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Capitol Comment
by Senator Kay Bailey Hutchison
Solutions to Energy Crisis Must Spur Domestic Production
May 9, 2008
The Pulitzer-Prize winning author of The Prize: The Epic Quest for Oil, Money, and Power, Daniel Yergin, has summed up what many of us are thinking: “We are living in a new age of energy anxiety.”
No one feels this anxiety more than the American families who are shouldering the burden of nearly $125 per barrel oil. The average mini-van owner is now spending upwards of $70 for a tank of unleaded gasoline. And it can cost up to $80 to fill up a pickup truck!
Now more than ever, we must adopt a comprehensive solution that will place more control over energy supply and prices in the hands of America.
Common sense tells us that an increase in our fuel supply will help drive down soaring costs. Yet, there are lawmakers who continue to put forward politically expedient proposals that will neither raise domestic supply, nor solve the broader problem of American dependence on foreign oil.
Some in Congress, including the Democratic presidential candidates, are proposing an irrational windfall profits tax on the U.S. oil industry. Increasing taxes on production only serves to decrease domestic production and encourage more exploration abroad where costs are lower. A punitive tax on profits would raise marginal production costs, reduce domestic oil production, and actually increase the overall level of oil imports. Furthermore, it would send jobs that Americans depend on overseas.
This is not speculation. This has been tried, and has failed, in the past. When Congress imposed a similar windfall profit tax on the oil industry in 1980, domestic oil production decreased significantly and jobs were lost. It raised our dependence on foreign oil by 10 percent.
Today, rather than discourage production we should concentrate our efforts on securing long-term sources of energy, especially within our own borders and along our country’s coastline. And the fact is these resources exist.
On U.S. soil and off our coasts, we have significantly more oil than Venezuela’s 80 billion barrel reserve, and our available natural gas reserves exceed that of Iraq, China, Yemen, Oman, Nigeria, and Venezuela combined.
Last week, my Senate colleagues and I unveiled sweeping legislation to begin to tap some of these resources to increase domestic fuel production and lessen our reliance on other countries. The American Energy Production Act of 2008 would leverage both traditional and renewable sources of energy that could add enough domestic production supply to satisfy U.S. energy demand for five years without foreign imports.
The legislation would allow coastal states to petition the U.S. Department of Interior to lift drilling moratoria for offshore oil and gas leasing off the Atlantic and Pacific coasts. It would also grant U.S. oil companies access to the 10 billion barrels of available oil in Alaska’s Arctic National Wildlife Refuge Coastal Plain (ANWR).
The legislation seeks to bolster supply and decrease oil prices by temporarily suspending deposits into the Strategic Petroleum Reserve, which currently has enough oil to supply our country’s energy needs for over 3 months in case of a disaster or national emergency. Further, the bill would allow access to alternative sources, such as the over one trillion barrels of shale oil in Colorado, Wyoming, and Utah. These sources, which presently sit unused, are equal to three times the reserves of Saudi Arabia.
Some of these are not new ideas. Many of us have been fighting for increased domestic oil and gas production in Congress for years. Unfortunately, in 1995 – when oil was $19 a barrel – President Clinton vetoed legislation passed by the House and the Senate to begin drilling in ANWR. If not for that veto, we would now be producing one million barrels of our own oil a day – the amount we import from Saudi Arabia…every day.
The provisions in the American Production Act are an important first step to boosting our domestic fuel supply. But a comprehensive energy plan must also include the deployment of every economically viable alternative energy source - including advanced nuclear energy, solar power, wind power, and biofuels.
The time is now to set the course to produce and maintain control over our own energy sources and end our dependence on foreign oil. We can’t afford to delay further.
Sen. Kay Bailey Hutchison is the Chairman of the Senate Republican Policy Committee.
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