Economics and Energy Expert Paul W. MacAvoy Voodoo Economics for a New Generation

Best remembered for coining the phrase “voodoo economics’ during the Reagan administration, economist Paul W. MacAvoy has spent a 30-year career at the intersection of energy markets and government regulation and served as a board member of the United States Synthetic Fuels Corporation, a federally funded organization meant to wean America from imported fossil fuels. Now 75, MacAvoy offers grim predictions for a renewable energy future.

E Magazine: What were some of the original goals of the United States Synthetic Fuels Corporation (SFC)?

Paul W. MacAvoyPaul W. MacAvoy: The SFC chose investment opportunities that weren’t profitable but were for the purpose of generating new and profitable technologies, so we investigated and invested in technologies that turned solid coal, shale, rock, natural gas and petroleum into liquid and gaseous fuels. At that time, there was no interest in capturing air currents or warm water in seas; we focused on hardcore additives to liquid fuels.

E: What is your opinion of the Obama administration’s support for carbon sequestering technologies that aim for near “zero emissions’ from coal-fired power plants?

P.W.M.: The Obama budget wants to commercialize additional sources of liquids and gases primarily from coal, but the clean coal project we started at the SFC and that was later taken over by the Department of Energy was projected to liquefy coal within 15 years—and this project has yet to liquefy coal. They used more liquefied fuel then they get from coal and they make a mess of it. It’s a huge environmental problem.

E: Do you think “clean coal” technology will become a reality?

P.W.M.: I think getting clean coal is very difficult. The techniques to remove the liquids and gases out of coal and oil shale are high heat, high pressure and high temperature. These are old technologies, nothing from the world of digitization, biology or chemistry. They just press the damn thing until the liquid is squeezed out, and of course, this hasn’t worked.

E: How do you envision America’s energy future?

P.W.M.: Well, we can continue to import oil for the next 50 years and run up our annual bill over $1 trillion, or we can develop domestic sources of liquids and gases and to some extent cut down the current $700 billion foreign deficit. Ultimately, I think they will come up with deep drilling techniques, but these have to be applied to parts of the country that are out of bounds right now, like off Fort Meyers, Key West, five miles out in California as well as the old drilling areas in Alaska. But I implore you, you must take electricity almost entirely separately from the liquid and gaseous fuels.

E: And the electric car?

P.W.M.: There are people who will buy electric cars, but, fundamentally, you have to go to consumer demand and my research tells me only 15% of consumers will buy electric cars. Ten, 15, or 20 years out hearts and minds of the consumers might change, but today people want speed, heft and safety, and you can’t get that in an electric car.