Wednesday, February 8, 2012

FRANK ZARB - The Most Important Public Policy Failure of our Time - Energy

(Speech given at the University Club, New York, Jan. 25, 2012)

During the next 20 minutes, we will talk about America’s inability to develop a cohesive thoughtful energy policy despite the fact that we have urgently needed one for decades. But the over-arching question to consider today as we contemplate energy policy is this.
Is it possible to reform our democracy so that it will be able to deliver long-term policies that benefit the national interest in the face of short-term political pain? The answer to that uncomfortable question is at the crux of almost all of the difficult policy matters this country faces.
Using energy policy to frame the question is natural. How we use energy, where we get it, how we pay for it – all drive our economic policy, both domestically and internationally. Energy shapes our global alliances and impacts our national security.
My own experiences in energy policy, began almost four decades ago, may provide useful color. Some of you may remember that in 1973, the Arab members of the Organization of the Petroleum Exporting Countries (OPEC) organized an oil embargo on the United States.

As a direct result our GDP dropped an estimated $15 billion – a big number back then. 500 thousand workers lost their jobs - also a big number in 1974. Hospitals ran out of fuel oil.  And the federal government actually took control of our ability to buy gasoline and heat our homes.
In 1973, the Unites States imported 35% of the oil it used. Today, it is closer to 60%. That’s over $400 billion leaving our country every year to buy oil from foreign sources – most of it flowing to the Middle East.
The impact of a major oil disruption to our economy and our national security today is unthinkable – but it can happen. So …
How can it be that since 1973, we have done so little to retard our exposure to oil imports from questionable areas of the world, and so little to regain some of the leverage we cede to those who may not have our best interests at heart? Here is a little history.