Manhattan Project Equivalency

Obama and the Democratic "talking point" gang speak often of a “Manhattan Project” for our energy future. The WWII Manhattan Project cost was $2B between 1941 and 1946. That translates into about $24B in 2008 dollars.

The Department of Energy's ('DOE') budget request for 2009 is about $25B. If you strip out money for security and defense (nuclear non-proliferation, navy nuclear, etc.) the DOE budget is about $16. At this run rate we will spend $80B over the next five years, the length of the Manhattan Project if you throw out 1941, a ramp-up year. In other words, we are already spending more than three times as much on government energy spending as we did on creating the atomic bomb – just by the DOE.

Now, think about all the tax credits for solar and wind. Then add the ethanol subsidies. None of this is in the DOE budget. They are just giveaways to promote certain behaviors. And of course none of this includes the costs that are externalized from the federal budget via mandates for everything from cleaner emission requirements for coal plants, increased spending by car companies to meet mileage and emission requirements, and increased costs of food due to diverting vast agricultural resources away from food to fuel. The Pentagon is spending huge sums of money to buy synthetic fuel (coal gasification – even with today’s oil prices it still costs 50% more than refining oil into transportation fuel).

I don’t know how much all these subsidies and externalized costs add up to but let’s say conservatively that it is another $100B over 5 years (it is probably much, much more). The point is that the government is spending enormous sums of money on energy research, alternative fuel subsidies, and even greater sums are being spent on unfunded government mandates.

Now I’m not debating the validity of any of these efforts. I’m just pointing out that there are enormous taxpayer and consumer monies being spent on all of this – far in excess of “Manhattan equivalency”. So when Obama talks about a Manhattan Project for energy, just exactly what is it he thinks can be accomplished and how much will it cost? I don’t think that anyone is suggesting that there is some energy source just waiting for the government to discover that will suddenly solve the problem, like the atomic bomb ended WWII.

In the case of the Manhattan Project, the theory was understood. The nature of critical mass had been established at the University of Chicago. As long as Oakridge could produce the enriched uranium, Los Alamos just had to figure out how to trigger a critical reaction on queue.

With energy the list of alternatives is well known. With oil at $130/barrel and climbing there is a strong profit motive for venture capitalists and entrepreneurs to develop better execution of these alternatives. In many ways, this is an easier problem to solve than the atom bomb.

The government can, and already does, fund a great deal of research to help alternative technologies reach commercial scale. The government can also apply a little common sense and enable us to attack the problem across the board using all of the resources at our disposale, both new and traditional.