By Michael R. Fox, Ph.D.
October 17, 2007
Michael R. Fox, Ph.D.
Within the next few weeks, the United States Congress can make history. It can approve legislation to assure adequate energy resources for the foreseeable future — or it can muff the ball and deprive Americans of secure oil and natural gas supplies that are needed to keep the economy humming.
If Congress fails, the entire nation will be the loser, especially consumers, who might have to dig deeper in their pockets to pay for oil and natural gas imported from countries like Venezuela and Saudi Arabia that do not provide market incentives to increase production.
The immediate challenge for Congress is to reverse the decline in domestic energy supply and get us on a path to meet rapidly accelerating demand for gasoline, heating oil and other petroleum products.
The Energy Information Administration has forecast that by 2030, U.S. oil consumption will increase by nearly 30 percent, even with anticipated improvements in energy efficiency and increased use of alternative fuels. The price tag will not be cheap. It will require the oil industry to invest more than $1 trillion over the next decade — nearly double the level of the 1990s. This year alone U.S. oil companies spent $124 billion on energy development.
Hawaii’s energy policy of burning oil to produce electricity will continue to harm its economy by its huge oil dependence. Its energy costs of 20 to 30 cents per kw-hr is unheard of in the rest of the nation and a major economy and job killer.
Yet both the House and Senate have already passed energy bills that would actually discourage production of domestic oil and natural gas. The House bill imposes an additional $16 billion in taxes over 10 years on the oil industry, and it bans companies from bidding on government leases to drill in deepwater areas of the Gulf of Mexico unless they agree to pay more for offshore leases that were awarded in the late 1990s. The Senate bill clamps price controls on gasoline, and it calls for a sevenfold increase in ethanol production by 2022. (Ethanol production is already driving up the price of food, as well as feed for beef, pork, and poultry, making it harder for people on fixed incomes and the poor in this country and around the world to buy food for themselves.)
Astonishingly, neither energy bill would remove prohibitions against oil and gas development on 85 percent of the U.S. Outer Continental Shelf as well as large parts of the mountain West and Alaska, though geologists estimate these areas contain enough oil and gas to last for decades. In fact, most of the nation’s oil and natural gas — 78 percent of the oil and 62 percent of the gas — are locked up beneath coastal waters and federal lands.
Instead of enabling companies to build new refining capacity or drill for more oil and gas, the House and Senate bills strip away tax incentives and give the money towards making energy from renewable sources like wind, sun and wood chips. The bills would not add even one gallon of oil or one cubic foot of natural gas to the nation’s energy supply, and over the long term they could prove counterproductive by discouraging domestic energy development.
What to do? Congress needs to come up with a serious and powerful package of measures to strengthen U.S. energy security that could easily win public support. Presidential candidates should call for prompt action.
The big question is whether the Democratic leadership, especially such powerful figures as Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi will be statesmanlike enough to recognize the need to wean ourselves from Persian Gulf oil — and that such measures are urgent in order to protect U.S. energy security.
Michael R. Fox, Ph.D., a science and energy reporter for Hawaii Reporter and a science analyst for the Grassroot Institute of Hawaii, is retired and now lives in Eastern Washington. He has nearly 40 years experience in the energy field. He has also taught chemistry and energy at the University level. This article originally appeared in Hawaii Reporter.