Energy Economics
“The cost of living is no sweat if you can do without electricity and food.”
—Thomas Sowell
Background
An immutable law of economics holds that if the supply of a good is restricted then the price for that good, at any given level of demand, will increase. It should come as no surprise that as Democrats have restricted domestic energy production over the past two years the price of energy has increased to levels that now threaten the sluggish economic recovery, all while crushing jobs in critical American industries.
With energy such a fundamental input to the economy’s functioning—from fuels such as diesel and gasoline for transportation, to coal used in electricity production, to crude oil-derived fertilizers used in agriculture—the safe exploration, extraction, and utilization of all of the country’s resources is too important to be left to political agendas. Americans are struggling to keep up with ever-increasing energy prices amid tightening household budgets. Economics teaches that this trend cannot continue forever.
Issues of concern
We can’t drill here: The Committee on Natural Resources has chronicled the many impediments created by the Obama administration to limit domestic energy production. From re-imposing the offshore drilling ban, to cancelling or delaying offshore lease sales, to a de facto moratorium on drilling in the Gulf of Mexico, all of these actions constrict industry activity that would otherwise provide thousands of good jobs—and that’s just offshore! The Committee points out that 2011 will be the first year since 1958 without an offshore lease sale.
Can’t drill here either: Onshore the story is sadly the same: withdrawing oil and natural gas leases in Utah, proposing new regulations on hydraulic fracturing, placing millions of acres of public land off-limits to energy production, the EPA canceling a permit for a Navajo Nation power plant and retroactively pulling a permit for a West Virginia coal mine. As the administration crushes the ambition of Americans looking for good jobs in the energy industry, our supply of fossil fuels remains contingent on other countries while the price of everything derived from those inputs, such as the price of gasoline, continues to rise.
But we can drill there?: On an official visit to Brazil last month, President Obama spoke to Brazilian industry and government leaders about their own natural resources, saying: “We want to help with technology and support to develop these oil reserves safely, and when you’re ready to start selling, we want to be one of your best customers.” One would be hard pressed not to see the illogic considering a White House statement in June 2010 stating: “Our addiction to foreign oil and fossil fuels puts our economy, our national security and our environment at risk.” Geopolitics aside, out-of-work Americans paying more to fill up their gas tanks know that this is an incoherent energy policy.
With a brilliant but misguided Secretary of Energy, the administration is unlikely to embrace a free market approach to domestic energy production—increased supply leads to lower price—anytime soon. Higher gas prices, the threat of higher taxes, and more regulation only hurts the very people the administration claims to champion. House Republicans are embracing the American Energy Initiative to stop harmful policies and expand domestic energy production, creating jobs and maintaining a steady flow of energy for our economy.
For additional information, contact:
The House Republican Conference Policy Office
