National and international energy markets are experiencing historic upheavals that will only be accelerated by next week's presidential and congressional elections.

The explosion in oil prices that peaked in July has already had a lagged but substantial effect on consumer behavior. People are driving less, adjusting preferences on what kind of cars they buy and, in some cases, where they live. Even if prices remain well below the peak, history suggests it will take several years for the effects of the energy shock to wear off.

Less recognized, the Congress last year passed the most substantive package of energy legislation since at least 1980. The Energy Independence and Security Act of 2007 mandates a 40 percent improvement in the fuel efficiency of passenger vehicles by 2020, robust new requirements for biofuels (not just corn-based ethanol), and big improvements in the efficiency of appliances and lighting. By 2015, the purchase of the venerable but inefficient incandescent light bulb will be virtually illegal. Those are tough measures, and they passed by wide margins.

Now we have the most closely watched presidential election in recent memory. Never before, even during the elections following the Arab oil embargo of the 1970s, have the two candidates talked so much about energy. Their plans (available on their Web sites) promise an end to business as usual. Sen. Obama calls, for instance, for an 80 percent reduction in greenhouse gas emissions by 2050; McCain sets his target at 60 percent. Both goals are daunting, since they use a 1990 baseline, since which emissions have risen 20 percent.

The congressional elections look like they will bring in a new crop of members eager to reduce reliance on Persian Gulf oil and slow global warming. With the long-time prestige of "unfettered markets" in disarray due to the financial meltdown, the door is open for prudent government intervention.

These trends will inevitably reduce reliance on fossil fuels and promote growing roles for energy efficiency and alternatives forms of energy. Through decades of neglect, however, the United States has lost its leadership in many vital technologies that produce energy without emitting carbon dioxide, ranging from photovoltaic cells to nuclear power. Europe leads the world in the development of clean, very efficient diesel engines for automobiles; Japan does the same for hybrid-electric technology. Where does the U.S. get an edge in the emerging energy market?

Light-emitting diode (LED) technology, for one, is making stunning progress in producing bulbs with high quality, super efficient bulbs. Although market-ready for some applications now, more advances are needed to expand usability. There will be substantial financial rewards to those who lead on LED technology.

Further out on the horizon stands the possibility of getting our transportation fuels from algae. As I describe in my new book, A Declaration of Energy Independence, yields per acre and the ability to produce the full range of gasoline, diesel, and jet fuel make this a very attractive prospect. The federal government shut down its civilian research program on algae in 1998 ( what were they possibly thinking?). However, there has been a burst of algae research recently in both the private and public sectors. Much work lies ahead to get algae fuels market ready, but again the potential payoffs are immense. (Don't miss " Biofuel Breakdown: Algae, Biomass, Waste" and " DOE Doles Out Bucks for Biofuel Producers")

The list of technologies that will benefit from our new directions in energy policy is immense. Those who assume that our energy future will end up looking like our energy past will end up missing the boat.

Editor's note: To stay up to date on energy, visit our Energy/Commodities page, which currently features coverage of Exxon Mobil's (XOM) latest earnings. This morning, the oil giant set a new record for highest quarterly earnings from a U.S. company.
Jay Hakes headed the U.S. Energy Information Administration at the U.S. Department of Energy from 1993 to 2000.

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