For over 40 years, the United States has had an inadequate, contradictory, and shortsighted approach with regard to our energy future.  It is time for a strategic change of course.  We can no longer ignore the consequences of not having a plan which is bold and comprehensive.  Energy is a national security issue, and it is an international security issue of the highest order.  Global demand will increase by more than 50 percent between now and 2030 – and perhaps by as much as 30 percent here in the United States.  We must develop new, affordable, diverse, and clean sources of energy that will underpin our nation’s economy and keep us strong both at home and abroad.  Our energy future must address growing shortfalls in infrastructure capacity and emerging environmental issues.

We are at a defining moment for our nation’s energy future and the United States must now undertake a comprehensive and strategic approach to include both long- and short-term actions to address our growing energy challenges.  We are in a race against the clock and complacency is our greatest enemy.  If we do not take this challenge seriously, America’s economic prosperity, national security, and global standing will be at risk.  The status quo is not only not an option, it is a recipe for failure.

The volatility of the gas and oil markets of 2008 is proof positive that a call to action is necessary and justified.  With the recent sharp drop in oil prices, we should not be lulled into believing that this reflects a fundamental change in our energy fortunes.  Consider that within a period of one year, the price of oil went from about $70 per barrel to nearly $150 per barrel before retreating once again to $70 per barrel.  Indeed, the fact that such boom and bust cycles have been all too common in energy markets over the past four decades is indicative of the lack of a national energy policy that keeps pace with the rapidly changing dynamics of energy markets and systems.  And looking ahead, even the most optimistic among us must conclude that we are not well positioned to anticipate nor prepared to meet tomorrow’s energy needs.

Increasing reliance on foreign sources of energy; rising or volatile prices of oil, coal, natural gas, and electricity; restrictions on domestic energy production; tightening capacity margins; aging infrastructure; and energy technology research and development budgets that are well off their 1970s peak reflect long-term trends that have left this nation increasingly vulnerable to energy shocks.

Other emerging trends reflecting the new global energy landscape could accelerate the impact of our growing energy insecurity.  Energy poverty haunts billions of people worldwide, and many developing countries have made providing modern energy services to their people a priority because they know the positive impact reliable energy has on economic growth and prosperity.

The need for new power production is a particular concern.  From 2005 to 2030, global electricity demand could rise 90 percent, with a 165 percent rise in developing countries.

At the same time as new demand growth is emerging, more and more global energy resources are becoming inaccessible.  Resource nationalism is on the rise, state-owned oil companies command a growing share of global reserves, project costs are climbing rapidly, and qualified engineers and skilled workers are becoming increasingly scarce.  These trends promise to place tremendous pressure on energy markets.

While the urge to “do something” to deal with short term fluctuations in energy markets is understandable, it is ultimately unproductive, and often detrimental to energy security, when actions are taken without a long-term view.  What is needed instead is a more strategic and comprehensive approach to address the broad underlying trends in energy markets—some long standing, some only recently emerging—that are and will remain significant challenges unless we muster the will to adopt a sound enduring energy policy.  A sluggish economy teetering on, if not in, a recession and the recent crisis in the financial markets makes tackling these challenges all the more pressing, not less so, because at its most fundamental level, energy security is a critical underpinning of a healthy economy.

Institute for 21st Century Energy

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