BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Tuesday, 1 May, 2001, 15:20 GMT 16:20 UK
Is there a US energy crisis?
Graph of world fuel supply
BBC News Online's Briony Hale examines whether the United States is truly facing an energy crisis.

It was undoubtedly a national embarrassment when California was plunged into darkness during its recent energy crisis.

Without a clear, coherent energy strategy, all Americans could go through what Californians are experiencing now, or worse

Dick Cheney
US Vice President
And now petrol prices are at record levels in US energy markets.

So is the warning by American Vice-President Dick Cheney - that the whole of the US could face worse problems than the blackout-stricken California - realistic?

It seems a strange admission, and somewhat of an exaggeration, since California's problems are very much specific to that particular state.

The fact that you may have to import more energy to cover demand is not a crisis - it's just a change

Malcolm Keay, industry expert
The extent of the US troubles was then further underlined - possibly hyped - by Matt Simmons, an energy industry executive who is also an adviser on the Bush-Cheney team.

"This crisis will likely be far worse than the two oil shocks of 1973 and 1979," Mr Simmons claimed.

Wildlife controversy

But these forecasts of doom must be viewed alongside some of the highly controversial changes that President George W. Bush would like to push through.

Polar bear
The Arctic wildlife reserve is under threat
These include building up to 1,900 new power plants, exploring for oil and gas in the arctic wildlife reserve, considering the construction of new nuclear-power plants and laying down 38,000 miles of new gas pipelines.

And all this in a country that has not built so much as one new refinery for 20 years because of the environmental difficulties of securing a site.

Some of Mr Bush's opponents have accused him of shifting energy policy in return for the large campaign contributions he received from the oil industry.

If the US population is to accept such a policy shift, they will need to be convinced that there is a real problem out there.

US energy expansion plans
Up to 1,900 new power plants
38,000 miles of new gas pipelines
Consider new nuclear-power plants
Build new refineries
Open new areas to oil exploration exploration
"Their plan seems to be to create a crisis mentality, so that policies that the public would reject under ordinary circumstances can gain support," said Dan Lashof of Natural Resources.

Malcolm Keay, deputy head of Energy and the Environment at the Royal Institute of International Affairs in London, also believes that the word 'crisis' is being used excessively to create a favourable climate to introduce non-green legislation.

"The fact that you may have to import more energy to cover demand is not a crisis - it's just a change," Mr Keay told BBC News Online.

Genuine problems ahead

But although few analysts think that the US is about to face widespread blackouts, there is a strong case for reforming US energy policy.

Gas fired power plant
Up to 1,900 new gas-fired power plants would be built in the next 20 years
"There's no doubt that the US has real problems," Jane Collin of the Energy Intelligence Group told BBC News Online, adding that this was a "weird" position for the world's biggest economy to be in.

And Mr Keay says that Bush's changes should not be dismissed with an overdose of cynicism. He believes there is a genuine need to overhaul US energy policy.

This week, for example, the price of gasoline futures being traded on the New York Mercantile Exchange (Nymex) are at their highest level ever.

They have risen well beyond the highs seen during the Gulf war without so much as a disruption to crude oil supplies.

This illustrates a problem local to the US itself.

Price spikes

Monday's sharp rise was sparked by a fire at the Illinois refinery in the Midwest.

But the fact that one refinery can cause such a spike demonstrates an infrastructure that is running close to capacity.

nuclear power plant
The US will consider building more nuclear power plants
Under the Clinton administration, each state introduced a variety of laws regarding the quality and pollutants acceptable in petrol.

The UK has undergone similar reforms, with lead-free petrol and ultra-low sulphur fuels available at pumps across the country.

But there has been much less conformity in the US, with each state making its own laws as to quality and the timeframe of the changes.

This is why one fire at one refinery in Illinois can cause prices to spike - because it is has not been possible for refineries in different states to increase production and meet the demand.

Environmental concerns

President Bush is now pushing to end America's vulnerability to such changes by expanding its capacity.

Both Bush and Clinton recognised the need to meet increasing energy demand.

During the eight years of Clinton Administration, the focus had been on conservation and renewable energy.

From what we've seen so far, the Bush administration is far more pro-oil than pro-environment

Jane Collin
Energy Intelligence Group

Mr Bush is approaching the problem from the supply side, increasing the nation's capacity to make more electricity, refine more petrol and generate nuclear power rather than trying to cut energy use.

The fundamental difference between the two approaches boils down to the importance laid on environmental issues.

"From what we've seen so far, the Bush administration is far more pro-oil than pro-environment," Jane Collin told BBC News Online.

Mr Bush - as demonstrated when he refused to ratify the Kyoto agreement - believes that legislation has swung too far in the favour of the environmentalists.

And one way to try and enlist the support of the public for high-risk strategies such as developing nuclear power could be to use the "energy crisis" scare-tactic.

Search BBC News Online

Advanced search options
Launch console
See also:

01 May 01 | Americas
Cheney warns of power shortages
30 Mar 01 | Americas
Kyoto: Why did the US pull out?
Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories