Challenge for the Next President: Energy

In the first of four articles, Boston Consulting Group's Harold L. Sirkin suggests how our next President can curb the need for foreign oil

By Harold L. Sirkin

Dear Senators McCain and Obama:

When one of you is sworn in as the 44th President of the U.S. next Jan. 20, you will inherit many problems and an even greater number of challenges. U.S. competitiveness falls into the latter category.

Though we tend to compartmentalize things—such as looking at Afghanistan, Iraq, the financial crisis, the environment, education, taxes, Medicare, Social Security, etc. as separate items—action on every item on your agenda will be limited by America's ability to pay for them. This will be determined, absent even more borrowing, by the economy's performance. And how well the economy performs is at least partly a function of our competitiveness: how well U.S. companies fare in the global marketplace.

Because the economic landscape continually changes, that marketplace today is far different than it was when either of you set out in public service. U.S. companies today are not just competing with Japanese, Western European, and South Korean companies, but with rivals from all over the globe, even places we used to call "Third World." Nor are we competing merely for customers and market share. We are competing with everyone from everywhere for everything: customers, raw materials, natural resources, financing, knowledge, and even people. We call this new phenomenon globality.

"Natural Security" is a key issue

I know you want to make sure that when you are President, the U.S. maintains its competitive leadership in the world of globality. To do that, you and the new Congress will have to address four key issues: energy, education, infrastructure, and productivity. In a series of columns, I will do so in the weeks ahead.

Like you, I have children and am concerned about the world they will face. I humbly offer my perspective because I want to help ensure that all of our children and grandchildren inherit an America that is competitive on the world stage—second to none. I hope you and your advisers will consider these observations and recommendations in the spirit with which they are offered.

It's fair to say that few issues are more important to the long-term health and success of our businesses, economy, and country than weaning the U.S. from its dependence on foreign oil. We now pump hundreds of billions of petrodollars each year into the economies of foreign countries. For economic, national security, and "natural security" (e.g., global warming) reasons we've got to stop this reckless behavior. This isn't only something we can do, but something we must do. And it's one of those rare win-win combinations. By reducing our dependence on foreign oil—and over the long term on fossil fuels in general, regardless of their source—we not only achieve energy independence, but reduce pollution and global warming while creating American jobs.

Presidential Warnings Began With Nixon

Unfortunately, our nation has held this conversation before. Every U.S. President since Richard M. Nixon has been beset by the energy demon. In 1973 under him, and in 1979 during Jimmy Carter's Presidency, the U.S. experienced its first two major oil shocks.

Both Carter and Nixon questioned our reliance on foreign energy. Calling the challenge we faced "the moral equivalence of war," Carter called for a new energy policy to wean the U.S. from its reliance on unreliable and unfriendly sources of oil. Presidents Ronald W. Reagan, Bill Clinton, George H. W. Bush, and George W. Bush have issued similar alarms.

Yet the situation has gotten worse. In 1970 we were importing only 23% of our oil. Today we're using far more oil overall, and importing more than 60% of it. To date, we have fought this "war" in name only—without an agreed-upon national objective, without a strategy, without a commander-in-chief focused on victory, and without a dedicated budget. If we had started to work seriously on this in 1973 and continued to work on it for 35 years, the U.S. would control its own energy destiny today.