Carpe The Freaking Diem

 I've had my disagreements with Yglesias more often than not, but one area we tend to agree on is energy policy. His argument that inflation is fundamentally tied to exploding energy prices is one I agree with. I also agree that the stagflation of the '70s was fundamentally about energy costs. You don't get the same inflation today with other issues like the supply chain problems, but without energy, none of this registers the same way.

What Yglesias focuses on is how to create more energy to bring prices down and how that's tricky because of past spikes and crashes. Fracking, as he notes, enjoyed a boom during a previous period of high energy prices, but then crashed when the Saudis pumped more oil. It's worth noting that Saudi Arabia's intransigence on this issue should herald a refocusing of our Middle Eastern and energy policies. Let's get the Iran nuclear deal up and running and get Iran pumping oil into the economy.

The Saudi issue is a good example of the problem both in the moment and long term that this poses for policy makers. The Biden Administration obviously wants energy prices to go way down before the midterms and GOP attacks on the Biden Administration are transparently cynical. However, we have a clear policy opportunity in front of us.

- We have ample evidence that energy supplies are fragile and usually dependent on some of the worst regimes in the world.

- This impacts our economy and our national security. In fact, our responsible national security position - support Ukraine - comes into direct conflict with our economic needs - cheap Russian energy. As long as global markets are dependent on regimes like Saudi Arabia, Russia, Venezuela and Iran, we are fundamentally not in control of some basic elements of our macroeconomic destiny.

The opportunity exists to create a long term policy to move off imported fossil fuels, but it won't make a terrible amount of difference in the short term. The long term benefits are huge, but we tend not to address long term benefits, given the exigent nature of our politics. 

First, we need exponentially more electrical generation. This means more solar, more natural gas, but it means more nuclear. If we want to dramatically alter our energy production, energy independence and economic autonomy, then we have to stop dicking around about nuclear power. Every kilowatt hour that is produced by nuclear power is one not produced by natural gas - which can then be rerouted to other uses.

Also, if we have an abundance of electricity from nuclear power, then we can convert water to hydrogen, which opens all sorts of opportunities for alternative fuels. 

We have seen the folly of abandoning nuclear power in Germany's current dilemma. They are so dependent on Russian gas that they cannot act with regards to Ukraine, and they are dependent on Russian gas because they shuttered their nuclear power plants.

There is an understandable tension between wanting to address CO2 emissions and global warming and wanting to address inflationary energy prices. Building out nuclear power will not help solve the immediate energy crunch. Easing our sanctions on Iran and Venezuela might be the best bets there. But using this "crisis" to create a long term solution to BOTH climate and energy precariousness would be the responsible long term action.

There's the old saw about what you would do if you could go back in time and tell your younger self one thing. Presumably that one thing would allow for amazing changes over the intervening decades. If I started to learn the guitar in my 20s I could play by now. The same is true for something like long term policy. Adding nuclear capacity will take years to pay off, but it will pay off by having the electricity necessary to drive EVs and use electricity to heat and cool our homes and create hydrogen and even desalinate sea water.

Use this energy crisis to change meaningful things for decades to come.