For several years a commercial has played on cable TV, with synthesized music suggesting technical innovations and thoughtful citizens urging us to embrace wind and solar energy to power our sustainable future. The advertiser is (or was) British Petroleum. I always found something suspicious about a prosperous oil company aligning itself with all the wistful truisms about alternative energy — perhaps even something unnatural.
I don’t mean it was unnatural for BP to appeal to its customers’ desire to have a clean conscience about their carbon consumption. Human nature is inconsistent, and BP is/was free to paint itself green and declare to consumers that it is/was “Beyond Petroleum.”
I mean that it seemed counter to its “nature” as a business to avoid the truth about its engineering achievements. It accomplished some impressive things, but among the oil giant’s problems now is the perception that its green guise was a cover-up. In fact BP was just telling gas buyers that they could have their carbon and still feel good about it. A more honest testament about its abilities to access — and our use of — carbon fuels, would have saved it from much of its current embarrassment.
The oil is there — apparently lots of it — and we need it to power our society, so why deceive ourselves about this? If BP is under pressure now to account for its failure and pay for its mistakes, think of the extraordinary pressure forcing billions of barrels of crude oil to the surface. That pressure is on all of us, because it’s undermining the premise that oil is in short supply so we must wean ourselves from it, deny ourselves the utility of it, and deprive ourselves of its value. There is something unnatural about an advanced society with a dynamic economy pretending it cannot use an available and essential resource.
What’s unnatural is the pretense that we should, or can, raise ourselves above the carbon fuels to more benign sources. All this does is distort our understanding of energy, the industries that delivery it to us, and markets that govern its supply and demand.
Thus, many of the easily accessed domestic oil reserves are off limits, thanks to environmental regulation. So, too, are the nearby underwater reserves, pushing oil companies to prospect riskier and more expensive sources. It was such regulations that drove BP 40 miles offshore and a mile underwater to fulfill the demand we “wish” didn’t exist.
Meanwhile, domestic petroleum refining capacity is insufficient to meet demand, also thanks to regulations. Similar restrictions limit domestic natural gas generation, coal mining, and coal-fired power projects. In each case, we deprive ourselves of the means to meet the market’s demand, and the capital-creating opportunities that go with them — which, not incidentally, benefit the domestic economy significantly.
On top of these distortions are some illusions about the viability of energy alternatives. Wind power was supposed to be the clean energy alternative to save us from carbon dependence, as well as an industrial engine to restart a faltering economy. But, a new study by IHS Emerging Energy Research (www.emerging-energy.com) concludes that state and federal incentives are the sole reason that the U.S. wind power industry is able to target a goal of installing 200 GW generating capacity by 2025. Whether the power those windmills will generate will be competitive or not isn’t clear: new capacity installation could be down as much as 60% from 2009 to 2010 because of transmission congestion and declining demand from independent power producers.
Or consider this distortion: Tesla Motors produces $100,000 electric sports cars in England, but its product is attractive to regulators because it has a lower carbon impact than more affordable carbon-fueled vehicles. The company fits the wistful vision of energy efficiency industry, though it has little to proof of its viability. Tesla aims to introduce a less expensive sedan, but so far it hasn’t attracted the investors it needs to move ahead. Recently, California officials coordinated a deal for Tesla to buy a shuttered Toyota plant, and the U.S. Dept. of Labor is prepared to subsidize and retrain workers until the plant reopens. When/if Tesla’s IPO is done, it will earn federal loan guarantees that will help to keep it solvent — but if the product is sound and there are investors and customers eager for this opportunity, why does Tesla need all this assistance?
I’m confident that BP has the resources and ingenuity to clean up the mess in mess in the Gulf of Mexico. It can clean its reputation by doing so in a forthright manner. The rest of us can have a clean conscience if we stop pretending there is anything unnatural about embracing the best opportunities to advance and prosper.