Franke: Avoiding Another ‘Oil War’
by Mark Franke
It seems that every time gas prices jump up at the pump, politicians are quick to find media microphones to blame Big Oil or the Arabs or the previous administration. That’s what we do best these days — find someone to blame. It saves mental energy otherwise wasted on research and analysis. Let me provide a personal example.
A close friend used to complain constantly that Fort Wayne had the highest gas prices in the country. It was hyperbole, and even he knew it, but his frustration needed an outlet. So I did some research. I found that the price of gasoline in Fort Wayne tracked spot on with the national average over time. It was the volatility in pricing that was noticed by consumers, at least the sudden increases in price more than the slower, extended decreases. At the end of the day, our average was the nation’s average.
It didn’t help that he and I could recall gas prices from our teen years when we had to gas up our own cars. Twenty-five cents was the common price with gas wars dropping it to 19 cents. (That 9/10 of a cent on the price made little sense then and none now, but there it is.)
The Arab oil embargo as a political response to the 1973 Yom Kippur War put gas prices front and center in the American consciousness and it has stayed there ever since, joined by home heating costs and utility bills in general. Expect to hear more gnashing of teeth about this when January heating bills land in our mailboxes.
Consumer complaints aside, energy is a strategic issue and has been ever since the invention of the internal combustion engine. A cursory reading of history instructs us how much geopolitical maneuvering over the past 100 years has had oil dependency as an underlying cause.
Long story short, the United States has gone from oil sufficiency to worrisome dependence on OPEC importation and then back to oil independence. At the same time, we have reduced our dependence on coal for electricity generation. Indiana has only a single coal-fired plant still operating.
As politically and ideologically charged as this issue is, most can agree that our electrical generation capacity must be increased, due in no little part to the huge data centers being built to power artificial-intelligence computing. The questions are how and at what cost?
My Socratic discussion group considered this issue at our last monthly meeting. We acknowledge that oil has its role for now, particularly in fueling transportation. Given fracking technology, our current reserves are adequate but not unlimited. The goal for some of our group is to eliminate all imports to achieve full oil independence. The classical liberals among us, adherents of David Ricardo’s law of comparative advantage, define effective independence as importing less than we export as America does now.
We could agree that the so-called green options for renewable energy sources can contribute modestly but only with significant public subsidies, something all conservatives want to avoid. Our focus was to identify an economically sustainable source.
I think we did. France generates nearly 80 percent of her electricity in nuclear plants and has done so safely since beginning conversion to nuclear power in 1964. While there have been accidents and preventive maintenance shutdowns, I could not find reports of any deaths or tragic disasters such as Chernobyl. Apparently France has figured out how to run nuclear reactors safely.
Perhaps the American public agrees. The percent of Americans who now favor nuclear energy has increased from 43 percent to 59 percent since 2020 according to a Pew report. Much of this support has come at the expense of support for wind and solar. The problem is the cost of building nuclear power plants, especially the add-on costs due to the regulatory permitting process.
Maybe we are looking at the wrong application for the solution. The U.S. Navy uses nuclear power for its capital warships, producing power through small modular reactors. Would the Navy entrust a $13 billion aircraft carrier and her crew of thousands to a disaster waiting to happen?
An experimental project in Kemerer, Wyoming, is the first commercial-scale demonstration project for this technology. Other western states have formed a consortium to move forward with the research. The economic viability of these projects should also be learned from them.
My Socratic group is not a scientific research team; we are just concerned citizens trying to work through major policy issues. Our goal last month was to find a way to make “oil wars” a thing of the past. An option for safe nuclear electricity generation has a growing acceptance among the populace, reducing our reliance on foreign oil. The key is our political will to move in this direction.
Mark Franke, M.B.A., an adjunct scholar of the Indiana Policy Review and its book reviewer, is formerly an associate vice-chancellor at Indiana University-Purdue University Fort Wayne.
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