Thursday, June 12, 2008

Are We Nuts, Or Just Insane?

The title is not a rhetorical question. It is a serious question about our Domestic Energy Policy. $4 Gasbags published in the Review and Outlook section of the on-line edition of "The Wall Street Journal" contains the following: hence the title.
Record-high fuel costs are hitting consumers and business like a huge tax increase. Yet the U.S. remains one of the only countries in the world that chooses as a matter of policy to lock up its natural resources. The Chinese think we're insane and self-destructive, while the Saudis laugh all the way to the bank. [Italics in original; Emphasis mine]
Our elected officials are elected to REPRESENT our best interests. Currently national polling data indicates almost 3 of every 5 voters considers the Exploration, Development and Production our DOMESTIC OIL and GAS Reserves our BEST INTEREST. But ...
Anyone wondering why U.S. energy policy is so dysfunctional need only review Congress's recent antics. Members have debated ideas ranging from suing OPEC to the Senate's carbon tax-and-regulation monstrosity, to a windfall profits tax on oil companies, to new punishments for "price gouging" – everything except expanding domestic energy supplies.
So the Chinese think we are NUTS and the Saudis cry for us all the way to the bank.

We deserve a better Representation from Congress and this includes both Senator Obama and Senator McCain. The amount of Reserves are staggering. We have enormous Domestic Reserves, but 97% is either off limits or undeveloped.
While energy "independence" is an impossible dream, there's no doubt the U.S. has vast undeveloped fossil-fuel deposits. A tiny corner of the Arctic National Wildlife Refuge contains an estimated 10.4 billion barrels of oil and would be the largest producing oil field in the Northern Hemisphere. Yet the Senate blocked that development as recently as last month. The Outer Continental Shelf is estimated to contain some 86 billion barrels of oil, plus 420 trillion cubic feet of natural gas. Yet of the shelf's 1.76 billion acres, 85% is off-limits and 97% is undeveloped.
The other nations of the world are watching us self-destruct while shaking their heads in disbelief. On this issue we are the crazy Uncle in the Attic.

Before the Democrats gained control of the Congress in 2006, it was the Republicans who controlled the Domestic Energy Reserves. The issue was in favor of the Environmentalists up to the Nancy Pelosi, Harry Reed era. Now the pendulum has swung the other way because in 2006 the price of gas was around $2 a gallon. Since the Democrats have become the majority, the price has doubled and the Average Joe and Jane have decided it is no longer OK to restrict Domestic Energy Production.

Unfortunately the most of the Democrats, (and a few Republicans) have not seen the writing on the wall. "It's the Energy Policy, and the High Cost of Gas, Stupid." We need to start now, because it will take 5-10 years to bring our Domestic Reserves to Market.
Yes, we know, increased drilling is no energy cure-all; new projects take about a decade to come on line. Then again, more than a few experts say that new production could affect price as the market perceives a new U.S. seriousness to increase supplies. Part of today's futures speculation is based on the assumption that supplies will remain tight for years to come, even as Chinese and Indian demand surges. [Italics in original]
In other words, just announcing a change in the Domestic Energy Policy would have a stabilizing effect on the price of energy. It is simple Economics 101 "The Law of Supply and Demand". Changing our Energy Policy is one step to greater Independence. The additional necessary step of increasing Refinery Capacity is the next step in this process.
Nor would merely repealing the exploration bans be enough. Between 2000 and 2007, the drilling of exploratory oil wells climbed 138%, but over the same period domestic crude oil production decreased 12.4% and fell to the lowest levels since 1947. Refineries for gasoline are stretched to the limit, but multiple regulatory barriers impede new construction or even expansions at existing facilities. Then there is the inevitable lawsuit downpour from the environmental lobby.
The public (voters) generally blame the Party in power for economic troubles. In this case that means the Republicans. And it can be fairly said that until 2006 the Republican Party was the problem, now it is the Democrats and the Congress they control who are the problem. Blaming the Republicans for the mess now is like blaming the motorist who ran the red light for the accident while the victim is bleeding in the street. It is time for the Democrats to call 911.
Democrats are going to have to grow up. The oil-rich areas they want to leave untouched are accessible with minimal environmental disturbance, thanks to modern technology. Hurricanes Katrina and Rita flattened terminals across the Gulf of Mexico but didn't cause a single oil spill. As for anticarbon theology, oil will be indispensable over the next half-century and probably longer, like it or not. Airplanes will never fly on woodchips, and you won't be able to charge your car with a windmill for some time, if ever.
So far the Democratic Party is refusing to recognizing they are the problem. They hold Committee hearings for Oil Executives to point fingers of blame instead of accepting responsibility. Jimmy Carter tried this some time ago - it didn't work.

Alas, John McCain has failed to capitalized on the opportunity. Hopefully the Republican Minority in Congress will.

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