Senator Dick Lugar - Driving the Future of Energy Security

Lugar: 'Our energy dependence is perpetuated by a lack of national will and focus'

On May 14, 2007, U.S. Sen. Dick Lugar told the Deloitte Energy Conference in Washington, DC that "Only the President has the visibility to elevate a cause to national status, and only the President can leverage the buying power, regulatory authority, and legislative leadership of an administration behind solving a problem that is highly conducive to political procrastination." He said that President Bush's efforts are "barely registering." Lugar calls for universal U.S. availability of biofuels and "radically" increasing mileage standards.

I appreciate the opportunity to address the Deloitte Energy Conference. It is a pleasure to be with so many leaders who are thinking creatively about our energy situation. I start from the presumption that overcoming U.S. dependence on imported energy and working with other nations to prevent energy crises are fundamental national security imperatives on par with controlling weapons of mass destruction. At issue is whether we will achieve our energy goals through a coherent and resolute national policy that takes advantage of America's natural assets to create new economic opportunities, a cleaner environment, and improved national security. Or will we achieve our objective only after many years of economic pain and national vulnerability caused by scarcity, terrorist attacks, market shocks, and foreign manipulation of our energy supplies?

The global oil market has fundamentally shifted under pressure from surging demand and tightening supply margins. Spare capacity has shrunk from up to ten percent just five years ago to below two percent. This means that relatively small oil supply losses can have dramatic effects on world prices. Small margins also make political manipulation of supplies a more potent weapon against the U.S. and import-dependent countries. As competition for scarce oil resources grows and the price of oil stays high, oil will be an even greater magnet for conflict.

Less widely acknowledged are the ways in which energy constrains our foreign policy options, limiting effectiveness in some cases and forcing our hand in others. We pressure Sudan to stop genocide in Darfur, but we find that the Sudanese government is insulated by oil revenue and oil supply relationships. We pressure Iran to stop its uranium enrichment activities, yet key nations are hesitant to endanger their access to Iran's oil and natural gas. We try to foster global respect for civil society and human rights, yet oil revenues flowing to authoritarian governments are often diverted to corrupt or repressive purposes. We fight terrorism, yet some of the hundreds of billions of dollars we spend each year on oil imports is diverted to terrorists. We give foreign assistance to lift people out of poverty, yet energy-poor countries are further impoverished by expensive energy import bills. We seek options that would allow for military disengagement in Iraq and the wider Middle East, yet our way of life depends on a steady stream of oil from that region.

Ending our oil import dependence will not suddenly cure poverty, end terrorism, prevent weapons proliferation, or bring peace to the Mideast. But failing to address oil dependence guarantees that our pursuit of these foreign policy goals will be encumbered and our way of life will remain under threat. American national security will be at risk as long as we are heavily dependent on imported energy.

Although Americans and their leaders are embracing the idea of changing our energy destiny, we have not committed ourselves to the action steps required to achieve an alternative future. In fact, advancements in American energy security have been painfully slow during the last two years, and political leadership has been defensive, rather than pro-active. One can point with appreciation to a few positive trends, but in the context of our larger energy vulnerability, progress has not been sufficient. If our economy is crippled by an oil embargo, if terrorists succeed in disrupting our oil lifeline, or if we slide into a war because oil wealth has emboldened anti-American regimes, it will not matter that before disaster struck, the American public and its leaders gained a new sense of realism about our vulnerability. It will not matter that we were producing marginally more ethanol than before or that consumers are more willing to consider hybrids and other alternative vehicles. Achieving a positive trend line is almost inevitable as long as energy costs remain high, because these costs will lead to some improvements in investment and conservation. We need to have the discipline to understand that a modestly positive trend line is not enough.

Breaking through a political logjam often requires a crisis that focuses the nation in a way that achieves a consensus. But consider that the combination of September 11, 2001, the war in Iraq, the conflict on the Israeli-Lebanese border, the nuclear standoffs with Iran and North Korea, Russia's temporary natural gas cutoffs to Europe, the Katrina and Rita hurricanes, and several other severe problems have not created a consensus on energy policy. The American people are angered by $3.00 gasoline, but they are still buying it in record quantities. This leads one to the sobering conclusion that a disaster capable of sufficiently energizing public opinion and our political structures will have to be something worse than the collective maladies I just mentioned - perhaps extreme enough to push the price of oil to triple digits and set in motion a worldwide economic downturn. None of us want to experience this or any of the nightmare scenarios that await us. It is time to summon the political will to overcome the energy stalemate.

In my judgment, meaningful progress to relieve energy dependence will require almost a single-minded national focus on solving specific energy deficiencies. The key word in that sentence is "specific." A broad, unfocused campaign to achieve an ill-defined state of "energy independence" almost guarantees that no objective will receive the resources and attention necessary to overcome technological obstacles and societal inertia. Like a military campaign, we need to maintain pressure for change on a broad front, but we also need to achieve breakouts that yield rapid results and demonstrate what is possible.

Since the 2006 State of the Union Address, when President Bush rightly declared that the United States was "addicted to oil," he has greatly expanded his public support for energy alternatives and enhanced the priority of energy security within his administration. He has been forthright in identifying the problem of energy dependence and advocating for progress. His administration has lent legislative support to significant energy proposals.

But despite this clear elevation of the energy theme, the President's energy activities are barely registering in the American consciousness. In large part, this is because there is no energy campaign upon which he has visibly and repeatedly staked his reputation and legacy. With the possible exception of drilling in the Arctic National Wildlife Refuge, there is nothing in the Bush domestic energy program that a well-informed American would identify with this Administration.

The President must say unequivocally that the United States is going to achieve a particular energy goal. He can acknowledge that others may want something more or something different, but he should pick a goal that, if achieved, would constitute irrefutable and irreversible progress that would be noticed by our enemies and allies. The President should promise that he will devote time to the goal every week. He should underscore publicly that everyone in his administration will be committed to the goal, and that if any member of his administration slows down or undermines progress, they will be dismissed.

President Bush and whoever succeeds him as President must be willing to commit the prestige of their administrations to overcoming American energy deficiencies. They must be capable of absorbing political and technological setbacks along the way, without bending on the necessity of achieving the chosen goals.

Congress and private enterprise can make evolutionary energy advancements, but revolutionary national progress in the energy field probably is dependent on presidential action. Our energy dependence is perpetuated by a lack of national will and focus. Only the President has the visibility to elevate a cause to national status, and only the President can leverage the buying power, regulatory authority, and legislative leadership of an administration behind solving a problem that is highly conducive to political procrastination.

Prospects for success would be enhanced if the goals are well-publicized, measurable, and understandable to the broad public. In the best case, such goals would take on a symbolic identity that transcends dry provisions in energy bills or statements in a State of the Union speech. In the best case, progress toward these goals would stimulate a degree of American pride.

Although there is no shortage of potential energy goals a President could choose, I would highlight two such goals to illustrate the concept.

First, President Bush or his successor could establish the national goal of making competitively-priced biofuels available to every motorist in America. Such an accomplishment would transform our transportation sector and cut our oil import bill. It would require multiple elements, including ensuring that virtually every new car sold in America is a flexible fuel vehicle capable of running on an 85 percent ethanol fuel known as E-85; that at least a quarter of American filling stations have E-85 pumps; and that ethanol production is expanded to as much as 100 billion gallons a year within the next 15 to 20 years. Such a campaign could achieve the replacement of 6.5 million barrels of oil per day by volume -- the rough equivalent of one third of the oil used in America and one half of our current oil imports. None of these goals are easy, but none are impossible if the weight of the Federal Government and high profile presidential advocacy were devoted to their realization. Brazil already has achieved the large scale deployment of ethanol as a national transportation fuel, and its success is a source of public pride in that country.

Second, the President could commit to radically increasing the gasoline and diesel mileage of America's auto fleet. The Federal government has numerous tools to make this happen, from direct federal support for research, to government fleet purchasing, to market regulations and incentives. Given that other developed nations have made great strides in improving fuel economy, this is fertile ground for rapid improvement. In fact, achievements on this front largely would be a matter of generating and sustaining political will that has, thus far, been absent. For fiscal year 2008, the Administration requested just $176 million for new vehicle technology research - an amount that was less than what was requested five years ago. Incredibly, cars in America today get less mileage per gallon than they did 20 years ago. Meanwhile, hybrids, plug-in hybrids, and fully electric cars are at or nearly at commercialization, yet there is not enough incentive for consumers to buy them or producers to make them on the mass scale necessary.

Efforts to achieve greater biofuel deployment and gas mileage would fit all the criteria I have laid out for a presidential energy campaign. These two potential campaigns would be specific, ambitious, visible, measurable, understandable, and achievable. A President who committed an administration to these tasks would encounter predictable resistance, but the President also would receive substantial bipartisan support.

Part of the value of a campaign for a specific energy goal is that it would combat public cynicism about what can be achieved. Most Americans have a vague anxiety about the risks of energy dependence, climate change, and other associated issues. Many have made some changes in their daily lives to reduce their personal impact on the environment. But they see little action from the U.S. government that gives them reason to expect transformational progress in our energy condition. A highly-visible campaign led by the President toward a measurable energy goal would focus Americans and their government on achieving results. Solving one or two major energy deficiencies would create confidence that others could be solved.

It would also strengthen our advocacy with foreign governments. Most energy and environment issues are global in scope. This is particularly true of climate change. Opponents of more resolute American attention to reducing greenhouse gas emissions often point out that our efforts to limit emissions could be rendered nearly irrelevant by unrestrained expansion of coal-fired power plants and inefficient gasoline vehicles in China, India, and other parts of the developing world. Achieving an important energy goal in the United States like increasing vehicle mileage or making biofuels universally available would heighten U.S. standing in forums overseas and provide a powerful example of how to physically achieve results in rapidly industrializing nations.

Finally, a national energy campaign could yield collateral economic benefits. U.S. energy policy is not happening in a vacuum. Nations around the world are looking for solutions to the same problems. Alternative energy and energy efficiency technologies have the potential to be major export industries that would benefit the American economy for generations. The economic benefits of these technologies will flow to nations that win the race to develop and deploy them.

Like you, I am confident that U.S. industry can be a leader in the search for answers to our energy deficiencies. Though great risks accompany these deficiencies, they also present the United States with opportunities for restorative economic benefits to our farmers, rural areas, automobile manufacturers, high technology industries, and many others. I look forward to working with you as you apply your talents to expanding our nation's energy options and building a more secure and prosperous future.

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