Energy policy of the United States

The energy policy of the United States is determined by federal, state, and local 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),[1] but no comprehensive long-term energy policy has been proposed, although there has been concern over this failure.[2] Three Energy Policy Acts have been passed, in 1992, 2005, and 2007,[3] which include many provisions for conservation, such as the Energy Star program, and energy development, with grants and tax incentives for both renewable energy and non-renewable energy.

There is also criticism that federal energy policies since the 1973 oil crisis have been dominated by crisis-mentality thinking, promoting expensive quick fixes and single-shot solutions that ignore market and technology realities. Instead of providing stable rules that support basic research while leaving plenty of scope for American entrepreneurship and innovation, congresses and presidents have repeatedly backed policies which promise solutions that are politically expedient, but whose prospects are doubtful, without adequate consideration of the dollar costs, environmental costs, or national security costs of their actions.[4][5] By 2018, the US is on the verge of achieving energy security or self sufficiency as the total export of coal, natural gas, crude oil and petroleum products are exceeding imports.[6][7] The US has trade surplus in energy sector by 2018.[8]

State-specific energy-efficiency incentive programs also play a significant role in the overall energy policy of the United States.[9]The United States refused to endorse the Kyoto Protocol, preferring to let the market drive CO2 reductions to mitigate global warming, which will require CO2 emission taxation. The administration of Barack Obama has proposed an aggressive energy policy reform, including the need for a reduction of CO2 emissions, with a cap and trade program, which could help encourage more clean renewable, sustainable energy development.[10] Thanks to new technologies such as fracking, the United States has in 2014 resumed its former role as the top oil producer in the world.[11]

History

U.S. oil reserves increased until 1970, then began to decline.

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, new emphasis was placed on access to coal and its use for transport, heating and industry. Whales were rendered into lamp oil.[12] Later, coal gas was fractionated for use as lighting and town gas. Natural gas was first used in America for lighting in 1816.,[13] it has grown in importance for use in homes, industry, and power plants, but natural gas production reached its U.S. peak in 1973,[14] 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.[15] Coal remains far cheaper than oil. The biggest use of oil has come from the development of the automobile.

Grand Coulee Dam in Washington State.

Oil became increasingly important to the United States, and, from the early 1940s, the U.S. government and oil industry entered into a mutually beneficial collaboration to control global oil resources.[16] By 1950, oil consumption exceeded that of coal.[17][18] 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.[19]

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.[19] 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.[20]

Hydroelectricity was the basis of Nikola Tesla's introduction of the U.S. electricity grid, starting at Niagara Falls, NY in 1883.[21] 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.[12][22]

Utilities have their rates set to earn a revenue stream that provides them with a constant 10% – 13% rate of return based on operating costs. Increases or decreases of the operating costs of electricity production are passed directly through to the consumers.[23][unreliable source?]

The federal government provided substantially larger subsidies to fossil fuels than to renewables in the 2002–2008 period. Subsidies to fossil fuels totaled approximately $72 billion over the study period, representing a direct cost to taxpayers. Subsidies for renewable fuels, totaled $29 billion over the same period.[24]

In some cases, the U.S. has used its energy policy as a means to pursue other international goals. Richard Heinberg, a professor from Santa Rosa, California argues that a declassified CIA document shows that the U.S. used oil prices as leverage against the economy of the Soviet Union. Specifically, he argues that the U.S. intentionally worked with Saudi Arabia during the Reagan administration to keep oil prices low, thus decreasing the purchasing power of the Soviet Union's petroleum export industry. When combined with other U.S. efforts to drain Soviet resources, this was eventually a major cause in the dissolution of the Soviet Union.[25]