The 2009 Offshore Technology Conference kicked off yesterday with a star-studded panel offering perspectives from all sides to discuss meeting America’s energy challenges in both the near and the long term. The panel included statements and question and answers from Roger Ballentine (Senior Fellow, Progressive Policy Institute), Jack Gerard (President, American Petroleum Institute), Bill Graves (President, American Trucking Association), Jason Grumet (Executive Director, National Council on Energy Policy), David Holt (President, Consumer Energy Alliance), Congressman Sheila Jackson Lee (D-TX), Jim May (President, Air Transport Association) and Marvin Odum (President, Shell Oil Company).
Although there was some disagreement, the general consensus was that when it comes to working together to reach an agreeable solution, all sides are talking past each other. The unpredictable nature of how energy policy will be structured in the future is limiting businesses’ commitment to investment as any number of congressional laws could seriously distort the market. Despite the current economic recession usurping the headlines for the last several months, $4-a-gallon gasoline still lingers in the back of peoples’ minds.
While not everyone on the panel agreed on everything, there was some general consensus on offshore drilling. Marvin Odum made the point that global energy demand is going to skyrocket in the next half century. Regardless of how much renewable and alternative energy will be brought on board, increased oil and gas supply will be critical to meeting that demand. Most panelists as well as the audience seemed supportive of an “all of the above” approach to energy, but that’s not necessarily the best way to look at it.
An above all approach might sound good, but really it is merely a way to ensure that everyone gets a piece of the pie. Rather than open up energy sources to competition, it forces businesses to build business models around subsidies and set asides rather than on a good product. It puts more value on good lobbying than a good product. It also causes a great deal of uncertainty for businesses to commit to projects.
Perhaps a better approach is: let the market decide. Maybe all of the current sources of energy (oil, coal, natural gas, nuclear, wind, solar, hydro, biofuels, etc) have a role to play in America’s energy profile. But the central criteria should be that it is cost-effective and able to compete without any subsidies, mandates or special tax breaks from the government. An all of the above approach may not suit the best interests of the consumer, but the market will develop the best sources of energy at the lowest cost to the consumer.
In a true free market, if someone can supply it cheaper and more effectively, they will. A balanced, comprehensive energy policy must not be focused on making sure everyone gets a piece of the pie, but instead on allowing everyone to compete for a piece.