- The Washington Times - Monday, August 15, 2005

Energy prices and independence

It was with strong interest that I read Martin Schram’s Commentary regarding the non-attention to oil company profits and the resulting impacts on energy prices, national security and U.S. energy independence (“Where’s the outrage?” Commentary, Aug. 8).

For the most part, Mr. Schram was on the money until he proposed his conservation solution. To say the “only possible solution” is conservation is incomplete to the point of being inaccurate. The United States cannot conserve its way out of this energy price and dependence crisis.

Over the last two centuries, coal and oil were king. Natural gas is fully capable of taking us through the 21st century if we take the necessary steps and make the essential investments.

Conservation and energy efficiency efforts have a role to play in a comprehensive energy policy, but at its heart, that policy must promote increased domestic natural gas supplies in order to achieve affordable energy prices and energy independence.

The energy bill signed by President Bush two weeks ago continues to look outside the United States in its promotion of imported liquefied natural gas (LNG). This policy approach demands caution against oil-like cartels for LNG exporting countries.

Domestic supplies of natural gas can increase substantially only if future energy policy provides access to onshore and offshore areas now off-limits, and provides the necessary catalysts for producing domestic methane hydrates.

America’s abundant supply of known natural gas reserves can be produced in an environmentally safe manner. What keeps us from doing so is our current energy policies. Right now, the federal government may only issue “oil and gas” leases.

Congress must allow the government to issue “gas-only” leases. Congress and the administration must also allow access to the estimated 213 trillion cubic feet (Tcf) of natural gas below the lower 48 federal landsorwaterswhere moratoriums or regulation make exploration virtually impossible. This represents almost a 10-year supply at the current demand rate (about 22 Tcf). With advances in drilling technology and stringent environmental regulations in place, natural gas can be produced from those areas in an environmentally safe and sound manner. Any such new offshore production would be outside the 20-mile “view shed” of our coastline.

The only road to true energy independence requires the federal government to invest in the final technology pieces necessary to make methane hydrates the primary source of our natural gas supply.

For those not familiar with hydrates, they very much resemble ice crystals. What does this mean in terms of potential natural gas supply? The amount of carbon bound in gas hydrates is conservatively estimated to total twice the amount of carbon to be found in all known fossil fuels on Earth. Conservative estimates are about 200,000 Tcf of natural gas, in hydrates, are found within the U.S. and offshore (well over 9,000 years of current demand).

Mr. Schram’s quoted “20-year goal of cutting in half the oil imports” is easily achieved if the federal government makes the necessary investments to bring hydrates to market.

If hydrate production technology is made available to the major and the independent producers alike, America’s energy independence will be restored. Can you imagine the impact that such an abundant, domestic, and clean natural gas supply resource would have on our economy and environment?

Although the abundant hydrates may not be attractive to some of those entities that either buy, sell, and profit from the current high natural gas prices, or have made significant investments overseas in LNG, it is the necessary, appropriate and long-term remedy for both consumers and our economy.

The bottom line on hydrates: this energy resource could serve as the last and final bridge between fossil fuels and renewables. Building that bridge will take either a rare demonstration of political courage in Washington or an absolute demand by American consumers demonstrated at the ballot box.

BERT KALISCH

President & CEO

American Public Gas Association

Washington

A ‘tough-minded approach’ for the future

Michael Scheuer’s article, “One unhappy Republican” (Op-Ed, yesterday) is extremely timely and I’m afraid extremely correct. I, too, have worked for the government (35 years, including military) and have a similar voting record.

It is sad to see our country at such odds over how to properly deal with terrorists and not presenting a united front to accomplish this goal.

Mr. Scheuer’s review of the handling of the Iraqi situation by the current administration is very disheartening. There must be, I hope, some minds in the administration who are of the same opinion as expressed by Mr. Scheuer and that they prevail and improve the administration’s approach to a deadly situation.

President Bush should do more to fully define his policy to combat terrorism and all the ingredients needed to achieve victory.

Also, (an almost impossible task) the president should eliminate those members of his administration that hinder, in any way, the establishment of a more tough-minded approach to our country’s safe future.

Up to this time, I have always fully supported Mr. Bush’s policy regarding the war on terrorism. Now, based on Mr. Scheuer’s thoughts, I wonder.

I have a son, who is a 22-year-old 2nd lieutenant in the U.S. Marine Corps. My wife and I retain an element of fear as to his future.

We pray that he will not be in harm’s way, but we clearly understand that the war on terrorism is going to be long and difficult. There will be sacrifices. I pray that the Bush administration will take heed of Mr. Scheuer’s message.

JAMES E. LE GETTE

Severna Park

China and interest rates

Alan Reynolds seems intent on shooting down any argument for a rise in interest rates. In “Deficits, China and mortgage rates” (Commentary, Sunday) he continues the theme, but in my opinion confuses the issue by writing too much about deficits. He’s right that deficits don’t automatically force interest rates up, but that is not the point at all.

In his last paragraph, Mr. Reynolds finally gets around to the fact that a prime cause of interest-rate rise is inflation. However, in no paragraph does he mention our current inflation situation. The core consumer price index — the best indicator of the underlying rate of inflation — doesn’t include food or energy costs. These are too volatile. Gas and oil are through the roof. But still, do we supposedly have inflation in check? No, this simply is not true, and with the removal of the Chinese peg, more dollar deterioration is inevitable.

We are going to lose more purchasing power and China is going to gain it. Denying Chinese influence on our economy is useless, even dangerous. Nothing happens when central banks stop buying treasuries? Maybe, but only in the sense that the stoppage is not the cause or initiating factor, but is instead a part of a larger process, one that we have brought upon ourselves by refusing to allow our economy to correct after the tech bubble burst in 2000.

On Jan. 3, 2001, the Federal Reserve Board began aggressively cutting rates, leading to a real-estate bubble. After the initial euphoria of Mr. Greenspan’s gambit finally wore off in early 2002, the dollar has since fallen precipitously. Nevertheless, the Fed keeps creating new money and credit. The inflationary results have finally forced the Chinese to slow down their U.S. debt investments and revalue the yuan. This indicates that they no longer trust the yields on Treasury paper to hedge against inflation, and instead have turned to trying to acquire commodities companies like Unocal.

Mr. Reynolds is right that inflation increases interest rates, and we’ve got inflation. And the yuan revaluation will make it worse. Therefore, higher interest rates are speeding our way, and China most certainly is a factor. We have to start saving and producing things again, instead of borrowing and spending. Not “eventually,” but right now.

THOMAS H. DESABLA

Silver Spring

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