$100 barrel of oil worth energy policy

Energy security is once again on the front burner.

Just consider the economics. Persian Gulf oil now costs more than $100 per barrel when you factor in the price of keeping U.S. and coalition forces in the Mideast. This gets people's attention.

Energy security has many dimensions. On the supply side are initiatives for new exploration and development, switching to alternative fuels and improving supply stability by getting oil from more politically stable regions. Development initiatives include proposals to open up the Arctic National Wildlife Range, called ANWR, for oil drilling.

Proposals to encourage alternative fuels - especially in transportation where we consume two out of three barrels of imported oil - include electric cars and other alternatives.

New fuels include compressed natural gas (CNG); methanol, made from biomass, coal and natural gas; ethanol, for which the feedstock is corn; and hydrogen. Liquid petroleum gas (LPG) is a byproduct of oil, so it doesn't help much to reduce oil dependency.

However, there are many problems with alternative fuels. Cost is a major barrier to ethanol, hydrogen and other sources. New battery technology is needed to make electric cars efficient.

Costly new infrastructure - such as special fueling stations and dedicated electrical outlets in the home - will be required for CNG and electric cars. The list of problems is a long one.

However, with the cost of U.S. military operations in the Mideast figured into the equation, it is more attractive to explore these alternatives, which in the past have been the darlings of the subsidy crowd.

But now it is increasingly a question of what do you subsidize: troops in the desert of the Arabian peninsula or new research and development by U.S. industry, American universities and federal laboratories. These are interesting choices which promise a lively debate.

On the demand side are price and policy driven initiatives to increase conservation and improve energy efficiency. This is where we will see major battles in Congress around strategy, ideology and the role of government.

Some approaches invoke market forces, including the use of taxes and price mechanisms - such as new gas taxes or oil import fees - to promote conservation. Others emphasize mandates - such as regulations to increase Corporate Average Fuel Economy, called CAFE standards, that increase the fuel efficiency of new automobiles. But automakers are strongly opposed.

A third strategy is in the works: forging new continental and hemispheric energy alliances to improve supply stability.

These include North Sea and Soviet oil and gas to fuel Europe; a new energy supply federation for Japan, South Korea, Taiwan and other industrializing Asian countries; and expanded energy cooperation in the Western Hemisphere. The key players here are the United States, Canada, Mexico, Venezuela and Brazil, the major hemispheric energy producers.

Some big changes are in the works.