Oil, Energy, and Congress

Now that Congress has recessed for the end of the summer, what are we to make of the energy situation? At this point, I’m getting tired of hearing that $4.00 gasoline is good for me. How can it be good when Americans are spending less of their money on other goods and investing in their gas tanks? Is it good that transportation costs have sent my food bill sky rocketing? Is it good that many Americans have shortened their vacations and cut back on their entertainment spending? Is it good that the working poor are struggling between putting groceries in their home and fueling their cars to get to work?

Apparently our Congressional leaders and one presidential candidate say the answer is yes. While our Speaker of the House is trying to “save the planet”, the rest of the world is out trying to find more oil & energy. Let’s look at few recent examples:

  • Egypt announced last week the start of a 9 billion dollar oil refinery and petrochemical complex, which will be located on its north coast. The complex is expected to begin operation in 2010 and will be completed in 5 years. The facility will refine 350,000 barrels of oil per day.
  • The Tupi deepwater oil field is located offshore of Rio de Janeiro, one of Brazil’s best tourist destinations. Last November, the Brazilian government announced that the location could contain five billion to eight billion barrels of oil. The Tupi oil field is expected to begin producing 100,000 barrels of oil in 2010, according to Petrobas, Brazil’s national oil company. Petrobas hopes to bring production to one million barrels a day in about ten years.
  • Finland is building a 1600 megawatt nuclear power reactor. The country currently gets 28 percent of it electricity from nuclear power.
  • Japan is working to increase its nuclear power production of electricity from 30 percent to 37 percent by 2009 and 41 percent by 2017.

Now, besides threatening to sue the Saudi’s and adding more taxes to oil, what has the United States government energy policy done? Let’s look at a few examples:

  • From 2000 to 2007 domestic crude oil production fell 12.4 percent
  • Through a congressional mandate, 85 percent of the Outer Continental Shelf is off limits to oil exploration. It is estimated that the Outer Continental Shelf contains 90 billion barrels of oil
  • The Artic National Wildlife Refuge (ANWR) is estimated to have 10 billion barrels of oil; in 1995 President Clinton vetoed a bill authorizing oil production on 2,000 acres out of 19.6 million.
  • U.S. Senator Ken Salazar, Colorado, inserted language into the omnibus spending bill last December that places a moratorium on enacting rules for oil shale development on federal lands. The Green River Formation is estimated to have as much as 1.1 trillion barrels of oil shale.
  • As mandated by the 2007 energy bill signed by President Bush, the U.S. is now required to mix 9 billion gallons of biofuels into the gasoline supply. The mandate is met primarily with corn-based ethanol. At the start of the biofuel mandates, corn was $2 per bushel. The price of corn now is a little over $6 per bushel.

It seems the more our government gets involved, the worse the situation becomes. And where did common sense go? If I see that you need water, I wouldn’t send you to a desert to find it. Yet, that’s what we do with our oil exploration. Try to find it where we don’t know if it exists.

From 2000 to 2007 American oil companies increased the drilling of exploratory wells by 138 percent (on those 68 million acres of existing leases); oil production still fell to its lowest level since 1947. The American Petroleum Institute reported that oil companies had the highest second-quarter oil well activity since 1986.

The United States has successfully developed other forms of energy; clean coal plants, nuclear power, natural gas plants, solar & wind energy. Our most efficient and cheapest forms of energy production are under constant assault from the environmental movement. The U.S. uses 760 gigawatts of power plants to meet current needs. The North American Electric Reliability Corporation (NERC) estimates that we will need 135 gigawatts of new capacity in the next 10 years. As of now, only 57 gigawatts of power plants are planned. Why?

  • 59 coal-fired plants were canceled in 2007 because of anticoal activist.
  • U.S. production of natural gas is beginning to decline because of environmental restrictions on exploration.
  • The National Resources Defense Council (NRDC) succeeded in stopping 13 natural gas power plants in southern California.

We have the best scientist, engineers and technicians in the world. Give them the opportunity to solve this challenge and they will. There are many private companies working on new technology to bring to the market. If our government is going to pick winners and losers through subsidies, many companies will not get into the market.

For example, NuScale Power, an Oregon-based startup company, is seeking federal clearance to begin its project to build a mini nuclear reactor. The reactor can power 45,000 homes, is 65 feet long and has no visible cooling tower. NuScale states that these reactors require no maintenance and do not need to be refueled. At the end of its useful life of about 30 years, the plant is returned to the factory.

This type of technology should be welcomed and encouraged by all. With a small footprint & no carbon emissions, these plants could replace many traditional coal and gas-fired power plants.

This situation does not require a billion dollar bail out from our government. Nor does it require raising taxes on the oil companies. Remember, we tried the windfall profits tax with President Jimmy Carter. That led to a 6 percent drop in the production of oil and a 15 percent increase in oil imports, according to the Congressional Research Service.

If congress would step back and allow all of the energy companies to explore and develop energy in a responsible way, we would not have to struggle with high energy costs. Take away all of the subsidies and let the market decide which means of energy is cheapest, environmentally sound and durable. American technology is more than capable of producing efficient energy and protecting the environment.

Instead of trying to spend more of my tax dollars, why doesn’t congress spend more of their time, which we pay them for, to fix the regulatory landscape of energy production. Congress needs to enact some common sense environmental regulations. If they do, the market will give us a diverse supply of energy that is reliable – American made – and affordable

It’s time to streamline & simplify this process, now.

Xander is a writer & researcher of current events. For more information, visit his blog at http://xander-xee.blogspot.com

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