In Bloomberg View, Noah Smith argues that I didn’t understand the origin or purpose of the Department of Energy when I called for it to be abolished in a Dec. 27 Washington Examiner op-ed. Smith is not only mistaken about the DOE’s origin and purpose, he also seems to have not read my op-ed. His essay was full of half-digested facts and outright misrepresentations of both what I wrote and the actual history of the DOE. As an energy policy scholar, I’ll set the record straight.
Smith claimed I said DOE was created “as a panicked response to theories of looming fossil-fuel scarcity” [his words not mine] when “in reality, [it] was created to increase government efficiency by combining a bunch of existing agencies.” Well, here’s what the 1977 enabling legislation says:
The Congress of the United States finds that—
(1) the United States faces an increasing shortage of nonrenewable energy resources;
(2) this energy shortage and our increasing dependence on foreign energy supplies present a serious threat to the national security of the United States and to the health, safety and welfare of its citizens;
(3) a strong national energy program is needed to meet the present and future energy needs of the Nation consistent with overall national economic, environmental and social goals.
The purpose (and sense of panic) were evident in a later DOE memo. It cited four “realities” for energy policy:
1. Within 15 years (early 1990s), “the petroleum era will be over.”
2. Any remaining oil would be so expensive the “US could not afford to pay [for it].”
3. Greater import dependence meant “intolerable” foreign policy implications.
4. The world oil problem will be resolved either through social upheaval or by strong government actions.
Natural gas was supposedly in even worse shape. As a Carter-era DOE official said, natural gas “has had it.”
Smith then strangely claims the DOE was created basically as a nuclear agency. “The Energy Department’s roots in nuclear energy also show that it wasn’t simply a response to high oil prices, [which I never said]. Government support for nuclear power boomed in the 1950s, when oil was cheap. The goal wasn’t to avert a fossil-fuel crunch, but to give humanity even cheaper sources of power” [emphasis in the original].
Smith is confused. His statement doesn’t reflect the real motive for nuclear power in the 1950s, and it was never used as a rationale for the DOE.
A primary goal of Carter’s DOE was to play a major role in the commercialization of soon-to-be-needed alternative energy technologies, and Smith chides me for claiming such DOE programs have never succeeded. There’s a graph showing the decline in the cost of solar photovoltaic panels, and we’re told solar PV electricity is in many places “now cheaper than coal power.”
But the graph doesn’t show that solar PV is cheaper than coal power. Is it supposed to show that the fall in solar panel prices has resulted exclusively (or at least primarily) from DOE’s commercialization programs? The DOE has supported solar power (e.g. Solyndra), but so did many governments and private firms. How much did DOE commercialization programs matter? Smith doesn’t say and probably doesn’t know.
Smith’s graph is misleading in any case. The main costs of solar are not panels but rather: connectivity, because utility-scale solar is typically generated far from population centers and high voltage power lines are expensive; intermittency and low availability, which means one must include the cost of back-up power sources; and the lack of low-cost mass storage, which means however “cheap” solar PV is on a sunny day at 1 p.m., it will be useless when people come home from work at 6 p.m. and turn on their air-conditioners. Consequently, solar will remain a niche product for the foreseeable future.
Using solar to replace coal power raises costs for consumers enormously, as Germany discovered. German solar is available less than 10 percent of the time and contributes to Germany’s enormously high electricity costs (which greatly disadvantages poor people).
Smith also adds: “Grossman is proposing to abolish the agency that keeps U.S. nuclear weapons safe… He also doesn’t seem to have thought about what would happen to the department’s extensive system of national labs, which research all sorts of next-generation technologies.”
Again, Smith must not have read my piece because I pointed out specific ways to treat exactly those two components of the DOE.
If Smith read my op-ed, he would see that I argue for the DOE to be abolished only if we can’t find a new rationale for it in accord with 2017’s challenges, not 1977’s.
If we misunderstand the energy policies of the past, however recent or distant, we won’t get the future right either.
Peter Z. Grossman is the author of “U.S. Energy Policy and the Pursuit of Failure” and is a professor of economics at Butler University. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.
