Green Jersey

The week in U.S. energy

by William Owen

The U.S. is moving toward greater transparency in the energy market, with the Obama administration’s emphasis on energy efficiency showing its commitment to a multifaceted approach to solving our energy problems and addressing global warming.

Last week the Department of the Interior moved to begin eliminating the Royalty-in-Kind program, in which oil producers leasing public lands were allowed to pay royalties with material commodities.

The termination of the program comes after reports of its ineffectiveness, mismanagement and questionable value, and marks a small but important step in an effort to open the energy market to greater transparency.

Many critics have pointed to the inherent conflicts of interest in the RIK practice by making the government a player in the market. A Government Accountability Office report last week criticized the Minerals Management Service, which managed the program, for numerous failures resulting in millions in lost revenue. Last year’s allegations of corruption, drug use and illicit sex led to the resignation of former RIK director Greg Smith and conviction of former deputy associate director Milton Dial.

Despite objections from energy producers (who, coincidentally, were the ones that lobbied the program into existence), Interior Secretary Ken Salazar announced plans to let all current contracts expire.

And on Monday, Energy Secretary Steven Chu outlined numerous steps his department was pushing to increase energy efficiency; efficiency and conservation measures could reduce by half the amount of new energy generation needed through 2030.

Chu says a more up-to-date, smarter electrical grid nationwide would allow for more renewable energy and allow consumers to more easily make efficient energy choices.

Finally, President Obama delivered a major speech on the need for changes to worldwide energy consumption and global warming action. One of his goals is to reduce global fossil fuel subsidies among the G20 nations he will meet with next week.

Fossil fuel subsidies remain the chief barrier to a free energy market, allowing oil, gas, and coal companies to hide the true cost of their products from the public. The U.S. alone has granted $72 billion in subsidies to oil and gas companies from 2002 to 2008, while these same companies have recorded massive, record profits.

Altogether, this multifaceted approach, addressing the issues of energy creation, efficiency, and generation, should help to provide real pricing structures for the energy we use — and can be used to fairly make assessments of the cost of renewable, cleaner technologies.

William Owen is a Green Jersey contributor.