To drill or not to drill? That has been the question this summer as Congress, the president, and both candidates debate where and whether we should be exploring for domestic oil. The implication is that this is an important step in reducing our dependence on imported oil.

It is not. Oil—wherever it is produced—is priced, sold and consumed in a global marketplace. Whatever the outcome of this existential debate, any incremental oil will be sold to the highest bidder, in the U.S.—or in other countries— most of which have an insatiable appetite for oil.
 
Such flaws of strategic logic seem to show up in most discussions on what to do. We must discipline ourselves to follow a more rigorous approach, which can be hard to do given the enormous importance energy has in our lives.  The plans announced recently by T. Boone Pickens and former Vice President Al Gore provide a good opportunity to think through our strategic options, by means of a comparative look. (See the Portfolio.com Green Machine graphic to find out where investors are putting their cash in the clean-tech game.)

I include as a third option a plan to allow cars and trucks on U.S. roads to run primarily on electricity drawn from the regular electric grid.  

Pickens proposes to build massive wind farms in the nation's center to generate a large part of America's electricity, which would then liberate the natural gas that is currently used to generate electricity. If the cars on the road were to be retrofitted to run on natural gas, Pickens argues, the need to import the corresponding amount of petroleum would disappear. Setting aside the task of retrofitting over 200 million vehicles, this plan raises a fundamental question. Natural gas, like oil, is a global commodity that can be shipped anywhere. Even if it is produced in the United States, what makes it stay here? It does so if, and only if, the United States pays the prevailing market price for it, just as we are paying market price for the petroleum fueling our cars today. So very little would change.

Vice President Gore's focus is on carbon reduction. He proposes that by 2018, 100% of America's electricity be generated from sources such as wind, solar and geothermal. Doing so would free a lot of oil, imported and domestic alike, as well as coal and natural gas. The oil, coal and natural gas that the U.S. does not use would become available for others through the world market. Correspondingly, carbon emissions would be shifted to other countries, but the world's total would not be reduced. And, in spite of this effort, cars on the road would still be fueled by petroleum.

I have been arguing that the first task—Job 1—is the electrification of the transportation sector. The fuel needs of transportation account for a very large part of the nation's petroleum consumption. Even more important is that today only petroleum and agri-fuels can be used as sources of energy for the overwhelming majority of the nation's vehicles, even though the residential, industrial, and commercial needs for fuel can be satisfied using the full range of energy sources.  

Put another way, the various sources of energy are fungible for residential, industrial, and commercial uses, but not for transportation.

If we are to undertake the equivalent of open-heart surgery on our economy, we must insist that after the trauma, the fuel for all segments of the economy should be capable of coming from multiple sources of energy. This will allow us to cope with the unexpected, and will prepare us for future transition to renewable sources of energy like wind and solar. This is why fungibility in transportation is important.  

This approach has its problems too. As with Pickens' plan, cars and trucks, old and new, must be converted. They need to be able to run on electric power, even if only partially. As we make progress, we will become increasingly dependent on battery technology and manufacturing, most of which currently takes place outside the U.S. If investments in battery manufacturing abroad outstrip domestic investments, this situation is reinforced. In addition, improved battery technologies may end up using exotic metals.  As we scour the periodic table of elements, our hunt may lead us to yet another set of dependencies.

To better understand the key differences between an electrification approach
and the plans laid out by Pickens and Gore, see the Alternative Thinking interactive feature.

Complicated picture? Yes, it is.

Let's face it, we are dealing with the adaptation of the world's largest industry, under the pull and push of different problems. To have even a small chance to improve matters and end our dependence on imported oil, we need to ask basic questions: What problems do we intend to solve? And in what order? Environmental? Economic? National security? They are all important, but our answers lead to different approaches and to different outcomes.

Personally, my bias is that national security has to be our first priority. We can't lead the world if we're on our knees begging often-hostile nations for oil. Wars have been fought over natural resources, and this could happen again. But whatever the answer, objectivity and clarity are essential for us to make progress on the issue that informs the life of our generation.