In last night’s capstone talk of the LSA Energy Futures Theme Semester, a University of Arizona economist pinpointed what he considers the two root causes of the nation’s energy crisis: the overuse of petroleum and large carbon emissions from energy production.
Paul Portney, dean of the School of Management at the University of Arizona, delivered his talk, “America’s Two Big Energy Problems and What to Do About Them,” to about 100 people in the Rackham Amphitheater.
“I am admittedly oversimplifying, but I feel very, very strongly that if we can accomplish a lot toward these two big problems over the next 20 or 25 years we’ll have come a long way,” he said.
Throughout his speech, Portney advocated a market-based approach to both of these problems.
Citing stats that show the U.S. uses far more petroleum per person than the rest of the world, Portney said importing about 12 million barrels of oil each day, as the U.S. currently does, causes many severe problems for the country. He said reducing consumption is necessary and raising petroleum prices would be “by far, the best way to do it.” America uses 25 billion barrels of petroleum per year, about five times more than the world’s average nation.
Portney said the three traditional solutions to energy challenges — efforts to convince people to consume less, government-financed technological development and direct regulation at the federal level — won’t go far enough to curb consumption.
Throughout the talk, Portney stressed that government should not dictate the country’s energy and fuel sources in the future.
“One thing I don’t think government is good at, no matter how smart the people are, is figuring out what sources of fuel we should be using 10 or 15 years from now,” he said. “I’d rather just get the prices right and let all the smart entrepreneurs figure out how to live within that.”
He suggested a similar, market-based approach to making energy production carbon-free. He said reducing carbon emissions is necessary because the repercussions of global warming would be immense.
Portney said half of the country’s energy is now produced by burning coal, which “produces a hell of a lot of carbon.” Another 20 percent of the country’s energy production produces even more greenhouse gases, he said.
He proposed a tax on greenhouse emissions that would generate revenue for a government facing an enormous national debt. But he said he expected a cap and trade system instead, which President-elect Barack Obama supports.
Under a cap and trade system, the government would require every business that produces greenhouse gases to reduce its emissions by a certain percentage. Businesses able to cheaply reduce their emissions below the cap would then be permitted to sell their surplus reduction to companies.
Portney addressed a number of other current political issues, including the idea of using corn-based ethanol as fuel.
“We need to do research on alcohol, I just think we picked the worst one in ethanol,” he said. “That wasn’t based on climate science — it was political science.”
He also lampooned Obama’s suggestion to create a so-called “car czar” who would oversee the automobile industry’s restructuring.
“I think that this is one of the worst ideas of all time and I hope it gets abandoned,” he said. “I think a car czar would be a death knell for the car industry.”
LSA freshman Brandon Lebowitz said he attended the event because he felt energy management will soon become an important national issue. As a pre-admit to the Business School, he said he was especially interested to hear Portney discuss the benefits and drawbacks of a cap and trade system.
First year Rackham student Di Gao said she attended the lecture to learn more about the policy side of energy use as she worked on the technical side in her chemistry courses.
“Energy is a really crucial issue today because we are running out,” she said.