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| The Problem at the Pump |
March 28, 2000 |
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It was $1.49 for regular at the Chevron Station on Alameda where I filled up my car the other night and it’s even worse in other places across the country. In Washington, DC the price is close to $2.00 in some places. The New Mexico Hotel and Motel Association says that advance bookings for this summer are down, and they believe gas prices are discouraging tourism.
Earlier this month one of the subcommittees that I serve on held a hearing on the skyrocketing oil and gas prices. It was clear to me after the hearing that current administration was slow to react to the oil shortage and doesn’t have an energy policy to deal with the current situation.
The Secretary of Energy admitted as much in front of energy industry officials in Boston when he said, "It is obvious that the federal government was not prepared. We were caught napping. We got complacent." (Portland Press Herald, 2/17/00)
You have to admire the honesty, but families budgeting for their summer vacations shouldn’t have to pay for the miscalculations of federal bureaucrats. The Administration’s nap has cost families across New Mexico hundreds of dollars over the last few months.
In February 1999 OPEC announced it was reducing its output of oil because prices were so low. And they did what they said they were going to do. The world consumes about 77 million barrels of oil per day, and worldwide production is about one-half million barrels short of consumption. So, refineries and countries started using up their stocks of oil on hand and prices started to climb.
OPEC reduced production a year ago. The Administration didn’t react for more than a year.
The real problem facing our country is our increasing dependence on foreign oil. In 1998, 52 percent of US oil consumption was foreign oil, and it is higher now. Estimates are about 55percent. According to an Associated Press report earlier this week, imports of foreign petroleum climbed to a record high of $7.87 billion this past January, more than double the level of one year ago.
Why is our dependence on foreign oil on the rise? We have a tax system that encourages imports and a regulatory environment that discourages responsible domestic exploration and the development of alternative sources of energy.
For example, although our nation as a whole depends on coal for 55 percent of its electricity needs, the cleanest coal in the lower 48 states was locked-up by the Administration’s Utah Monument designation.
Hydropower provides 10 to 12 percent of U.S. needs, yet the Administration is campaigning to tear down hydropower dams across the country. America could generate another 4-6% of the nation’s energy needs by putting turbines on dams that already exist. But as soon as a turbine is put on a dam, it becomes regulated by the federal government rather than the state. The federal licensing process can take 8-10 years and is subject to all kinds of conditions. Most people rightly conclude it’s not worth the hassle. So, megawatts of clean energy just flow downstream.
What can be done to reverse this troubling trend? If we reduced federal gas taxes, we would have to make sure that general fund revenue was transferred to the highway program to cover the loss there. That could be done, but that’s less than 5 cents on the gallon and might not even show up at the pump.
While reducing federal gas taxes or releasing some of the strategic petroleum reserve might give some small immediate relief, it would not address the more fundamental problem. Our country needs an energy policy that reduces our dependence on foreign oil and a federal bureaucracy that acts swiftly before gas prices skyrocket and lines form at the pumps. We need a proactive policy that moderates these wild fluctuations in prices.
Relying on “oil diplomacy” is not a policy; it’s a plea. It’s what we are forced to do because we do not have a policy. I hope that the Administration will learn from this debacle and work with Congress to develop a comprehensive energy policy that will decrease our dependence on foreign oil, diversify U.S. energy supply, streamline regulations that discourage domestic production, and promote responsible domestic energy exploration. That’s the way to bring stability to oil and gas prices. |
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