With the current military escalation related to Iran, it’s time to ask again why we are so mired in the affairs of a handful of very small countries in the Middle East. Why is it that they rate so much more attention than, say, Peru or Tanzania? The answer, of course, is primarily our unfortunate overdependence on oil.
For a while there, it looked like fracking was going to be the answer to all our near-term oil dependence woes. With the help of fracking, we were supposed to become energy independent again. Alas, we’re still a net importer of oil, and fracking has turned out to be cash flow negative—investors have to put in more cash than they receive in return. What’s more, the productive life of the wells dependent on fracking is proving to be much shorter than conventional wells, compounding the financial dilemma.
Oops.
The real hope continues to be from things like electric vehicles and from alternative sources of energy, especially solar and wind. Unfortunately, there are a lot of folks that think these will not come close to making a meaningful change in the US energy equation in our lifetimes. They may well be correct. Electric vehicles are well less than 1% of the cars on the road. Solar now supplies only about 2% of all US electricity needs. It seems preposterous to think that these can put a big enough dent in our dependence on foreign energy anytime soon.
But remember, it was massive US government support that enabled many crucial industries to grow to scale and become economically viable—two very notable examples (among many) being railroads in the 19th century and microchips (and thus personal computers) in the 20th century.
And so it will need to be with solar and electric vehicles if our goal is to make significantly greater headway quickly in these areas. Subsidies in the US for these industries now total less than $5 billion a year. Compare that to the $44 billion in US military in 2018 in the Middle East alone.
If we took the US Middle East military budget and redirected half of it to supporting the advancement of solar and EVs, within a decade we could have 10 to 20 million EVs on the road instead of the not-much-more than a million we have today. And we could have 10 to 20 million houses and other buildings with solar instead of the mere million or so of those we have today.
With that, we would genuinely be close to true energy independence, with these two industries at to sufficient scale and to see continued explosive growth even without continued subsidies.
Sound good?
At that point, our need to intervene militarily in that region would have radically abated. And the Middle East would perhaps not appear quite as often on the front pages of our websites and newspapers.
And our poor climate would be taking less of a daily beating.
Ponder that.
