Thursday, August 07, 2008
For zero risk, high energy prices
From the RoundTable blog
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Winston Porter
Porter, an environmental consultant in Leesburg, is a former assistant administrator of the U.S. Environmental Protection Agency.
If the effort in Congress to deny oil companies access to new areas for offshore drilling is a bad idea -- and it is -- then the consequences of such a political move are even worse: less oil, more volatility in gasoline prices and reduced funding for highway repairs and maintenance. The cost of congressional inaction would fall on motorists -- and ultimately on anyone who suffers from high energy prices.
It's hard to see what anyone would gain from a continued moratorium on drilling in untapped areas of the Atlantic, Pacific and Gulf of Mexico, regions that hold 18 billion barrels of oil and 76 trillion cubic feet of natural gas, according to the U.S. Minerals Management Service. Experts estimate that the oil in these closed-off areas alone could provide an additional 1 million barrels per day of oil production for 50 years. This would be a big improvement in domestic production, now at about 5 million barrels a day.
The United States is the third largest oil producer in the world, next to Russia and Saudi Arabia. What we do -- or fail to do -- affects not just our country, but energy markets throughout the world. But we are the only oil- and natural gas-producing country whose government restricts access to its energy resources -- both offshore and on land. Consequently, Americans bear a costly and unnecessary burden in high energy prices as world demand for oil and natural gas continues to climb.
We cannot afford to repeat the mistakes of the 1970s, when public frustration with the energy situation led to price controls, allocation schemes, restrictions on natural gas use and punitive taxes. None benefited the consumer. Instead, they resulted in less investment in domestic oil and gas production -- and increased dependence on imports of foreign oil. Indeed, the trend has continued away from energy independence: Imports now account for 70 percent of the nation's oil supplies, compared to 35 percent in 1973.
In a way, the foolishness of the effort to ban offshore drilling symbolizes the wasteful pursuit of zero risk. In the name of environmentalism, politicians too often are making bad decisions based on emotion and misleading data.
Examples of restrictions on energy production leading to results opposite of those intended can be seen all over the regulatory landscape. In pursuit of the impossible goal of eliminating all risk, we are going to expensive extremes to produce ethanol, which has raised food prices and used scarce water, with few benefits. Congress has slowed efforts to develop shale oil, a potential long-term substitute for conventional oil. And it has yet to lift the ban on energy exploration and production covering 85 percent of the Outer Continental Shelf.
The escalation in oil and natural gas prices is more worrisome than the perceived risk from drilling in coastal waters. There hasn't been a large oil spill from an offshore platform in the United States in nearly 40 years. More oil seeps into the ocean naturally through the ocean floor than from accidents involving tankers and offshore rigs, according to a study by NASA and the Smithsonian Institution. But who is there to see the big picture when environmental activists have elected officials fooled?
Federal constraints on domestic energy production serve only to reduce supplies and raise prices. The irony is that the constraints do not apply to energy from foreign countries, so they also hand a comparative advantage to OPEC and other non-U.S. producers.
In short, members of Congress should ask themselves whether the ban on offshore drilling justifies the cost to our nation's economy. The answer should be clear: If we are serious about easing the financial burden of high energy prices, then we need to open up the Outer Continental Shelf to drilling for oil and natural gas.
