October 7 2008
The Answer to High Gas Prices: Produce More Energy
Gasoline prices have finally dipped below $4 a gallon. But the relief may be short-lived. Unless we produce more energy, we will be increasingly sharing scarcity in the years ahead.
Vote-seeking politicians have blamed a rogue's gallery of villains for the recent run-up in prices: Speculators (as if people haven't been trying to guess future energy prices for decades), energy companies (as if gas would have ever fallen below four bucks a gallon if they could manipulate prices at will), OPEC (as if the cartel hasn't existed and influenced prices for decades), and of course, the Bush administration, a convenient target for all ills.
None of these supposed culprits are the root of today's crisis. The real cause is simple: too many people using too much gasoline, too few refiners making too little gasoline. When demand exceeds supply, prices go up. Economics 101.
There are only two ways to change the balance. One is to cut demand. But energy is the life blood of our economy. Cutting energy demand means cutting economic growth.
The second strategy is to produce more. Those who prefer to live under scarcity say we can't drill our way out of today's crisis. But in fact, there is no other way out of today's crisis.
There is much talk about alternative fuels, but the government has spent billions of dollars attempting to develop such energy sources for years. The government-and, more importantly, the taxpayers-have gotten virtually nothing for their money. Renewable energy accounted for just seven percent of America's energy supply last year.
The problems afflicting alternative fuels are many, and might be solved over time, as technology continues to advance. But wishing for alternative energy in the meantime won't make it so. If we want an answer for high energy prices today it will only come from coal, oil, and natural gas. And mostly oil, since that's where the price run-up has been most severe.
Numerous events across the globe contribute to tight petroleum supplies. Americans can't control events overseas, but we can control policy in America. And the U.S. could produce a lot more energy, particularly oil. But currently Americans can't because the federal government won't let them. It's a bizarre policy: locking up U.S. resources increases gas prices, which strain personal budgets and threaten business survival, and leaves the U.S. dependent on corrupt and authoritarian dictatorships, some hostile to America, for the energy necessary to run the economy. You'd think Osama bin Laden had designed our energy policy.
Consider some of the sources currently off-limits. The Arctic National Wildlife Refuge is estimated to contain at least eight billion barrels of oil. That's not as much as the more than 13 billion barrels so far pumped from Alaska's North Slope, but it would make a nice dent in imports, which run about ten million barrels a day.
Another 24 billion barrels of petroleum lies beneath other federal lands. That's more than America's total proved reserves. It also exceeds the proved reserves of China, Qatar, and Mexico, major producers all.
Then there's the Outer Continental Shelf, which is believed to contain roughly 86 billion barrels of oil and 420 trillion cubic feet of natural gas. That's quadruple America's current proved reserves, and about one-third of Saudi Arabia's proved reserves. That exceeds the total reserves of each of Venezuela, Russia, Libya, and Nigeria, all oil exports, but also unstable or hostile, or both.
Even more impressive are America's shale oil deposits, the largest in the world. The so-called Green River Formation has recoverable reserves commonly estimated at 800 billion barrels. That is about three times Saudi Arabia's total proved reserves. It exceeds the total proved reserves of the top five oil producers today. In fact, that's nearly two-thirds of the total proved reserves in the entire world.
Yet Congress has blocked development of all of these resources. Obviously, finding, extracting, and refining oil from these sources would be expensive and difficult. But what is the alternative? Continue paying exorbitant prices for gasoline? Remain dependent on the whims of mercurial dictators and the vagaries of foreign conflicts? Hope for a miracle technological breakthrough?
Americans must take the problem of energy into our own hands. Nature has given us the necessary domestic supplies. It's up to us to put them to use.
Michelle D. Bernard, author of Women's Progress, How Women are Wealthier, Healthier, and More Independent Than Ever Before, is the president and CEO of the Independent Women's Forum and Independent Women's Voice and is an MSNBC Political Analyst.