Energy Policy: A prudent time for change

By DAVID JENKINS, REP Government Affairs Director

AN HISTORICAL DOCUMENT: This article first appeared in the C.E.P (Conservative Environmental Policy) Quarterly, Spring 2005, Vol. 1, #1

“We use 25 percent of the world’s oil. With only 2 percent of reserves and 8 percent of production, we’re depleting our reserves four times faster than the rest of the world. It doesn’t make sense to me to use our oil up even faster.”

—Congressman Roscoe Bartlett (R, MD)

Representative Roscoe Bartlett (R-MD) has been drawing attention to this problem, along with Representatives Wayne Gilchrest (R-MD) and Vern Ehlers (R-MI), in a series of special order speeches given recently on the House floor. In those speeches, Bartlett and his colleagues have highlighted compelling evidence that the world supply of oil is peaking and that the diminishing supply of oil cannot keep up with growing demand.

U.S. oil production peaked 35 years ago and has been declining ever since. Big oil finds like Prudhoe Bay did little to slow this decline.

Representative Bartlett makes a compelling case that increasing domestic oil production is actually detrimental to the nation’s energy security. In an April 18th press release, Bartlett said, “We use 25 percent of the world’s oil. With only 2 percent of reserves and 8 percent of production, we’re depleting our reserves four times faster than the rest of the world. It doesn’t make sense to me to use our oil up even faster.”

The disruptive oil embargo and gasoline shortage of the 1970s was a temporary blip that pales in comparison to what lies ahead if we do not significantly reduce our dependence on oil. The oil supply and demand problems that currently face the U.S. are long-term liabilities that threaten to impact our economy for the foreseeable future.

Americans are already seeing gasoline prices surge to well over $2 per gallon. Goldman Sachs, a leading global investment banking firm, believes that oil markets have entered the early stages of a “super spike” period, and is predicting near-term crude oil prices as high as $105 per barrel.

Even though there will be continuing short-term ups and downs in oil and gasoline prices, there will be unrelenting upward pressure on prices in the long-term. Supplies of available crude oil are already tight and world demand for oil is growing faster than new supplies are being discovered. U.S. oil consumption, which accounts for 25 percent of the world’s total, continues to increase by between 1 and 2 percent each year and oil demand in developing nations is growing even faster. Oil consumption in China increased by 15.6 percent in 2004 alone.

The economic and security risks to the U.S. are compounded by the fact that most of the world’s oil reserves are in unstable and often terrorist-friendly regions. The increasing world demand for oil shifts political leverage to those nations that possess the greatest oil reserves, compromising US foreign policy and national security goals. The resulting price increases transfer more wealth from Americans and the U.S. economy to those oil-rich nations and their political causes.

The effect of increased oil costs on the US economy goes well beyond the often discussed impacts on consumer spending and cost of living. Higher oil prices also result in more U.S. jobs being moved overseas as companies attempt to offset higher energy and transportation costs with the lower labor costs found in developing countries – which of course only further increases the demand for oil in those countries.

As the Department of Energy’s own forecasts through 2025 reveal, increased U.S. demand for oil can only mean increased dependence on foreign sources and the associated security risks, wealth transfer, ever growing trade imbalance, and downward pressure on the dollar. Greater fuel efficiency and reliance on domestically available energy sources such as biofuels, solar, wind, natural gas and new energy technologies would greatly alleviate each of these problems. Such a change would also help address many environmental concerns facing our nation.

With transportation accounting for two-thirds of U.S. petroleum demand, it stands to reason that the transportation industry is the most vulnerable to high oil prices and future supply disruptions. Still, the U.S. automobile industry — which apparently learned nothing from the 1970s and again finds itself poorly positioned to weather high oil prices – resists efforts to increase the fuel economy of cars and trucks. This perpetual short-sightedness is impeding our nation’s ability to break its excessive oil dependence and is putting our nation at risk.

Unfortunately, at a time when the conservative political party controls both houses of Congress and occupies the White House, its leaders are pursuing shortsighted polices that increase our nation’s dependence on oil. While reluctant to embrace long-term solutions, including conservation and diversification of the nation’s energy choices, the White House and Congress are rushing to tap into every last ounce of the nation’s remaining oil reserves.

They rely excessively on pollsters such as Frank Luntz to develop messaging that gives the American people false hopes that increased domestic oil production will significantly reduce our dependence on foreign oil. In doing so, they obscure the true nature of our energy predicament, waste time, and divert resources away from efforts to improve conservation and fully develop promising alternatives. This is both irresponsible and unpatriotic. A nation with 2 to 3 percent of the world’s proven oil reserves cannot drill its way to energy independence – and pretending it can only weakens the resolve needed for change.

The misleading rhetoric employed in the ongoing debate over drilling in the Arctic National Wildlife Refuge provides a clear case in point. A Luntz report to Republicans earlier this year advised that the “single strongest argument you have” for drilling in Refuge is “America must not depend on any foreign nation” for oil. Proponents for refuge drilling have taken that advice, claiming that refuge oil “could replace Saudi Arabian oil imports for nearly 30 years,” an inaccurate statistic designed to mask the fact that oil from the Arctic Refuge would not come anywhere close to filling the gap between domestic production and domestic demand.

If the Arctic Refuge is opened for drilling it will only embolden those who promote domestic oil production as the answer. The same arguments will likely be employed again and again as further opportunities for production are pursued. In each case the domestic oil development objective becomes the “solution” and serves as an obstacle for meaningful progress.

The recently passed House Energy Bill (H.R. 6) was loaded with subsidies, tax breaks, and regulatory rollbacks designed to push fossil fuel development rather than reduce America’s reliance on oil as an energy source. Of the $8.1 billon dollars in tax breaks provided by the bill, only about 5 percent was directed at renewable sources of energy and energy efficiency.

Leadership is an honor bestowed by the American people, and a responsibility to safeguard the nation and its future. The nation’s energy policy can no longer be driven by special interests that delude themselves into sacrificing the nation’s future for their own short-term gain. If today’s conservative leaders are not up to the task of developing a prudent, forward-thinking energy policy, if they lead America down a false path to energy security, then the consequences for this nation will be dire — and no amount of clever messaging will hide culpability or stave off the political consequences of failed leadership.

America is at a seminal moment. Our nation’s security, prosperity and the quality of life of all Americans are at stake. Conservatives must rise to the occasion, above politics, and embrace the prudent conservatism that has served this nation well throughout its history.

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