Remarks of Spencer Abraham<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
United States Secretary of Energy
At the Competitive Enterprise Institute’s
7th Annual Warren T. Brookes Memorial Dinner
May 24, 2001
Building an Energy Community
It’s a tremendous privilege to join you this evening to honor Warren Brookes. And it’s an added pleasure to be a part of a gathering that will recognize the work and accomplishments of Julian Simon.
I am also glad to be here with so many old friends like Jack Kemp. And congratulations to Steve Moore for receiving the Julian Simon Award.
Let me begin by thanking the Competitive Enterprise Institute for its consistently intelligent and effective support of free markets and limited government. As a member of the Senate, I found CEI’s work an indispensable source of reasoned commentary, and probing public policy analysis.
Keep up the good work.
Looking at the roster of those who have spoken at these dinners in the past it’s obviously a group that was strongly motivated by Warren Brookes and Julian Simon. But I doubt any one of them has been influenced more than I have been by these men’s thinking.
I first became hooked on the writings of Warren Brookes through his columns in the Detroit News. Those columns helped be flesh out my own economic and political philosophy.
I had the great pleasure of working with Julian on one of my major initiatives as a member of the United States Senate – our fight for a reasonable immigration policy. His thinking on this issue was more than important to us; it was essential. He briefed us before we began the task in 1996 of stopping legislation to severely cut back legal immigration in this country. Julian made that task easier not only by what he talked about, but more importantly, by the body of work he had established that demonstrated the positive contributions immigrants make to our economy and our society.
Many people think differently about the world today – about population control, about resources depletion, and about immigration – because of Julian’s tenacious commitment to careful research and, of course, his willingness to challenge orthodox thinking.
I’ve been thinking about Warren Brookes and Julian Simon a great deal lately. It’s unfortunate they aren’t here to join in the debate over energy policy. I could use them at my side.
Just consider what we are hearing … calls for price controls on gasoline and electricity … calls for further regulation of the energy industry … charges that GOP stands for gas, oil, and plutonium.
They would have had a circus toppling these notions.
Both of the men we honor tonight spoke directly to the topic I wish to discuss this evening … a national energy policy for the United States.
The True Source of Energy
Warren often argued that our concept of energy was too narrow. He wrote that most of the time energy “means some identified fuel – oil, gas, coal, wood, uranium, solar light, wind, waterfall.” He urged us to think of energy more broadly … to what he said was the real power than makes those fuels valuable, human ingenuity.
Oil was well known to the Romans. They used it for everything from curing toothaches to connecting severed muscles. Uranium was once a “largely irrelevant number on the chart of elements.” For thousands of years coal was simply useless. None of these resources had any value until human intelligence raise them from worthless to prized.
“Thus,” Brookes tells us, “the real energy of our society arose not from raw materials in the ground but from the brain matter in our heads.”
The ultimate resource, Julian Simon, taught us is mankind.
And we cannot predict, or dictate, what new or better use human innovative genius would find for the resources nature has given us. All we can predict with confidence is that there will be successive innovation.
Surely the last one hundred years have brought us more new knowledge than the previous 100 or even 200 years. And even the last 25 years, has accelerated the pace of our learning.
Why shouldn’t the next 25 or 30 or 40 years set in motion a sequence of innovation and creation that makes our current mix of fuels look as old fashioned as wood burning and whale oil?
And “yet,” as Brookes argued, “the common denominator of all this is not the fuel substance but the true energy of ideas and technology, and the virtually unlimited source of that is the mind of humankind. Since that power is most energized by freedom of opportunity,” Brookes continued, “the nations with the greatest energy potential should be the nations with the greatest level of freedom.”
The President’s Energy Plan
The President’s energy policy, which I would like to discuss for you this evening, is defined by a faith in our ability to employ this human resource … to employ the genius of the American mind … and our free markets … to help us solve our long-term need for energy that will power our cars, run our factories, and keep the new economy moving ahead.
But our Plan is also defined by a distinct lack of faith in the capacity of government to pick and choose the best fuel, or the best technology for the future. Ultimately, the market will answer that question.
We have tried the “favored fuels” approach in the past. Remember synfuels in the 1970s?
The previous Administration turned this idea on its head. It simply drew up a list of fuels it didn’t like – nuclear energy, coal, hydropower, and oil – which together account for 73 percent of America’s energy supply. Some policy.
So today, after eight years of ignoring the problem, the nation confronts a serious national energy crisis.
It can be defined quite simply. We are facing rising demand, tightening supply, an aging energy supply network, and a political atmosphere that demands a quick fix to a long-term problem.
The answer to these challenges is a balanced and comprehensive energy policy that redresses the gap between supply and demand, promotes stewardship, and repairs our aging energy infrastructure. This is the plan the President has proposed.
Of course, even before the National Energy Policy was released, it was set upon from the usual quarters.
Interestingly, the most prominent critics of the President’s plan are the unlikely duo of, Jimmy Carter and Gray Davis.
I certainly have the utmost respect for these two men. But making them advisors on America’s energy problems does not seem to me to play to their strong suit.
We really do have a choice in this country. On the one hand we can look to those who deny the problem even exists, or if they acknowledge the problem, offer price controls and personal sacrifice as a solution. On the other we can take the kind of serious comprehensive approach offered by the President.
We do in fact have a serious energy supply crisis in this county. Consider this:
· In the next 20 years we expect overall U.S. energy consumption to increase by over 30 percent.
· We expect oil demand to increase by one third.
· We expect consumption of natural gas to increase by 62 percent.
· We expect electricity demand to increase by 45 percent, owing at least in part to the growth of power hungry information technology.
· We now produce 39 percent less oil than we did in 1970.
· 40 percent of our domestic gas resources are now off limits or subject to restrictions than make it virtually impossible to develop.
· Hydroelectric power generation is expect to fall sharply,
· There has been no nuclear power permit granted since 1979,
· And there are many people who want to see coal – which now supplies over have our electricity -- go the way of whale oil.
· Our energy supply network is also in trouble.
· 37 U.S. refineries have closed since 1992 and none have been built in 25 years
· Power grid prevent power rich regions of the nation from selling power to areas that need it most.
Unless we change course and fill the gap between supply and demand, we will face 70s-style gas lines and California-style energy miseries.
Under current policies, we would be forced to fill the gap largely with imports. But I suspect that few Americans wish us to become even more energy dependent. We could attempt to fill the gap by drastically cutting our consumption of energy. But, who is really going to propose more expensive gasoline, or CAFE standards high enough to virtually ban SUV’s from the highway?
We really have but one workable option – in conjunction with a sound approach to increasing energy efficiency, we can increase domestic production of a diverse supply of energy, improve its delivery, and work with our hemispheric neighbors to boost supply and forge a new energy partnership. That is the course we have chosen.
And I’ve been delighted to see that this is an approach that has been largely endorsed by our host, the Competitive Enterprise Institute and by Jack Kemp. If you don’t mind Fred, I’ll quote CEI’s press release. The President’s energy plan, you note, is an “important move away” from past policies. It will “turn America away” from sky-high gas prices and it represents a “long-range shift from forcing Americans to use less energy” to a greater focus on needed supplies.
And Jack has paid us his greatest complement – he’s called it a supply-side plan.
Still, there are those for whom no energy policy can ever be pure enough to pass free-market muster. They attack our National Energy Policy for insufficient adherence to their notion of what is needed to generate competition in the energy market and accuse us of playing favorites with selected industries.
If their goal is to find favor with the liberal media, they will probably achieve a unique and short-lived success. In the end, however, their only accomplishment will be to undermine those of us actually trying to bring free market competition to American’s energy industry.
I think the criticism from these quarters is just plain wrong, as well as being counter-productive. Unlike virtually every other energy plan I have ever seen, our policy does not pick a preferred energy source, it seeks diversity from coal to nuclear; our policy removes government impediments to nuclear power and then lets the market determine if it’s going to be a viable sources; it creates more regulatory certainty and so stimulates private investment; and it streamlines licensing and permitting to allow companies to expand and invest in modern and more profitable infrastructure.
And finally, our plan unequivocally rejects the idea of price controls.
Communities of Power
Indeed, our proposals for a national energy grid will do more to boost competition in the electricity market than perhaps any other action we might take.
More electricity than ever is being shipped longer distances over a transmission system that was originally designed to provide limited power sharing among neighbors. Rather than a true national integrated electricity grid we have four regional grids, where moving power from one to the other is often constrained and serious bottlenecks are common. Price spikes in the Midwest and New York City and recent blackouts in northern California have been the direct result of our failure to update America’s antiquated electricity grid.
This outdated transmission system is also one of the reasons electricity deregulation in this county has failed to work properly. Electricity deregulation only makes sense if you have a broad market in which sellers and buyers can come together. So one of the major responsibilities of my Department is going to be to draft and work to seek passage of legislation than can bring us closer to creating a true interstate highway system for electricity, where power can move as freely from coast to coast as the family automobile.
Too often today, an electricity producer can only look to a relatively small region as a market for its power. That’s bad for consumers who are denied choice. We need to bring more sellers into these regional electricity markets, which are now largely isolated. This would drive down prices, by creating competition and consumer choice.
An electricity highway with all the stop signs gone, will have another advantage. It will help us to transcend one of the major obstacles in America to building energy security – the not in my backyard syndrome, known as NIMBY.
Americans love energy, but they hate energy production.
It has become an effort worthy of the Manhattan project to site a new power plant or build a transmission line in some parts of this nation. Earlier this year, for example, plans to build a 550-megawatt gas-fired generator in a Los Angeles suburb were scrapped after residents voted 2:1 against the project. The local mayor added a much-needed dose of reason and maturity to the debate by launching a hunger strike in opposition to the plant.
And yet there are communities in this nation – some of them quite isolated -- that welcome power generation, including nuclear power generation, and would readily add new plants to their economic base if they could only reach beyond their isolation to find a large market for their electricity. Today, that’s not possible.
But a truly national energy grid provides those communities with the broad base of costumers they need to create their own hubs of power. And at the same time, it moves beyond NIMBY to IMBY – communities that say to power plants, yes, in my backyard.
If we are going to avoid increasing dependence on foreign sources, we must somehow find a way to convince the American people that domestic power generation is not only essential, but consistent with their interest in clean and safe neighbors.
One key step will be building an American energy superhighway.
The focus of this effort on electricity, as with the entire energy plan, is to enhance and extend competition in the American energy market.
Our energy policy is the right response to a serious problem. But the entire nation hasn’t suffered rolling blackouts, as have the citizens of California, so there are those that simply want to wish the problem away. But it’s not going to go away.
We are asking the American people to act before the lights go out.
We are asking the American people to learn from California’s mistakes and take action now to avert an energy calamity.
I feel certain this is a challenge our nation is prepared for. We may need to increase our domestic supply of power, but we already have a surplus of what Warren Brookes reminded us, over a decade ago, was the most important energy resource of all – an energetic, creative and free people.
Thank you all very much.