President Obama didn’t say much about energy in his State of the Union speech Tuesday. Last year, he focused on energy issues more, and devoted much of the energy portions of his speech to natural gas.
This year, he acknowledged rising U.S. oil production and the benefits of cheap energy that have come with it, and then he made a backhanded reference to the Keystone XL pipeline.
In calling on both parties to support the infrastructure projects such as “modern ports, strong bridges, faster trains and faster internet,” he then encouraged lawmakers to pass a bipartisan infrastructure plan by saying: “So let’s set our sights higher than a single oil pipeline.”
Certainly, the Keystone pipeline has become a far greater political punching bag than a meaningful piece of infrastructure. Environmentalists have greatly exaggerated its role in climate change, and Republicans in Congress are now determined to push through legislation supporting it almost out of spite for the administration’s foot-dragging on a decision.
In brushing off Keystone as an aside, Obama missed an opportunity to illustrate exactly the type of 21st infrastructure needs he’s talking about. As the Senate begins debating the issue, it’s worth remembering that Keystone represents the sort of energy infrastructure into which we should be investing proceeds from the current oil boom.
Right now, oil is cheap, but we know that demand will return at some point, and the world’s appetite for energy is going to grow. We remain the world’s biggest energy consuming country, and when prices begin rising once again, we are going to need better energy infrastructure to ensure adequate supplies. Keystone, in other words, is exactly the sort of infrastructure insurance policy we should be building now.
When Obama first introduced is “all-the-above” energy plan, he envisioned energy that was “cleaner, cheaper and full of new jobs.” At the time, I argued that job creation shouldn’t be a focus of a long term energy plan. If jobs are added, so much the better, but it’s the cheaper and cleaner part that are the salient goals.
Energy is definitely cheaper now than it was just two years ago, and as the president point out, the U.S. leads the world in wind power, and solar installations are on the rise. “Every three weeks, we bring online as much solar power as we did in all of 2008,” he said in his speech.
Solar panel manufacturing has risen at a compound annual rate of 52 percent since 2008, and the cost of manufacturing has fallen to 65 cents a watt from $3.95. The lower costs have spurred demand, as have more innovative financing options offered by installers. Solar may finally be reversing its decades-old trend of being a financial sinkhole for government subsidies. One thing that often gets lost in figuring the drop in manufacturing costs: cheap energy. Lower natural gas prices have reduced factories' operating costs and spurred a manufacturing renaissance across the country.
But wind and solar combined can't yet come close to meeting the country's energy needs. They aren’t yet reliable or substantial enough to replace fossil fuels and their rise isn’t significant enough to have any more impact on climate change than the delay of the Keystone pipeline has.
The reason for investing in solar is the same as the reason for investing in Keystone — insuring adequate energy supply. In the 1980s, the U.S. allowed cheap oil to undermine the advances that were made in alternative fuels. This time, we can’t afford to make the same mistake. We need to use the current slump in oil prices to fund a more diverse energy portfolio -- both out of concern for the climate and for the economic future of the country.
It’s an important idea that unfortunately wasn’t mentioned in Tuesday’s speech. Instead, the president faced a divided Congress, half of which has unrealistic views about the immediate potential of renewable fuels, and the other that has unrealistic views that the oil markets will sustain us forever.
