The Top Energy Challenges Facing the Next President

March 14, 2008

Identifying pivotal energy issues is vital to creating sustainable, green policies. USC political scientist Mark Bernstein, managing director of the USC Energy Institute, outlines the significant energy crises that will demand the next president’s attention.

The High Price of Energy

Oil, which just cracked $110 a barrel, isn’t the only energy commodity straining budgets. Prices are also high for natural gas and electricity and don’t look like they’ll be dropping anytime soon.

“There has been some slackening of demand — or at least a reduction in the growth rate — but does that mean a long term change in direction?” Bernstein says. “People still think prices will come down because it has happened before.”

Adding to the problem is the fact that the U.S. dollar is the denomination used to set the price of a barrel of oil worldwide, Bernstein explains. Tying the price of oil to a weakened currency drives prices up overall.

Bernstein also points out that some of America’s overdependence on oil is derived from its connection to commodities like transportation and plastics: “What we use oil for, we can’t easily substitute away.”

Aging Electrical Infrastructure

In a talk he gave before the recent Florida blackouts, Bernstein suggested that power outages could occur in a number of places in the U.S., including that state. Now, he says that he wouldn’t be surprised to see blackouts in other regions of the country.

The culprit: an aging electrical infrastructure nationwide that needs upgrades to transmission and distribution lines. The solution, at least short-term: reducing demand through smarter use of resources at the residential, commercial and industrial levels.

“It’s not a matter of getting people to conserve, or to suffer, but of using energy more efficiently,” Bernstein says.

Climate Change

Climate change is a particularly complex problem, because there isn’t a straightforward solution as there was with the ozone hole, Bernstein explains. However, even a complex issue can call for relatively simple first steps.

In this case, the new president should move quickly to introduce federal legislation that utilizes the market system to reduce greenhouse gas emissions and increase standards and codes for appliances and buildings, Bernstein says. There must also be an effort to accelerate improvements in the efficiency of transportation.

“The United States cannot be a pariah on this global issue,” Bernstein adds. “We need policy solutions to get us started.”

Water Supply

No energy problem exists in a void. Climate change, together with overuse and pollution, contributes to another important energy challenge: sustaining the supply of water. Conventional energy processes require a great deal of water as well, to cool and to clean machinery.

“No one is facing up to the problems we’ll have with the availability of water,” Bernstein says. “Unless we start using less, we’re in trouble.”

“Trouble” means potential water shortages. Even worse, a shock to the supply of water initiates a cycle: It requires energy to fortify the supply of water, which leads to more climate change, which further affects the supply of water, Bernstein notes.

“This is a problem that seems to be growing nationwide, even in regions like the Southeast, where it’s a surprise that this is an issue,” Bernstein says. “We need to increase the attention we give to water issues.”

Mark Bernstein is the author of Barriers and Benefits of More Rapid Deployment of Biofuels, forthcoming in the Contemporary Economic Journal. Recent publications include Smog Alert: The Challenges of Battling Ozone Pollution (Environment, October 2005) and Regional Differences in the Price-Elasticity of Demand for Energy (RAND, 2005).