Energy Policy:

Former EIA chief Hakes talks about road to energy independence, economic stability

How can we look to the decisions of past presidents to help define how we should proceed with energy policy and climate change legislation now? During today's OnPoint, Jay Hakes, former head of the Energy Information Administration and author of the book "A Declaration of Energy Independence: How Freedom from Foreign Oil Can Improve National Security, Our Economy, and the Environment," explains how he would advise the next president on energy issues to help the United States achieve energy independence and boost economic growth. He discusses how declining oil and gas prices may affect the urgency to act on energy and climate, and highlights the key technological hurdles that need to be overcome for the country to attain energy independence.

Transcript

Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. With us today is Jay Hakes, former head of the Energy Information Administration and currently the director of the Carter Presidential Library and Museum. Jay is the author of the new book, "A Declaration of Energy Independence; How Freedom from Oil Can Improve National Security, Our Economy, and the Environment." Thanks for coming on the show.

Jay Hakes: It's great to be here, Monica.

Monica Trauzzi: Jay, in your new book you look back at the last seven administrations and highlight what went wrong and what promises of energy independence were never fulfilled. What is it about this point in time that makes the storyline different and why should we be convinced that something is actually going to happen in the next administration, in terms of moving forward on energy independence?

Jay Hakes: Well, I think there's two basic reasons. One is that from 1977 to 1982 there was an aberration and we actually did do something about dependence on foreign oil. We reduced our imports from 8.6 million barrels a day to 4.3, which was a 50 percent chop. That's been overlooked by almost all the energy experts. People who have written books on energy and write for the press, when I mention that, they're quite surprised. So that's one thing that gives me hope. The other is that, I think, last year we ended a long period of energy complacency and there were two things that evidenced that. One was we started to see change in energy habits from people in response to the high prices and second we saw the passage of the strongest energy legislation since 1988. The Energy Independence and Security Act was not a perfect bill, probably no one would say that it was, but it had a lot of substance to it. So, to me, those are signals, along with the fact that the candidates are talking about it so much this time. There's never been a presidential campaign with this much attention on energy, even in the 70s. So, I think there are a lot of promising signs.

Monica Trauzzi: Considering the current state of our economy and the challenges that are going to be posed to the next administration, if you were given the opportunity to advise the next president, what are the first things you would recommend he does to get the U.S. on the right track towards energy independence?

Jay Hakes: Well, I would say one of the first things that I think the new president should do is go on television and have a frank talk with the American people about this and say that business as usual is not going to work. Presidents back in the 70s did that. Presidents Nixon, Ford, Carter were frequently on primetime television at night. They were preaching conservation, telling people we needed to take action. So that would be one thing. Second, I think that the new president needs to offer a bold legislative agenda. Some of it will be picking up things from last year that didn't quite make it into the 2007 bill and then the president will have to tackle the climate change issue. And some of the things that help on climate change will also help on oil imports. Back to this period for just a second, from 1977 to '82, the other thing that's even more obscure, that people don't know, is the United States greenhouse gas emissions dropped 9 percent from 1977 to '82, another hidden victory that we don't know about. So, if we have good energy ...

Monica Trauzzi: That was due to what?

Jay Hakes: It was due to a lot of conservation, better insulation, cars were becoming more efficient and people were driving a little bit less because of high prices, a whole combination of factors. So a lot of times we talk to people who rightfully say these are tough issues, but I don't think they should conclude that they're impossible issues, that we can tackle them and be successful if we really put our mind to it.

Monica Trauzzi: There's some people that sort of want to divorce the two discussions, the climate change discussion and the energy independence discussion. Do you think that the two are separate or are there too many overlaps to not look at both at the same time?

Jay Hakes: I think you have to look at them at the same time if you want to make wise policy. One of the things I was disappointed in back in the '90s was if you look at the government energy plans produced by the Department of Energy; they didn't include discussions of greenhouse gas emissions. And that was sort of treated as a separate issue. But on things like more fuel-efficient cars or the use of the better forms of ethanol, you get a double benefit there. You get the benefit from reducing dependence on Persian Gulf oil. You get the benefit of reducing carbon emissions. So, if you look at the two together, you can start finding those programs that are what I call two-fers or three-fers, they help you in two or three different areas at the same time.

Monica Trauzzi: Which presidential candidate falls in line best with the solutions that you layout in the book? I mean they're both sort of, you know, making similar point in terms of climate and energy. But is there one that you think can get the job done better?

Jay Hakes: Well, I think both of them have enviable records on energy. Both of them would be rated above, well above average compared to their peer group and both of them have pretty ambitious programs up on the Web. I think most people would have to agree that Obama's position is bolder. It's got more specific goals, goals that are more bold. And I think with Senator McCain there's been some problem where the heft of his conservation program seems to have gotten less as the campaign has gone along. I think everybody should go to the Web sites and make their own evaluation, but if you look at what constitutes the conservation program for Senator McCain, it's a little bit less than you might have suspected from his long record in this area.

Monica Trauzzi: With all the books that are out there about energy independence and how we get freedom from oil, what makes your book different and why exactly did you set out to write this book?

Jay Hakes: Well, one, you know, being at EIA I think you learn to evaluate all of the evidence. When I start a book like this I'm going to come to conclusions, but I change my mind along the way sometimes when I see better evidence. So, I think there's an open-mindedness in the book and even when I'm making an argument I try to point out some of the good aspects of the other side's arguments. The other thing is I bring a lot of historical perspective. So many of the issues of today were being discussed back then and it just makes things so much clearer. When I started the book I said we know everything was discussed back in the 70s except for hydrogen fuel cells and for climate change. And I went back in Nixon's first term and found this document where he had been invited to a demonstration of hydrogen fuel cells in Connecticut in the early 1970s. And I found that both the Ford White House and the Carter White House produced reports on global climate change. So, there are very, very few issues today that weren't discussed back then. So I think it helps really dissect future trends better if we can put it in the big context.

Monica Trauzzi: Over the last couple of weeks we've seen oil and gas prices come down significantly from where they were a few months ago. Do you think that Americans and lawmakers are going to feel less urgency to address the issues that we see associated with oil and gas use and feel less urgency to maybe go after renewables because prices are lower?

Jay Hakes: You know, I think that is a very big question. What happened back in the 70s after the Arab oil embargo is the public's attention did lapse a little bit, but the leaders in Washington did pay a little bit more attention to it than I think some of the historians have acknowledged. I think most members in Congress in both parties realize that this problem is not going away if oil goes down. Now, to me, the logical solution would be to say we probably need to put a tax on carbon fuels. Now, I'm not running for office, so it's a little easier for me to say that. But if you look at it from an investor's standpoint, someone who's investing in renewables, those renewable tax credits sort of come and go and they're usually just for a year or two at a time, so they really don't stimulate investment as they might. We need things like renewable portfolio standards and we need taxes on carbon fuels. If we can't do some of those tough things, then we're sort of admitting that we're not up to really solving these problems.

Monica Trauzzi: A group of Democrats has signaled that when Congress comes back next year they want to take another look at the moratorium on offshore drilling that was lifted this past session, because they weren't too happy with it. What do you see as the prospects for that and is "drill, baby, drill" really the way for the U.S. to move forward? It doesn't really help us solve the climate problem.

Jay Hakes: Right. I think that the argument has been overwrought on both sides. I think the environmental dangers of offshore drilling in the United States, where we have pretty firm environmental controls, exists, but it's much less than things like tar sands in Canada, methane releases in western Africa. So that doesn't bother me too much and it does help with our balance to trade problem, which is a serious part of energy. On the other hand, it's probably not going to lower prices ever because it's very expensive drilling. They have to go down very deep. Right now they would have trouble even finding the rigs to do the drilling, so this idea that's been floating out there, that all we have to do is drill offshore and we solve the problem, is not helpful to the debate. It's just simply not true. So I personally wouldn't object to it as part of a broader package. And I also like the fact that some of what's found out there, a lot of it may be natural gas and to the extent that that displaces coal that's helpful. But I don't know. I can't predict how Congress is going to go on that. Probably the president will have a lot to say about it and I think both candidates have agreed to some expansion of offshore drilling.

Monica Trauzzi: Final question here, what are the key technological hurdles that need to be overcome in order to achieve the goals that you outline in the book and sort of address national security, the economy, and the environment all at once?

Jay Hakes: Well, step one is to get the technologies that we already have into the marketplace. I mean we have technologies that have been around for 10 or 20 years that aren't in the marketplace. And, of course, we know a lot of them, when they get in the marketplace, the price will go down. So that's sending a good price signal. Then I think we need to get back investing in some long ball, homerun, or Hail Mary passes of technologies that are out there that could really be game changers. The one that I am pushing the hardest is algae-based fuels. I've look at this from every angle and, strategically, I think algae-based fuels could really be a perfect solution. They produce gasoline, diesel fuel, and jet fuel. So maybe the Defense Department would be a good government agency to push that technology.

Monica Trauzzi: All right, we're going to end it right there on that note. Thanks for coming on the show.

Jay Hakes: Great to be here.

Monica Trauzzi: And thanks for watching. We will see you back here tomorrow.

[End of Audio]

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