The U.S. Energy Secretary Steven Chu has marked a radical shift in U.S. energy policy away from its historical focus on OPEC and oil supply and toward a policy of cutting petroleum demand and promoting renewable energy at home.
OPEC is due to meet in Vienna on March 15 and when Chu was asked what the government’s position on another oil output cut he admitted that he did not know and that it was not in the “domain” of his job responsibilities. This was a shocking statement from the energy secretary of a country that had for the past forty years been in a symbiotic dance with oil producing nations that has led to wars and adventures that have cost trillions of dollars and millions of lives.
It is a stance that is in stark contrast to some of his recent predecessors who routinely lobbied the cartel for more supply, and is clear evidence of the sea change that has taken place in the U.S. administration and will send a clear signal to OPEC.
Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois said “We’ve been wrestling with OPEC for more than 40 years and we haven’t really made any progress reining them in. Chu is signaling a de-emphasis on Middle East oil and it is clear we will be heading in a greener direction.”
Other energy secretaries have as a matter of course focused on securing imports and raising domestic supplies to meet voracious U.S. energy demand, Chu has said he will push for more renewable energy, promote ways to save energy and fight global warming.
“By investing in groundbreaking research, making homes and businesses more energy efficient and deploying solar, wind, biomass and other clean energy, this … will help ensure that America once again leads the world in confronting our global economic, energy and climate challenges,” Chu said last week in reference to the Obama administration’s new budget.
The administration is hoping the shift in investment focus will create millions of jobs while reducing the country’s dependence on foreign oil, Energy Department spokeswoman Stephanie Mueller said.
“Secretary Chu is extremely intelligent,” said Guy Caruso, former head of the government’s Energy Information Administration and now a senior energy adviser at the Center for Strategic and International Studies. “In the long run focusing on renewables and efficiency certainly makes sense.”
OPEC has already agreed to slash 4.2 million barrels of oil from the global market to combat a steep slide in prices, and members have said they may consider deepening the cut in Vienna.
The danger is that a rebound in oil prices could hamper an economic recovery, experts have said.
The last Democratic energy secretary, current New Mexico Governor Bill Richardson, went as far as calling OPEC ministers during one of their meetings for some last-minute lobbying against an output cut.
“OPEC is engaged in the business of maximizing oil revenue and there’s no evidence that U.S. jawboning ever has or ever will persuade the cartel to leave money on the table,” said Jerry Taylor, energy expert at the Cato Institute. “U.S. policy to whine, beg, threaten and tantrum (OPEC) is embarrassing and counterproductive.”
Whatever Chu does, or says now would have little sway over what OPEC decides at its meeting as the oil producers suffer falling oil revenues due to the collapse in prices and demand. But it does mark a clear shift in direction and intent of the energy policy of the U.S. and is sure to have OPEC ministers wondering where they fit into the energy mix of the future.