Preventing the Return of $4 Gasoline
Last July, soaring gasoline prices had everybody talking. Presidential candidates called for energy independence. Congressional leaders hauled oil company executives in for hearings. Gas prices seemed to jump by a dime a day. They topped $4 per gallon and looked as if they’d never stop climbing.
Yet suddenly they did. A global recession slashed demand and gas prices fell, dropping back to today’s roughly $2 per gallon.
But that doesn’t mean our energy problems are over. In the months and years ahead the global economy will improve; the demand for oil will increase, and prices will rise again.
That means today’s cheaper prices are an opportunity. The U.S. needs to act now so we’ll have enough supply in the years ahead to keep costs reasonable. The key: increase domestic oil production.
Last summer President Bush took a sensible first step, lifting an executive order (put in place by his father) that prohibited oil drilling off America’s coasts. A few months later (even though gas prices were finally falling) Congress allowed its own moratorium to expire. Together, these bans had kept about 85 percent of America’s territorial waters off limits to exploration.
Even with lower gas prices, Americans grasp the need for more drilling. A Harris Interactive poll taken in February shows that 62 percent support “increased domestic access to offshore oil.” Only 26 percent oppose it. Yet our government isn’t moving quickly enough.
The Interior Department has taken a tentative first step. It has announced a draft program to provide offshore leases, and it has given the public 60 days to comment. Unfortunately, President Obama’s new secretary of the interior, Ken Salazar, has already (long before the initial comment phase would have ended) announced he’ll extend it for six months. He’s also told his agency to gather additional information on the estimated amounts of oil and natural gas in these offshore areas.
To be fair, drilling offshore is hardly a crisis that needs immediate action. But some steady progress would help. Unfortunately, Salazar seems determined to slow any progress as much as possible. He called the two-month comment period “a headlong rush of the worst kind.” Really? Even though the public had plenty of time to comment?
Meanwhile, he’s hinted that he may want to delay exploration indefinitely. “The Bush administration was so intent on opening new areas for oil and gas offshore that it torpedoed offshore renewable energy efforts,” he’s said, ignoring at least one offshore wind project Bush promoted. Besides, electric wind farms are completely different from oil fields, as Salazar must know.
It takes years to develop an oil field, which is why we should get started this year, while prices are still low. Salazar’s own Interior Department estimates there are 19 billion barrels of oil available in U.S. waters, and such estimates tend to be on the low side. But we won’t know until we start looking.
This isn’t the first time Salazar has opposed exploration, by the way. Last summer, when the Bush administration wanted to sell some public land in Western states so oil companies could take a closer look at harvesting fuel from oil shale, Salazar disliked the program.
“A fire sale will not lower gas prices. It will not accelerate the development of commercial oil shale technologies,” he wrote in The Washington Post. Again, true as far as it goes. But without exploration, we’ll never know if oil shale can be made to work.
Our country needs more oil exploration, as quickly as is prudent. Otherwise, prepare for the eventual return of $4 or higher gasoline.