Our Energy Deficit
By INVESTOR'S BUSINESS DAILY | Posted Friday, February 08, 2008 4:20 PM PT
Energy: With a $160 billion stimulus package sitting on the president's desk and energy prices headed back up, it's high time to start talking about giving our economy a real, long-term boost by driving down the price of oil.
Related Topics: Energy
After OPEC members, including Saudi Arabia, said Friday that they won't pump more oil, the market sent the price of crude up $3 to $91.77 a barrel. So much for our policy of publicly begging the Saudi sheikhs to increase output.
The renewed jump in oil underscores the corner we've painted ourselves into. By refusing to drill in either ANWR or offshore, the U.S. can expect less energy, higher prices, growing vulnerability and a shrunken economy.
As recently as 1973, imports made up 36% of our total oil use; today, imports are two-thirds of our 21-million-barrel-a-day oil habit, and climbing fast. As Mitt Romney noted last week, we're sending nearly $400 billion overseas each year to buy oil.
This has made us uniquely vulnerable, to say the least, to the inherent political instability of the Mideast, Russia, Africa and Latin America — and to the OPEC oil cartel's anti-Western schemes.
But what can we do? Plenty. Start with getting more energy.
We have at least 40 billion barrels of crude and 250 trillion cubic feet of gas offshore, in ANWR and on federal lands — enough to replace nearly a quarter of our imports for several decades. Another 1.2 trillion barrels of oil lie in shale deposits across the Midwest.
Yet Congress has put more than 50% of the oil and 27% of the gas in the U.S. out of bounds. Just 19% of the Outer Continental Shelf can be developed. The National Petroleum Council estimates that we'll need $4 trillion in investments over the next 25 years just to keep pace with a forecast 30% jump in energy demand.
Apart from demonizing oil companies, Congress does nothing. This is madness, writ large.
As civil rights leader Roy Innis recently wrote, "Onshore and offshore public lands could hold enough oil to produce gasoline for 60 million cars and fuel oil for 25 million homes for 60 years — and enough natural gas to heat 60 million homes for 160 years."
Here are some other things we could do, with little trouble and at fairly low cost, to boost energy supplies while cutting oil use:
• Take gas-guzzling, pollution-spewing older cars off the road: 20% of vehicles are responsible for 80% of the fuel waste and pollution. Why not scrap the oldest and dirtiest?
• Give people incentives to buy hybrid cars. They're getting better, but they're still expensive. We're spending billions to subsidize corn-based ethanol production, which has driven up prices for energy and food. Wouldn't it be wiser to subsidize hybrids?
• Recognize that nuclear power's time has come. We get just 18% of our electricity from nuclear power; France gets 80%. Other nations are building nuclear plants. So should we.
• Stop adding to the Strategic Petroleum Reserve. After filling it to 700 million barrels of oil as promised, the 2005 Energy Act boosted the amount to 1 billion barrels. But, after we began adding more oil last August, oil prices surged. We should stop now.
No one thing will solve our energy problems. But many, taken together, can. The key is to think both supply and demand.
As we noted above, the "stimulus" package of $160 billion will deliver one-time checks to millions later this year. But the stimulus will end there. By cutting our oil use by 1 billion barrels a year — about 13% of our annual use of 7.5 billion — and getting oil prices from $90-plus to $65 a barrel, we could slash our oil import bill by $112 billion and its domestic costs by $225 billion.
That's real stimulus, the kind that would boost the economy, create millions of new jobs and kick the legs out from under inflation.
Those who say we need energy taxes are wrong — especially with our weakening economy. Besides, taxes don't add a bit of energy; they only hurt consumers and make all of us poorer.
Presidential candidate John McCain has in the past opposed drilling in environmentally sensitive areas. He could show some bold leadership by pushing an energy policy that actually produces more energy and cuts prices. It's the best stimulus we'll ever have.