing the reality of implementation or the role the market has to play in the matter. He has plenty of ideas for trying to keep prices down - few of which are viable - but appears to have none that address the demand realities of the worldwide oil market or the time it takes to get a proven technology into the hands of the people who want to use it.

There are many troubling aspects to Obama’s position on energy, the most glaring is this detachment from reality. Obama’s concession that drilling has to be part of the plan this past week is a welcome nod to the world as we know it, but the rest of his plan on energy still misses the point: $150b on “clean energy” infrastructure? A continued focus on the failure that is biofuels such as ethanol (and, by the way, did you hear about the havoc ethanol is causing smaller engines)? And his speech yesterday is even more troubling, with the windfall profit nonsense. It’s not a position that lends itself to serious energy policy.

I think the worst part is the types of energy Obama prefers - while clean-burning coal is noted, the obsession with ethanol is almost overshadowed by his desire to see more solar, wind, and geothermal energy sources. Again - a great thought in theory, but solar is still too expensive to have any wide use (and that’s without discussing climate issues and location - the same reason hydrogen fuel cells are useless), geothermal may not even be viable with a number of questions surrounding it such as long-term viability, and wind power can’t quite measure up to the hype. Perhaps even worse, while Obama touts numerous government initiatives to do this, we have folks like T. Boone Pickens providing offering market-based choices for some of the same ideas, and likely for a fraction of the cost. And don’t even get me started on Obama “not being a nuclear energy proponent” and not making that a major part of his mix.

Obama’s proposal to tap the strategic oil reserve (and even his somewhat ridiculous tire pressure argument, in a way) to help with oil prices indicates that we can at least assume that he understands the basic premise that more oil = lower prices. Of course, his lack of economic understanding in regards to things like windfall taxes almost completely offsets that. This results in a clear area where, if energy is your issue du jour, an imperfect candidate like John McCain provides a viable, realistic alternative. No, he’s not in favor of opening ANWR, and yes, he’s also a proponent of cap-and-trade, but he’s spot-on regarding the need to drill for the energy available to us as a nation. More importantly, longer-term (see? - viable long term thought!) involves nuclear energy and plenty of it, as well as letting the market do its job. Does anyone think McCain doesn’t understand that today’s oil companies are tomorrow’s alternative distributors? Does anyone think Obama really realizes that? Even those who prefer an activist government in regards to energy spending can find things to like in McCain’s plan - market incentives, billions for already-viable clean technologies, and the push for “green” technologies.

Personally, I think the answer is much easier - open drilling now, and recognize the need for alternative sources for transportation and electricity, and support policies - from taxes to trade - that will accellerate those issues in a market-based way. Both candidates see it as a more complex issue, but Barack Obama’s not the one who’s coming at it from a realistic angle. In an era when we’re going to require energy leadership, the guy who hangs his hat on the unproven commodities isn’t the one you want running the show.