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The energy policy of the United States is determined by federal, state and local public entities in the United States, which address issues of energy production, distribution, and consumption, such as building codes and gas mileage standards. Energy policy may include legislation, international treaties, subsidies and incentives to investment, guidelines for energy conservation, taxation and other public policy techniques. Several mandates have been proposed over the years, such as gasoline will never exceed $1.00/gallon (Nixon), and the United States will never again import as much oil as it did in 1977 (Carter), but no comprehensive long-term energy policy has been proposed, although there has been concern over this failure. Three Energy Policy Acts have been passed, in 1992, 2005, and 2007, which include many provisions for conservation, such as the Energy Star program, and energy development, with grants and tax incentives for both renewable and non-renewable energy. State-specific energy-efficiency incentive programs also play a significant role in the overall energy policy of the United States. The United States has resisted endorsing the Kyoto Protocol, preferring to let the market drive CO2 reductions to mitigate global warming, which will require CO2 emission taxation. Multiple 2008 U.S. Presidential candidates have published aggressive energy policy platforms, and some propose carbon emission taxation, which could help encourage more clean renewable, sustainable energy development.
History
In the Colonial era the energy policy of the United States was for free use of standing timber for heating and industry. In the 19th century, it was access to coal and its use for transport, heating and industry. Whales were rendered into lamp oil. Later, coal gas was fractionated for use as lighting and town gas. Natural gas was first used in America for lighting in 1816., it has grown in importance for use in homes, industry, and power plants, but natural gas production reached its U.S. peak in 1973, and the price has risen significantly since then.
Coal provided the bulk of the US energy needs well into the 20th century. Most urban homes had a coal bin and a coal fired furnace. Over the years these were replaced with oil furnaces, not because of it being cheaper but because it was easier and safer. Coal remains far cheaper than oil. The biggest use of oil has come from the development of the automobile.
By 1950, oil consumption exceeded that of coal. The abundance of oil in California, Texas, Oklahoma, as well as in Canada and Mexico, coupled with its low cost, ease of transportation, high energy density, and use in internal combustion engines, lead to its increasing use. Following World War II, oil heating boilers took over from coal burners along the Eastern Seaboard; diesel locomotives took over from coal-fired steam engines under dieselisation; oil-fired electricity plants were built; petroleum-burning buses replaced electric streetcars in a GM driven conspiracy, for which they were found guilty, and citizens bought gasoline powered cars. Interstate Highways helped make cars the major means of personal transportation. As oil imports increased, US foreign policy was inexorably drawn into Middle East politics, supporting oil-producing Saudi Arabia and patrolling the sea lanes of the Persian Gulf.
Hydroelectricity was the basis of Nikola Tesla's introduction of the U.S. electricity grid, starting at Niagara Falls, NY in 1883. Electricity generated by major dams like the Jensen Dam, TVA Project, Grand Coulee Dam and Hoover Dam still produce some of the lowest-priced ($0.08/kWh), clean electricity in America. Rural electrification strung power lines to many more areas.
Energy Independence and Resilience
The 1973 oil crisis made energy a popular topic of discussion in the US. The Federal Department of Energy was started with steps planned toward energy conservation and more modern energy producers. A National Maximum Speed Limit of 55 mph (88 km/h) was imposed to help reduce consumption, and Corporate Average Fuel Economy standards were enacted to downsize automobile categories. Year-round Daylight Saving Time was imposed, the United States Strategic Petroleum Reserve was created and the National Energy Act of 1978 was introduced. Alternate forms of energy and diversified oil supply resulted.
The United States receives approximately 84% of its energy from fossil fuels. This energy is used for transport, industry, and domestic use. The remaining portion comes primarily from Hydro and Nuclear stations. Americans constitute less than 5% of the world's population, but consumes 26% of the world's energy to produce 26% of the world's industrial output. They account for about 25% of the world's petroleum consumption, while producing only 6% of the world's annual petroleum supply and having only 3% of the world’s known oil reserves.
In the United States, oil is primarily consumed as fuel for cars, buses, trucks and airplanes (in the form of gasoline, diesel and jet fuel). Two-thirds of U.S. oil consumption is due to the transportation sector. The US - an important export country for food stocks - will convert 18% of its grain output to ethanol in 2008. Across the US, 25% of the whole corn crop went to ethanol in 2007. The percentage of corn going to biofuel is expected to go up. In 2006, U.S. Senators introduced the BioFuels Security Act.
The proposal has been made for a hydrogen economy, where cars and factories are powered by fuel cells, although the hydrogen would still have to be produced at an energy cost, and hydrogen cars have been called one of the least efficient, most expensive ways to reduce greenhouse gases. Other plans include making society carbon neutral and using renewable energy, including solar, wind and methane sources.
Automobiles, on the other hand, possibly could be powered 60% by grid electricity, 20% by biofuels and 20% direct solar. Re-design of cities, telecommuting, transit, higher housing density and walking could also reduce automobile fuel consumption and obesity. Carpooling, flexcars, Smart cars, and shorter commutes could all reduce fuel use.
It should be noted that between 1950 and 1984, as the Green Revolution transformed agriculture around the globe, world grain production increased by 250%. The energy for the Green Revolution was provided by fossil fuels in the form of fertilizers (natural gas), pesticides (oil), and hydrocarbon fueled irrigation. The peaking of world hydrocarbon production (Peak oil) may test Malthus' critics.
United States' relationships with oil-producing countries
The close relationship the United States has with Saudi Arabia, the world's single largest oil producer, may best be understood as a symbiotic relationship: America's energy needs in lieu of Saudi Arabia's needs for capital. The Saudi's wish to modernize and beautify their country into a western-style paradise, as well as create long-term investments throughout the world for use once their oil reserves become depleted. Successive American presidents have provided "red carpet" treatment to the Saudis. The American posture toward Saudi Arabia and many other OPEC counties, has been touted as a "special relationship" in the media. This relationship was shaken by the rise of Islamic militancy, and most acutely by the events of September 11, 2001. For the first time in close to a century, the leadership of the United States as well as many of the American people, began to weigh the benefits versus costs of those relationships, and reliance upon an energy source that was costly, easily interruptible, polluting, and which would eventually run out.
To date, the Saudis alone have invested approximately 70 billion dollars around the globe, 60% of which was invested in the United States. Saudi Arabian investments in the United States have traditionally been a welcome counterweight to the systemic U.S. trade deficit with the Kingdom. As American demand for Saudi oil continues at 1.5 million barrels (240,000 m3) per day, U.S. service and merchandise exports revenues to the Kingdom cover nowhere near the level of expenditures for petroleum. One enabler of U.S. consumption has been the historic Saudi Arabian willingness to finance this trade deficit by investing in the United States. This relationship, while symbiotic, and necessary to a U.S. economy addicted to consumption, is viewed by many as "golden hand-cuffs" voluntarily worn by the United States.
The current account is the broadest measure of a nation’s balance of income payments with the rest of the world, and it is the difference between a nation
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