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Obama's Energy Plan Could Face Uphill Battle

In his inaugural address, President Obama highlighted energy as one of the major challenges facing the nation.

"Each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet," he said.

The president went on to mention briefly what his goal will be when it comes to energy.

"We will harness the sun and the winds and the soil to fuel our cars and our factories," he said.

More details are provided on the new White House web site, which outlines the Obama administration's policies on a wide range of issues.

A Clean Energy Future

Among the energy proposals listed are: creating five million new jobs by investing $150 billion over the next 10 years to promote a clean energy future; reducing imports of oil through conservation and promotion of hybrid electric cars; implementation of a "cap-and-trade" program to reduce greenhouse gas emissions 80 percent by 2050.

Many of the ideas listed are not new and quite a few people in the traditional energy industry question the viability of developing renewable energies to replace oil, coal and natural gas. They note that such sources of energy as solar and wind account for only a small percentage of overall energy use in the United States and that heavy machinery and large trucks cannot be run on electrical power from solar panels and wind turbines.

A First Step, But Questions Abound

Still, energy analyst Ken Medlock at Rice University's Baker Institute for Public Policy, said President Obama has made a major step forward in addressing the energy problem by simply having a plan.

"Having a plan is the first major step toward having something real occur. We have not had a real plan, ever, really. This is exciting, from that standpoint, in that we seem to have a goal and we seem to have a plan to execute that goal," he said.

Medlock is critical of some aspects of the Obama plan, for example, he says the call for one million plug-in electric hybrid cars by the year 2015 would do little, given the fact that there are some 300 million vehicles on U.S. roads. He said he would also like to see a tax on gasoline that would help curb demand and provide funds for energy research.

The Right Moment for Change

Now that oil prices have fallen below $40 a barrel is the perfect time to implement such a plan, in Medlock's view. He said the administration could sell it on the basis of its overall benefits to the economy.

"We import a lot of our oil and if we could curb consumption, we could actually dramatically reduce those imports and that would affect our balance of trade, which would positively influence the value of the dollar, which would do all sorts of things in terms of what we could afford to buy in terms of imported goods," he said.

Medlock also questioned the administration's goal of creating a "cap-and-trade" program, whereby a company that is producing greenhouse gases can buy offset credits from another company that has reduced such emissions. Such a scheme would favor companies that pollute little and put a big economic burden on those that rely on fossil fuels like coal to fire furnaces or generators.

A Rough Road Ahead

Medlock said even some members of Obama's own Democratic Party would fight that idea.

"If you have a Democratic senator or representative from a coal-producing state or a major coal-consuming state, it is going to be a tough sell to that individual to do something that could potentially disadvantage the economy of that state. So I do not think we will see action quickly on that front. I think it will come, but it is probably a one,or two-year sort of issue," he said.

But the Obama administration is only a matter of hours old and still has a long road ahead in terms of forming specific proposals on energy.

Medlock said much will depend on how effective the new president is in formulating policies that draw widespread support from Congress and the American people.