In an effort to lessen our dependence on a finite resource, President Barack Obama this week called for a repeal of billions of dollars in government subsidies to oil companies. The repealed subsidies amount to $4 billion annually. The president said the money can be invested directly into what he believes is the future of job growth in the United States — alternative energy.
Debate about repealing tax breaks for oil companies is nothing new, though it gained ground over the last few days when House Speaker John Boehner (R-Ohio) demonstrated a willingness to consider repealing some of the big tax breaks enjoyed by companies that, frankly, don’t need them.
Gradually taking money from the oil companies and putting it into clean energy will generate some impact (economically and environmentally) down the road.
Still these discussions between both parties are mere baby steps — if that.
As every day goes by, our economy becomes more dependent on a natural resource that is increasingly becoming a source of insecurity and instability in the United States.
An end to our dependence on foreign oil must come from the bottom up; the consumers who drive the market must push for change.
U.S. defense spending is greater than the next nine countries’ combined. Much of that expenditure is spent securing sea-lanes for oil ships. Other developing countries that depend on oil and gas for growth should seek to challenge the United States’ naval dominance.
For example, as China seeks natural resources to foster growth, it could come into military conflict with the United States if shipping lanes become areas of contention.
More importantly, though, the world’s dependence on oil empowers foreign leaders who often rule tyrannically and ruthlessly over undemocratic countries.
The transnational sale of oil empowers and enriches a select few within the exporting country.
More often than not, this creates extremely uneven growth and, as is the select group seeks to hold onto power, its members choose not to develop institutions of a free-market economy because they don’t need them to hold onto their power and prosperity. Instead, they use force.
For this reason, governments in Iran, Iraq, Libya and Syria, where oil exports account of a significant part of the countries’ gross domestic product, are currently facing strong social opposition.
And since domestic politics and social change now have global repercussions, the United States spends even more money policing and aiding rebellions and revolutions in countries in the Middle East.
American taxpayer dollars help ensure undemocratic and ruthless foreign dictators stay in power, but they also finance their removal and, in the case of Iraq, the nation’s high price reconstruction.
In the short term, the Obama administration should reduce oil imports by increasing domestic oil development and production. It should also develop alternatives to oil to standardize and enforce the production of more efficient cars and trucks.
Undoubtedly, these measures have risks and downsides. Offshore drilling can be extremely detrimental and costly — especially when accidents happen — and expanding biofuels and natural gas markets will have a negative effect on the environment.
On the other hand, putting more fuel-efficient cars and trucks on the road helps, and the Obama administration has already institutionalized a greener auto-market by encouraging the purchase of hybrid cars.
But these changes will neither sufficiently fix the problem nor ensure Americans aren’t funding the disturbing and costly oil-cycle.
To substantially reduce oil consumption, the Obama administration could raise the price of gasoline through either taxing at the pump or removing U.S. subsidies to oil and gas companies.
If the price of gas goes up, Americans should respond by using cars less, and eventually will begin demanding for more fuel-efficient means of transportation.
As a result, carmakers will have an economic incentive to produce fuel-efficient or electric cars and, at the same time, higher gasoline prices would eventually encourage substitution.
Innovation, which relies on funding, is required to substitute our dependence on oil and gas with alternative energy solutions. Money accrued by the government by taxing or removing gas subsidies could be invested in alternative energy and non-oil fuel development and production as well or help reduce the deficit.
But when it comes down to it, the more confident investors become that alternative energy and non-oil fuels, the more they will invest in such projects.
The Obama administration has a reason and a way to decrease our dependence on foreign oil.
Ultimately, American consumers, as the individuals who by a large margin consume the most oil of any public in the world, will dictate the success of this endeavor — not our politicians.
It is time for the Obama administration and the American public to end the discussion and finally stimulate the development and production of alternative energy sources.
William Fay is a senior majoring in international relations. His column, “Facing Our Global Challenges,” ran every other Thursday.