VINCENT DeVito is now an international energy attorney in New York with the law firm of Pepper Hamilton LLP.
But he was once an acting assistant secretary in President Bush’s Department of Energy, where he oversaw policy and international affairs.
I sat down with DeVito for a chat on the president’s newfound focus on our oil “addiction.” Here’s part of our discussion.
What is wrong with our energy policy? What should it be?
DeVito: Our energy policy should be conservation. What I really think the government needs to do is figure out a way to get people to start using less oil.
Assuming Americans are not going to tighten their belts as far as energy use is concerned – because we haven’t – are alternatives like using hybrids a realistic possibility?
DeVito: What I’ve said is that we need a Manhattan Project or an Apollo Program with regard to the energy problem.
The Department of Energy really isn’t the Department of Energy. It is actually the Department of Science, Technology and Energy. The labs at the DOE are working fiercely to come up with new technologies to be substitutes for and enhance our fuel supplies. Essentially, what we need is to find alternative sources of energy to replace, or enhance, our current fuel supplies.
Should we encourage exploration in our own country?
DeVito: Yes. In the national security context, it’s really important to look at our own continent, Canada and Mexico. Understandably, the Mexico government’s ownership of its natural resources is part of Mexico’s national pride.
Unfortunately, that dynamic will make it very difficult for President [Felipe] Calderon to reform Mexico’s energy sector and invite the private investment Mexico needs for exploration and development.
The U.S., with Wall Street, must continue to work toward market reform in Mexico.
Is there a substantial amount of oil in Mexico?
DeVito: Yes. We don’t have the data for Mexico. It’s not shared with us. But knowing what we do about the Gulf [of Mexico], the answer is yes.
And Canada is already a big producer.
DeVito: Yes, a million barrels a day out of the oil sands. It’s more marketable when the price of a barrel is at $50 as opposed to $20 a barrel. They are actually thinking of building a new power plant to help them process the fuel out of the tar sands.
What many American’s do not know is that Canada is our largest supplier of petroleum products, not Saudi Arabia. While in the administration, I was U.S. chair of the North American Energy Working Group and we worked tirelessly toward integrating our continental energy market.
And where should we be drilling?
DeVito: Some of the states want to drill off the shores, even on the Eastern seaboard.
Should they be allowed to do it?
DeVito: They should in an environmentally sound manner, but of course it strongly resonates as a local issue. The question is, is it worth it? The Gulf of Mexico? Yes, everybody says it’s worth it.
So we should be drilling there.
DeVito: We have been drilling there. The fact of the matter is, if you look at Texas and Louisiana, the folks are used to it. So they are not too averse to having platforms off shore.
So the supply should be increased by hook or crook. The supply should be increased here and overseas. So we need to work on the demand. Assuming that Americans are still going to want to drive their cars, alternate forms of engines will be necessary. Correct?
DeVito: Right, diversity of supply should be increased.
Should the government subsidize?
DeVito: The government should subsidize, right now, and mandate all sorts of alternative fuel supplies.
It should also mandate conservation – in other words, higher efficiency for cars. But the fact of the matter is some of the alternative forms of energy are just too expensive to be produced.
Without the subsidies and without the mandates Wall Street will not invest and they are just not viable in the market.
With government’s assistance, alternative fuels rightfully become investor targets and we are driven toward diversity of supply and efficiencies.
Part of the pricing problem is is due to speculation. Do you agree?
DeVito: That’s absolutely correct. I think part of the price of oil is based on a “how high can we go” pricing strategy.
