As any driver can tell you, the pain at the pump is pretty acute right now. It’s a simple matter of supply and demand. Demand is up (thanks, in part, to an increasing appetite for fuel in China and India), and supply is low.
And if there’s one thing that makes the pain worse, it’s knowing that supply doesn’t have to be this low.
Are the ridiculously high prices we’re paying the fault of the big, bad oil companies? No, the lion’s share of the blame goes to politicians, who have locked away vast amounts of American energy—both oil and natural gas.
In the 1980s, Congress began restricting more offshore areas from energy exploration—prohibiting drilling in more and more places around the country. With energy relatively cheap, it was easy to give in to the carping demands of radical environmentalists, who (then as now) exaggerated the impact of drilling and downplayed the benefits.
Then, in 1990, President George H.W. Bush issued a directive restricting new offshore exploration and drilling. President Bill Clinton compounded this error in 1998 by extending the directive to 2012.
Fast forward to 2008, and it’s abundantly clear that we can’t leave huge deposits of energy to remain buried in our own backyard for another four years.
How huge are these deposits, you ask?
The latest estimates from the Interior Department indicate that the off-limits areas contain 19.1 billion barrels of oil and 83.9 trillion cubic feet of natural gas. According to Ben Lieberman, an energy expert at The Heritage Foundation, that’s about 30 years’ worth of imports from Saudi Arabia—and enough natural gas to power America’s homes for 17 years.
At a time when you practically need to take out a second mortgage to keep your car in gasoline for a month, it’s insane to keep such restrictions in place. Yet that’s exactly what politicians have been doing for years, even as they harp on the need for “energy independence.” The hypocrisy, even for Washington, is astounding.
But what, some ask, about the environmental impact? If we drill in Alaska’s Arctic National Wildlife Reserve, for example, or in many offshore areas, won’t we be harming nature and local species? In fact, technology has improved substantially over the years, reducing the “footprint” of such drilling efforts to a tiny one. (The booming herds of caribou around the Prudhoe Bay area in Alaska, for example, are encouraging.) And their safety record is impressive. As Washington Post columnist Robert Samuelson says, “We have thousands of rigs in the Gulf of Mexico, yet not even hurricanes Katrina and Rita resulted in spills of any significance.”
Fortunately, President Bush has called recently for America’s offshore areas to be opened to exploration and drilling. “If Congress is serious about addressing high energy costs,” Lieberman writes in a Heritage Web memo, “it should quickly send legislation to the president that removes restrictions on these vital energy reserves.”
Lawmakers can take some other sensible steps while they’re at it. They should repeal the mandate to mix more ethanol in our nation’s gasoline supply, for one. As Ben Lieberman notes in another Heritage paper, all the ethanol mandate has done is raise prices—not only on energy (which it supposedly would bring down) but on food.
It’s also time for Congress to stop subsidizing “alternative” energy sources such as wind and solar power. There’s anything wrong with such sources—if private investors want to fund them, no one’s stopping them. But more than 30 years of attempts by the federal government to encourage such alternatives have resulted in numerous failures. Even after decades of special tax breaks, wind and solar power account for less than 3 percent of our nation’s electricity.
What else can policymakers do? They can cut some of the regulatory red tape that affects refineries and gas supplies. Heritage research shows that tight refinery capacity contributes to higher prices at the pump. We need new refineries, but current regulations make it all but impossible to build a new one or expand an existing one. This needs to change. It’s also crucial that we get more of our energy from nuclear power.
President Reagan knew how to respond to high gasoline prices. He deregulated crude oil prices in the 1980s, a decision which brought gas prices down and helped spur economic growth.
It’s time we open the marketplace and harness the rich, natural resources of oil right here in America.
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