Energy prices are the real story
You can walk back a statement, but actions persist
Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.”
Steven Chu said that in 2008 just before he became the Obama Administration’s Department of Energy secretary. Now he is performing a maneuver known in media circles as “walking it back.”
It’s not quite eating crow. It’s more of a distancing yourself from something you said earlier. You walk it back because what has been said is unseemly or has become a liability—kind of like the time your wife got home from the hair stylist and you told her you liked her old haircut better.
Some commentators have suggested that Mr. Chu never made such a claim, so here is the source material pulled from a Wall Street Journal story dated Dec. 12, 2008. The story talked of how the would-be cabinet would handle policy:
In a sign of one major internal difference, Mr. Chu has called for gradually ramping up gasoline taxes over 15 years to coax consumers into buying more-efficient cars and living in neighborhoods closer to work.
“Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,” Mr. Chu, who directs the Lawrence Berkeley National Laboratory in California, said in an interview with The Wall Street Journal in September.
In this case, Chu walks back that old quote with claims that his mission since Day One as Energy secretary has been to reduce fuel prices. In fact, because the most recent fuel-cost spikes look as if they will last through the summer and dangerously close to election season, the Administration in general has become a band of swashbucklers—hacking at gasoline prices with sharp rhetoric. They remind us that the United States is a veritable pincushion of oil rigs and gas wells. And the world is a mean place and out of control.
Movement toward further developing known supply hasn’t accelerated.
One question for the 2008 Mr. Chu would be what the Department of Energy would do with its share of the increased tax revenue from European-level fuel taxes. There would be, it is safe to assume, enough in the coffers for several more Solyndra experiments. Maybe we could add on another batch of $10 million grants like the one Phillips got for the “affordable” $50 light bulb. And there would be enough to subsidize an even larger fleet of idle Chevy Volts, the electric car that has proved its range is more than sufficient for the car’s average haul—from the transport truck to the dealer lot.
Too harsh? Then let question for the 2012 Mr. Chu be simpler. What’s the plan?
Fuel prices have become emblematic of the populace’s growing belief that our leadership class has fumbled its duty. And, indeed, fuel prices are a weighty contributing factor to the current malaise. Some of this can be attributed to policy, some of it is beyond the control of policy.
The USDA’s Economic Research Service estimates that energy and transportation make up about 10 percent of the average retail food expenditure. So, if energy goes up by 50 percent, you can expect a five percent rise across the board in the grocery store. Some items, of course, will be more and some less.
I’ve listened to my fellow wage-earners on this count. They are not happy. Our standard of living is on the pinch in real terms.
Nor is the fleet manager for any major business happy. Transportation directors everywhere approach their company’s budget-minded senior management with the bad news and a shrug of the shoulders. Their report is universal—it’s a gash to the bottom line. All they can do is offer a bit of gallows humor in the budget meeting with a sheepish grin and a grim rhetorical question: “What are you going to do?”
It may be a rhetorical question, but I’ve got two answers. If you’re the business, pass the cost along. If you’re the consumer, suffer.
We can take a lot of fumbling from our leaders, and plenty of walking it back, and we know that sometimes world events are out of any leader’s control. But when all of these things begin to stack up, we wonder if there isn’t a better position.
The safest position on energy is to be agnostic about how it arrives to your house, business or fuel tank. Without politically favoring any particular form of energy, pragmatic policy can be formed. You can pepper that agnosticism with environmental and safety caveats, but, none the less, energy needs to be affordable and reliable. That’s job one, the rest of the economy depends on it.