I spend a lot of my time trying to convince hard money and balanced budget advocates that we are living through a period in history which is worse than that which they fear.
Millions of American are without jobs, underwater on their mortgages and together with Europe and Japan the developed world faces the serious prospect of prolonged stagnation.
We can and should do something about this. We should print more money. We should borrow more money. These are not costless solutions and I do not argue that they are. However, the risks they pose are not as great as the tragedy that we are living through.
However, a similar argument prevails on the supply side of energy production. There are strong reasons to believe that energy shortages will make these problems worse. In the short run energy acts more like a debt service than a consumption commodity.
We can say that households and businesses “must use” a certain amount of energy. What we really mean is that adjustments in the amount of energy they use will throw out of wack enormous long term plans in plants, production, infrastructure, home, and transportation equipment.
Thus the cost of altering energy usage can be enormous.
Now in the long run something has to be done, if for no other reason than fossil fuels are not forever. In the short run there are many who are concerned about pollution, both C02 and the groundwater pollution from new fracking techniques.
I do not argue that these aren’t serious concerns. I do not dispute the science of global warming or the clear evidence of burning water, from natural gas contamination.
However, there are things worse the pollution and we have them. We should take steps to mitigate the harm but our first duty should be to relieve suffering now where we can and lay the foundation for recovery in the immediate future.
Expanding production of our energy resources would relieve strain on households and firms at a time when they are facing enormous strain. Can we bring down the cost of gasoline, overnight. Of course not. However, we can do some things to relieve supply constraints.
We can open up ANWR to drilling, we can increase operations in the gulf and we can push forward on fracking underneath the Eagle Ford and Bakken Shales. We can’t say for sure how much production this will bring to the market or when.
However, we can say that in the short run they increase the demand for non-residential structure investment and in the medium run they ease supply constraints. Both of these are things we could use right now.