America’s Failed Energy Policy

By Richard H. Frank

 Americans have short memories and I fear even shorter spans of attention when it comes to our government’s policy to attain energy independence. In the early 1970’s we allowed OPEC to impose a policy of economic blackmail on the greatest country in the world. The price for a barrel of imported crude skyrocketed while supply was artificially restricted causing chaos in the world energy markets. Long lines appeared at gasoline filling stations, prices at the pump increased to over $1.00/gallon for the first time as the supply lines to our refineries dried up. The impact upon the manufacturing sector of our economy was immediate as operating costs increased from higher energy prices and demand for products began to fall due to consumers diverting their spending to cover increasing energy prices.

As painful as this was it was short lived primarily due to greed on the part of OPEC members watching their revenues fall as their inventories ballooned into a sea of crude called the oil glut. Our government could do nothing but encourage conservation and legislate stricter standards for more fuel efficient vehicles to counter the actions of OPEC. Ultimately the law of supply and demand took over and stabilized the market and the price for a gallon of gasoline averaged at about $1.50. No efforts were pursued to increase our domestic supply of crude oil owing mainly to political resistance to domestic exploration. On the other hand oil companies were encouraged by governments in developing nations to develop their own natural reserves. Increasing world demand for fossil fuel products between 1975 and 2000 made it difficult for supply to keep up with demand.

In 1970 the United States imported 26% of our energy requirements that number and had increased to 65% in 2010 and is continuing to rise. In 2008 America transferred $475 Billion in wealth to foreign nations and that number is expected to exceed 10 Trillion over ten years. We consume 21 million barrels of oil every day of which 12 million are imported. It wasn’t until sometime between 2006 and 2007 when the cost of a gallon of gasoline reached $4.00 that Americans rebelled. The Mantra of “drill here, drill now” was heard from the politicians. Politicians in Washington and various state Legislatures have blocked efforts for exploration, expanding nuclear power generation and offshore drilling to increase our energy independence for the past 30 years. These tactics have effectively stopped providing a bridge for developing new, economically feasible, technologies such as geothermal, solar and wind energy production.

The Obama administration myopically believes that “green energy” is the panacea for all our economic woes today and in the future. They refuse to acknowledge that our entire economy is based on the production of cost efficient energy sources that can meet today’s demands as well as those demands in the future. The gap between today’s needs and tomorrow’s technology can only be filled in one of two ways. Paying higher prices for foreign supply to fill that gap, or increasing our own infrastructure and capacity to fill the need from our own reserves. Like it or not these are the only alternatives available to us. The former only make us more dependent and less prosperous, while the latter makes us more prosperous as we achieve total independence.

Today the Williston basin, or the Bakken, is estimated to be the largest domestic oil discovery in recent history. Valued at $107.00/barrel the reserve is estimated to produce $5.3 Trillion in wealth. It stretches from Montana to Canada and will produce enough energy to fill our needs for the next 41 years. Additionally, in April 2006 reserves at approximately 1000  feet below the Rockies are estimated at more than 2 Trillion barrels.

If our government would set their political ideologies aside, and focus on a real plan for energy independence, we can provide that bridge to new technologies and put America back to work now.  Both political parties need to pull their heads out of the sand and get to work removing the obstacles to energy independence, not through more government control and intervention but through encouragement of the free enterprise system.

President Obama needs to get off his campaign soap box and become presidential and provide real leadership for solving our energy policy problems.  His push for cap and trade legislation will, if enacted, raise the price of a gallon of gasoline between $4 and $6 dollars. This is not the change Americans voted for. Get government out of the way and let the free enterprise system drive solutions to our massive economic problems.

The answer is more nuclear power, increased refining capacity and “drill here drill now.”