Posted: 10/14/2005 | Author: H. Sterling Burnett
Hurricanes underlined need to explore all U.S. oil and gas reserves
WASHINGTON – Hurricane’s Katrina and Rita have highlighted a problem that policymakers have for too long ignored. From an energy perspective, we have put too many of our eggs in one very fragile basket—the Gulf of Mexico.
For years politicians have whistled past the graveyard of America’s energy security and economic prosperity. They pray every year that the ports, refineries, and oil and gas platforms in the Gulf of Mexico are not too badly damaged during the annual hurricane season. Simultaneously, they limit other options: banning economically viable new oil and gas production off most of the U.S. coastline and passing laws which limit oil refining capacity and discourage the building of new Liquefied Natural Gas (LNG) terminals and refineries.
As a result, nearly 30 percent of U.S. off-shore oil production, almost half of the country’s refining capacity, approximately 20 percent of the off-shore natural gas production and more than 60 percent of our crude oil imports are produced in, flow through or are transformed to gasoline and other uses in the tropical storm ridden Gulf of Mexico.
The folly of this policy will remain evident as American’s go to the pump and heat and cool their homes for some time to come. Despite the fact that coal is America’s most abundant fossil fuel and new technologies are reducing the pollution from coal fired power plants, during the 1990s the Clinton administration, with many states following suit, promoted natural gas as the electric power source of the future. At the same time, the administration kept much of North America’s abundant natural gas fields on public lands and off-shore closed to development. In the Rocky Mountain region, an estimated 40 percent of all the natural gas in the ground is off-limits.
In addition, exploration and development of other sources of natural gas off the East and West coasts has been banned. So while demand skyrocketed, domestic supplies of natural gas leveled off and even began to decline. The result: sharp increases in the price of natural gas.
Of course, until recently, the only places considered for new natural gas production and LNG terminals were in the Gulf of Mexico—right in hurricane alley. Concerning oil, there has been a moratorium on new oil and gas development and production off the coasts of California, the East Coast and much of Florida since 1990. While shortsighted, the ban faced relatively little opposition. Few politicians were willing to fight the very vocal environmental lobby at a time when supplies seemed abundant and prices were relatively low.
These conditions no longer exist and today the policy just seems foolish. Even the energy bill enacted in August only expanded production in the Gulf, continuing restrictions on new production in other coastal areas.
Will we learn the lessons of Katrina and Rita, or will the political power of environmental elites continue to trump the energy needs of the country?
And then there is the Arctic National Wildlife Refuge (ANWR). According to the Energy Information Agency, ANWR contains between 6 billion and 16 billion barrels of oil under its frozen expanse. Even if only 6 billion barrels of oil are recovered, it equals all of our imports for nearly two years.
With new oil technologies, we could deliver this oil from an area just over 2,000 acres in size, less than one-half of 1 percent of ANWR’s 19 million acres, with little or no effect on the surrounding wildlife.
We are not running out of oil or natural gas, at least not in the near future. But rising demand and political roadblocks have made supplies of oil, gas and gasoline temporarily scarce. This problem will not be solved overnight. However, proposals in Congress to allow states to share in the wealth should they allow new oil and gas development off their coasts, and to expand refining capacity beyond the Gulf, would in the meantime help prevent future gaps in supply and demand from occurring when Mother Nature roars in the Gulf.
Future Americans would be grateful.