December 2 2009
Oil, Oil Everywhere, and Not a Drop to Pump
Nicole Kurokawa Neily
If you had something you needed in your home, would you go to the store to buy it anyway? Of course not! Strangely, however, some members of Congress seem determined to push the country toward making this counterproductive choice. The Congressional Research Service released a report at the end of October, "U.S. Fossil Fuel Resources: Terminology, Reporting, and Summary," which clearly showed that the U.S. has a considerable amount of oil, coal, and natural gas at its disposal-but most of it hasn't been accessed.
According to the report, "the resource pyramid indicates that many of the high quality, easy to find deposits have already been produced. Current proved reserves include many deposits that are of lower quality or with poorer access than some historical production, but which are still economic under current market conditions."
In other words, it makes sense for businesses to retrieve the oil and turn it into useable fuel. As a result, the United States appears to be well-positioned to declare energy independence, which should be cheering news since currently the U.S. has to purchase resources from unstable and sometimes unsavory overseas suppliers.
Unfortunately, some environmental activists, in their quest to cut America's emissions levels back to 1977 (back when fewer people lived here, fewer cars were on the road, and the economy was smaller) have begun to demand that the production process used to extract and produce energy also be factored into fuels' emissions "bottom line," through the imposition of a low carbon fuel standard scheme.
That's right - the geniuses that brought cap-and-trade (a policy that hasn't reduced the E.U.'s emissions since its been in force since 2005, but cost European consumers about $140 billion last year) have dreamt up yet another social engineering policy intended to discourage the use of "dirty" fuels by intentionally raising the cost of energy for American families. The amount of energy that it takes to bring a fuel to market will be factored into its overall emissions profile; those products that are presently cheap and relatively clean to use - in particular, coal and natural gas - will be penalized by these new standards, as the domestic reserves that the nation has in abundance are more labor-intensive to mine and process. Low carbon fuel standards will force companies purchasing these fuels to spend more money to obtain the same products through the sale of climate "indulgences" - and alas, those costs are certain to be passed directly on to consumers.
Ironically, were it not for this proposal, the ability of companies to access these fuel sources-even if they are harder and more expensive to access-wouldn't increase the cost of energy. In fact, by increasing supply, it would drive it down. The forces of supply and demand are just as effective in the energy market as they are elsewhere, and the CRS acknowledges that "as long as demand for oil continues, the exploration and production process will move down the pyramid under the influences of price (including environmental costs in some cases) and technology."
A poll released by the Independent Women's Forum on women's attitudes towards health care revealed that 23 percent of women list their primary concern as the increasing cost of energy, including gasoline and home utilities; 34 percent of women say it is the general cost of living and everyday expenses. Under these expansive energy proposals, both those problems will get worse. Goods and services will increase in price dramatically, as manufacturers will be forced to pay more for the energy used in production, and for shipping costs. And of course - energy for personal consumption will be more expensive - both for home utilities and for gasoline.
Instead of raising prices for energy and everyday goods, policymakers could try to actually help reduce the costs American face by allowing greater domestic exploration. Allowing greater exploration could be considered a real economic stimulus: it would directly put more people to work in the energy sector, and it would lower the cost of energy, making it easier for businesses to hire more workers, and consumers would have more money in their pockets to spend on other goods, helping those businesses as well.
Politicians need to take a hard look at the situation we face: The economy is strained. Too many Americans are out of work or, have too little work for too little pay, and are struggling to make ends meet. Politicians may want to socially engineer "green" energy into the population's lives, but families simply cannot weather these additional costs.