IT’S BACK to the basics. With much of the economy in a tailspin and commodity prices soaring, Americans are once again finding themselves having to brush up on their fundamental economics, and more carefully scrutinize the platforms of their local and national politicians.
The economy won’t fully recover anytime soon, but a few short-term fixes put in place were fairly uncontroversial. The fiscal stimulus packages found bipartisan and — how surprising — public support. Other government actions have caused more heated debate, such as the practice of bailing out financial institutions along the lines of Bear Stearns, Fannie Mae and Freddie Mac. On the other hand, there are some solutions that should not be so contentious, but are nonetheless. The most pressing example in this category is, arguably, balancing short-term gasoline price hikes with a comprehensive, long-term national energy plan. To confront this challenge, Americans should demand that the 110th Congress put away tired partisan talking points and truly engage themselves with finding a viable solution to this problem.
As the House and Senate reconvene following their August recess, a good starting point for the latter would be to schedule substantive debate over the New Energy Reform Act of 2008. The legislation, brokered by a group of Republicans and Democrats dubbing themselves the “Gang of 10,” addresses many of the critical questions raised by the current energy crisis. The details will require some fine-tuning to be sure, but the plan’s tenets are solid.
The first and undoubtedly most controversial aspect of the measure is that it proposes to lift the ban on offshore drilling for large parts of the Atlantic and Gulf coasts. States could consent to drilling taking place more than fifty miles offshore. Though this is the legislation most likely to infuriate environmental groups and vilify the GOP, it is also the most crucial medium-term step in securing our energy needs for the future.
The basic liberal case against expanded drilling is two-fold. First it is that we cannot afford to sacrifice more of our environment in the name of oil, and second, that drilling will only delay taking genuine steps towards implementing the alternative sources that must be found.
The Democrats are correct here to a certain extent: The government needs to strictly enforce environmental standards on oil companies who seek drilling leases as well as make some key investments into alternative fuels research. This second point needs to be fleshed out and discussed on Senate and House floors sooner rather than later. Still, it is unwise to think that offshore drilling will be a major disincentive for private companies to invest in research seeking substitutes for oil and natural gas. Being ahead of the game and out in front of the competition is what business is all about. The Democrats are right to question if Republicans will use increased drilling as an excuse to ignore long-term planning, but it is precisely their job to press the issue in the future — not to cut off all shorter-term proposals. This kind of disciplined rationality and foresight could make Congress remarkably more effective, not to mention popular.
The other claims against offshore drilling are rather superficial. Some claim it will not deliver oil to the market for several years at best. True, but that same argument was made during oil shortages of the 1970s. Furthermore, the notion of a stable oil source in the future might have some impact on prices today. Critics are right to point out that oil operates in an international market and that revved up domestic production will not be significant enough to remake the global energy scene. Yet at the same time, advances in search and recovery technology have some oil companies estimating that unproven reserves might be much higher than government estimates. These companies aren’t evil; they are simply market-driven. If it’s financially practical to recover the oil, they will do so as quickly as possible.
And on the environmental front, if America neglects to take advantage of its own oil reserves, foreign producers will step in to fill the void as much as possible. In fact, Sen. Charles Schumer, D-N.Y., demanded in May that Saudi Arabia ramp up production by a million barrels a day. In essence, we are simply outsourcing our environmental damage to other parts of the world. Because the U.S. has much better technology and far more rigorous environmental standards than most developing countries, the overall impact of this noble goal is actually a negative in terms of protecting our planet. Syndicated columnist and commentator Charles Krauthammer eloquently argued this very point in an August column.
In exchange for expanded drilling, the Gang of 10 proposal cedes ground to Democrats in several ways. It keeps the Arctic National Wildlife Refuge off-limits and repeals the tax breaks given to oil companies in leaner years. It also promotes strong conservation and new, cleaner technologies. After all, politics is supposed to be all about compromise. Instead of wasting our time chasing after energy speculators or other equally faultless parties, let’s accept market mechanisms for what they are and go from there. You know, it might not hurt Congress to brush up on some basic economics either.
Ross Lawrence is a Cavalier Daily Associate Editor. He can be reached at r.lawrence@cavalierdaily.com.
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