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How America can achieve true energy independence
by Senator Kay Bailey Hutchison
Published in the Houston Chronicle June 12, 2008
President Reagan said, "There are no easy answers, but there are simple ones." This principle applies to America's energy woes. Since January 2007, the price of a gallon of gasoline has soared from $2.33 to a record $4.04. Over the next two decades, global demand for oil is expected to rise by 50 percent. Further price escalation is inevitable.
When confronted by these facts, the energy solution is simple. We need more energy! We should be increasing our production of oil, natural gas, clean coal and nuclear power — and those resources should come from America, instead of foreign dictatorships.
One of the best-kept secrets in politics today is that America is one of the world's richest energy nations and is capable of achieving energy independence.
Our most valuable untapped resource is the Arctic National Wildlife Refuge, ANWR, which is estimated to contain 10.4 billion barrels of oil. This remote frozen tundra could be drilled with minimal impact on surrounding life. ANWR is the size of South Carolina and the area drilled would be roughly the size of Dallas/Love Field Airport.
In 1995, the Republican Congress passed legislation to open ANWR for energy production. But President Clinton vetoed our bill. If he had signed it, America would now be producing an additional 1 million barrels a day, almost enough oil to replace all of our daily imports from Saudi Arabia.
Beyond ANWR, federal law prevents oil and gas production in the deep waters off the Atlantic and Pacific Coasts. These areas, along with a section of the Gulf of Mexico, could contain as much as 115 billion barrels of oil — greater than Venezuela's current reserves — and 565 trillion cubic feet of natural gas — greater than the combined reserves of Iraq, China, Yemen, Oman, Nigeria and Venezuela.
Federal laws also prevent us from exploiting one trillion barrels of shale oil in Colorado, Wyoming and Utah — an amazing amount that is three times what Saudi Arabia has in reserve.
In May, I joined 18 other Senate Republicans to introduce the American Energy Production Act of 2008. Our bill would remove unnecessary government barriers to domestic energy production and allow us to tap our vast resources with environmental safeguards. This should be bolstered with an energy portfolio that includes renewable and alternative sources such as solar, wind and nuclear power.
My Democratic colleagues have a starkly different approach to the energy crisis: It is one that creates no new energy. Their answer is to tax energy production.
In 1980, Congress passed a "windfall profits tax" and the consequences were devastating. In the six years following that levy, domestic oil production dropped by 1.26 billion barrels and imports of foreign oil rose 13 percent. The disastrous tax was repealed in 1986. Rather than learn from that mistake, some in Congress would impose the same ineffective tax on the oil industry today.
Their proposal also seeks to blame "price gouging" for soaring energy prices. The Federal Trade Commission has been vigilant in its investigation of pricing practices in the oil industry. It has consistently found no evidence of market or price manipulation, and instead points to global supply and demand as a leading factor in the price of gasoline.
In fact, as of January, the average tax on each gallon of gasoline was 47 cents, while the oil and gas industry has testified that it earns only four cents per dollar of gasoline sales.
The Democrats' plan would also repeal incentives for expanded refinery investment. By increasing taxes and reducing the incentives to refine oil into usable gasoline, we will end up with a smaller supply of domestic energy, which in turn fuels price increases, perpetuates our present crisis and keeps us at the mercy of OPEC. Energy companies would be hit with new taxes on foreign earnings, potentially exposing producers to double taxation and hindering their ability to compete for oil and natural gas reserves on the global market.
This year, we will spend about $500 billion to import oil. All of those dollars should stay here in America, instead of being sent to foreign regimes that may be hostile to our interests.
We need energy for Americans produced by Americans, and we need it now. Instead of searching for scapegoats, we should be searching for additional energy resources to be part of a bold, comprehensive plan for America's energy security in the 21st century.
Hutchison is the senior U.S. senator from Texas and is the chairwoman of the Senate Republican Policy Committee.
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