The President’s Slippery Solution
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

President Bush received sustained applause in his State of the Union address on Tuesday when he declared, “Let us build on the work we’ve done and reduce gasoline usage in the United States by 20% in the next 10 years.”
Mr. Bush seemed to be reviving that will-o-the-wisp of energy independence — freeing America from having to import oil — chased by Presidents Nixon, Ford, and Carter. We don’t strive for independence in other lines of commerce. Moreover, energy independence, if that’s what Mr. Bush is driving for, is not attainable.
Just two days before the president’s address, the finance minister of Kuwait, Bader al-Humaidi, announced that his country’s budget revenues will be based on a $26-a-barrel price of oil. The official Kuwait News Agency quoted the minister as saying that the price forecast gave “consideration to the downward trend of the crude prices on world markets.”
Oil prices may not drop to $26 in 2007, but they are unlikely to return to last year’s highs above $70. At a time when oil producers see their prices falling, President Bush proposes to impose enormous costs on the American economy.
Reducing our gasoline usage by 20% over 10 years sounds simple. Why buy from abroad what we can make ourselves? But such cuts are practically impossible and would be enormously expensive. By 2017 we would need to produce 35 billion gallons of alternative fuels. Fourteen billion gallons are expected to come from corn in the form of ethanol, and 21 billion gallons are expected to appear magically from sources not yet invented.
In 2005, Congress, yielding to the power of the farm lobby, in particular, from the Archer Daniels Midland Company, mandated the production of 7.5 billion gallons of ethanol annually by 2012. America produced over 5 billion gallons in 2006. But it is costly to produce and lowers the fuel efficiency of our vehicles. A gallon of ethanol has only two-thirds the propulsive power of a gallon of gasoline.
It takes almost as much energy to make ethanol as it produces, and much of this energy comes from natural gas. So, even though ethanol saves imports of gasoline, it uses up domestic natural gas, driving up prices for Americans’ home heating. With natural gas prices reaching record highs last winter, this isn’t an efficient trade-off. Also, using corn for ethanol raises costs of foods such as bread, milk, and meat.
In this month’s “Scientific American,” an article by Michael Wald concludes that “relying on ethanol from corn is an unsustainable strategy: agriculture will never be able to supply enough crop, converting it does not combat global warming, and socially it can be seen as taking food off people’s plates.” What could be profitable is making ethanol from the stalks of corn, rather than from the grains, but we haven’t figured out how to do that yet.
Americans are also made worse off by some other energy proposals. Raising fuel economy standards for cars, which will supposedly result in a 5% gasoline savings by 2017, generally results in lighter vehicles, costing Americans their lives in traffic accidents. Putting Americans at risk in order to conserve our trading partners’ oil supplies is no bargain.
The president’s proposals call into question America’s role as a responsible — and compassionate — world leader. Producing 14 billion gallons of ethanol a year from corn would raise the price of corn worldwide, causing hardship to the world’s poor. Since America is a net corn exporter, our farmers would gain, but others would suffer.
This would also encourage further global development of forests into agricultural land to produce more corn as the price rises. For those who are concerned about global warming, this is a major disadvantage, since trees are said to help reduce global warming.
Cutting off oil imports from trading partners, many of whom are our friends, destabilizes their economies, potentially encouraging the spread of terrorism that we are battling all over the world. For most oil-exporting countries oil is a primary source of revenue and economic development, helping to alleviate poverty.
Energy independence is as hard to attain as independence from other imports. China, with which we have a $214 billion trade deficit in goods, just successfully tested an anti-satellite missile and is allegedly supplying Iran with weapons technology used against our troops in Iraq. Yet we do not say that we are addicted to Chinese toys, electronics, and clothing, nor say that we need independence from China.
American consumers naturally look after our energy security. As oil prices crept up over the past two years, Americans used less gasoline. They abandoned SUVs, bought Priuses, and expanded telecommuting and flextime. Even when oil prices doubled, the gross domestic product stayed strong and unemployment remained low.
President Bush had positive ideas on energy use in his State of the Union address, such as increasing the capacity of the Strategic Petroleum Reserve and making traffic flow faster by using congestion pricing. But replacing gasoline with alternative fuels is a costly and misguided policy.
Ms. Furchtgott-Roth, a former chief economist at the U.S. Department of Labor, is a senior fellow and director of Hudson Institute’s Center for Employment Policy.