Speaker says energy policy versus national security is complex issue



by Cynthia Price
Legal News

The name of Dr. James Bartis’s Varnum-sponsored lecture for the World Affairs Council last Monday was “Energy Geopolitics: An Issue of National Security.”

But the first thing Bartis did was demonstrate that common perceptions about that issue are likely to be based on outdated information as well as misconceptions about the relationship between energy independence and our national security.

Bartis works for the internationally-known RAND Corporation (RAND stands for Research ANd Development), a policy think tank originally created in 1946 to perform research and analysis for the U.S. armed forces. The nonprofit organization’s scope has broadened over the years to include a wide variety of policy areas, including, according to its website, “the issues that matter most such as health, education, national security, international affairs, law and business, the environment, and more.”

Bartis, a senior policy researcher, has worked for RAND since 1997, concentrating in energy and related environmental topics, particularly as they relate to national security in both the United States and other countries. Prior to that he worked for the U.S. Energy Department — during the lecture he joked about starting there in 1978 as a “mere child.”

He also served in both the first Bush administration and the Clinton administration on the Industry Sector Advisory Committee on Energy for Trade Policy Matters.

Dr. Bartis’s expertise seems to be matched by a commitment to going where his research leads him. And what he sees when he looks at the trends is that in a relatively short period of time the United States has moved into a much better position as far as energy independence.

Production of oil within U.S. borders has increased somewhat, even since 2005, and although Bartis stressed that the oil industry has a long production response time, there is a lot of potential in oil shale that is close to being tapped. Since 1998, the amount of oil the U.S. imports from Canada, a firm ally, has increased greatly. At the same time, energy imports from countries who are decidedly not our allies has declined.

He thinks these trends will continue.

A potential mitigating factor is that over the same time period, 1998 to 2011, U.S. demand has decreased slightly. Some attribute this to conscious energy optimization practices, others to the challenged economy. Regardless, the changes in source of oil supplies Bartis showed are expressed as percentages, so are still valid.

Bartis reacted to a headline he saw in a recent International Herald Tribune, which read, “Energy gains change the equation for U.S. leaders.” He said he regards the assumptions behind that article’s contention that “our problems in the Middle East came from our need for oil,” as  misguided, along with the assumption that seeking  control over oil supply is the basis for most of the wars and conflicts the U.S. has engaged in over the past few decades.

He points out that Afghanistan is not even an oil-producing country.

However, that is not to imply that Bartis thinks the energy situation has no national security implications, just that the issue is subtle and complex.

One way in which that plays out, according to Bartis, is through the tremendous transfer of wealth to those countries which focus on keeping energy production high. The money we hand over to Venezuela and the OPEC (Organization of the Petroleum Exporting Countries) nations, among others, allows them to set their own courses, which may not always be in the best interest of the U.S.

“Oil exporters really do have some power,” Bartis commented.

Those countries may govern oil supply in different ways than the U.S.; many of them run state oil production entities rather than allowing private companies to compete. Bartis presented information indicating that the percentage of oil in the world readily accessible to private investors at low cost is small — and the United States sits on top of a lot of it.

One implication resulting from that open-door situation is the United States is at risk of depleting its oil supplies more quickly, and Bartis recommends the U.S. government increase what it charges for extraction leases to avoid compromising national security in the future.

Varnum’s Bruce Goodman, speaking the following morning, changed the energy discussion focus to the state of Michigan and emphasized that we are not in a good position regarding the wealth transfer that accompanies energy dependence.

He feels that exploring alternative energy sources is a good answer for Michigan.

The World Affairs Council’s Great Decisions Foreign Policy Discussion Series this year offered options to see a speaker on either Monday evening or Tuesday morning. For most of the lectures, the two programs were near repeats, but in this case Tuesday’s presentations by Goodman and Dr. Deborah Steketee of Aquinas College’s Center for Sustainability replaced Dr. Bartis, resulting in three very different approaches to the same subject.

Steketee looked at how the mix of sources for energy has changed rather quickly, despite the lag time between conception of a complex energy project and its completion. “Developed” countries are reducing their reliance on coal and oil, and increasing natural gas usage, which, she pointed out, is likely to have increased even more than her 2010 statistics showed. At the same time, “unconventional” methodologies of extracting oil are coming to the forefront. These include oil, or tar, sands and oil shale extraction, where technologies are beginning to become more eco-friendly.

Goodman’s presentation centered on the potential for Michigan to supply a much higher percentage of its own energy needs, with the resultant economic benefit of circulating money within the state rather than sending it overseas. “I’m really here to bring energy issues down to the micro level – in Michigan in particular,” he said.

Currently, Michigan imports approximately 97% of the petroleum it uses, and 82% of its natural gas. His proposed solution to so much money leaving the state is to start generating more power from renewable sources, such as solar, wind and biomass.

Michigan’s legislature passed an energy act (the Clean, Renewable and Energy Efficient Act, PA 295) in 2008, including provisions for 10% of the utility companies’ energy to come from renewables by 2015. Goodman says, “There was a very positive response from private industry. Private companies with ideas for wind generation, for bioenergy activities, for solar resources, and even hydroelectric, started working with the various utilities.” It appears that those companies, Consumers Energy and Detroit Edison, are on track to fulfill that mandate.

The policy has jump-started business opportunities for both existing and new companies, including manufacture of hardware for infrastructure. These companies, some of which are Goodman’s clients, are seeing substantial success and creating jobs across the state. Exploration of ways to store the power from renewables has resulted in a thriving, though still small, battery-production industry.
Goodman acknowledged that the generation of electricity, which is the result of most renewables, will not substitute entirely for petroleum products, but may provide additional business opportunities, for example, electric or hybrid cars versus gasoline-powered.

In response to a question about energy optimization, also mandated in PA 295, Steketee and Goodman saw a great deal of potential in “what used to be called energy conservation.” Michigan has made good strides in the direction of reducing energy consumption, though as with the entire U.S., that may result more from economic hardship than from conscious change. Both said they see a lot of potential for economic opportunity in that arena too, from job development in inspection and weatherproofing to production of energy-efficient appliances.

Steketee, who has long worked in sustainable business, said that progress in “dematerialization,” or reducing the amount of materials used in product manufacture, and the process efficiencies promoted by the strong Michigan green chemistry movement will also contribute to reducing consumption.

All three presenters over the two days felt that the United States government must invest heavily in energy research and development, though Bartis leaned harder on the “not picking winners and losers” argument which says that the market and the private investment community are best positioned to determine what specific technologies to pursue.

All three are also supportive of some form of carbon tax (although Goodman made sure to say it was just his personal opinion). This would facilitate inclusion of the externalities (health impacts, environmental damage, for example) not reflected in market pricing. Bartis says there is a lot of potential for such a tax to incentivize development of a variety of alternative technologies and sources so critical to the U.S. reaching its energy potential.