Is Obama's "All of the Above" Energy Policy Flawed?

At what point do energy independence and the social cost of carbon collide when it comes to U.S. power sources?

Feb 2, 2014 at 2:42PM

If we are looking at the "all of the above" energy stance the U.S. has more publicly taken in recent years, a debate can be made that the move has created thousands of jobs despite displacing many in the coal sector. Another view could also fuel a strong argument that the move has contributed to climate change, which has magnified domestic droughts, cold spells, tornadoes, and twisters (and that's not even going into the devastation that Superstorm Sandy wreaked on the Northeastern U.S.). Which argument is right and what should we do next as a country when it comes to energy?

From the perspective of being purely energy independent, the 'all of the above' strategy has been a success thanks largely to unconventional drilling techniques that are effective, but also highly controversial. However, if we are trying to wage a war on carbon, U.S. energy policy needs to swiftly focus more on renewables, including next-generation biofuels like the ones being created by refiners Valero (NYSE:VLO) and Tesoro (NYSE:TSO). The U.S. also needs to establish more support for the nuclear industry and create energy storage solutions that can help make solar and wind power more constant. 

Five years ago the American people were promised an energy policy. That policy was put on the backburner for what is widely referred to as "Obamacare," a health care policy that has had its fair share of criticisms. I don't want to be too hard on President Obama here since even without a full-blown energy policy he been a staunch supporter of lowering our dependence on fossil fuels through the advancement of alternative energy sources. Yet support needs to come from policy and action, not just words. 

We keep hearing about natural gas, but what is the social cost of fracking? Is the U.S. being too shortsighted when it comes to declaring natural gas our nation's energy savior? Quite frankly, I believe the bridge mentality is flawed, and the U.S. needs to concentrate on what's on the other side of the bridge. It is my view the government shouldn't be in the business of picking winners, but it should also stop tax benefits for oil companies and instead focus on an energy policy with a clear direction: sustainable, renewable energy that not only moves the country toward a carbon-neutral society but pushes the envelope of innovation to strive for a carbon-negative future as well.

The government needs to establish the rules so private equity investors can invest in renewables with confidence. It's hard to kick a football through a moving goal post, but that's exactly the case with endorsing ethanol and then reducing ethanol requirements or encouraging wind developments only to not continue production tax credits. Granted ethanol from food is wrong, but advanced biofuels should be more of a focus. Also, wind is certainly leading the renewable push to be more economically viable versus fossil fuels without subsidies, but many investors want more assurances before they start funding new projects or technologies. 

While a true national energy policy has been lost from sea to shining U.S. sea, there is such a stark contrast of energy views between Democrats and Republicans. This is very troubling to me since such strong opposing stances on alternative energy will only hinder progress toward developing cleaner sources of power at home. We need more clarity on the government position. Therefore the 'all of the above' energy concept should be reevaluated so that reducing carbon and being energy independent can coexist for future generations. 

Could OPEC become a thing of the past?
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John Licata has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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