Each morning over the past several weeks, Americans have watched gasoline and diesel prices skyrocket, igniting worries about the potential for a record-setting spring and summer of high fuel and food costs. Prices have not spiked this quickly since Hurricane Katrina in 2005; in fact, we are experiencing the second highest weekly spike in prices since 1990, according to the Energy Information Administration.
Several factors are behind the turbulence in the oil markets. The global market has responded to the unrest in the Middle East and North Africa with speculative higher prices. Growing demand from China and India for oil, gas and coal has changed the dynamics of world energy needs.
But the roots of our energy woes are largely of our own making. The price of crude oil as a global commodity is pegged to the U.S. dollar, and America’s huge budget deficit and massive trade deficit have devalued our currency.
Worse, the regulatory assault on American fossil fuels by the Obama administration and the past Congress has had a significant effect on today’s fuel prices. These counterproductive energy policies have decreased domestic production and left us more vulnerable than ever to the whims and designs of hostile dictators, oligarchs and cartels.
Consider this economic signal from the Gulf of Mexico. In 2008, the Department of the Interior received more than $68 million in revenues from royalties and lease sales under the Gulf of Mexico Energy and Security Act. In 2010, revenues plummeted to $2.3 million. Our economy lost billions in economic activity and thousands of jobs because of the terrible Deepwater Horizon oil spill and the subsequent self-inflicted moratorium by the Obama administration that closed down drilling.
The federal government’s Energy Information Administration is projecting oil production from the Gulf will fall by 250,000 barrels per day each year over the next two years. To date, 102 drilling plans for the Gulf of Mexico are awaiting approval from the federal government. What are we waiting for?
All of this obstruction from Washington means we not only are paying higher gasoline prices, we also are missing out on much-needed state and local revenues. Moreover, blocking access to the barren northern plain in Alaska and other oil and gas reserves decreases our ability to fuel ourselves. And all the while, we become more vulnerable to others outside the United States while sending more of our money out of our country.
America has the greatest energy resources in the world. We should look at our natural resources as a blessing, not a curse. Instead, the Obama administration - through the Environmental Protection Agency and abetted by an abdicating Senate - insists on moving forward with draconian regulation of carbon dioxide while ignoring the widespread opposition to a carbon cap-and-trade energy tax scheme. This regulatory attack specifically targets our plentiful, available and affordable domestic supplies of coal, natural gas and oil that we use to produce electricity, heat and fuels for our homes, vehicles and businesses.
Such harmful policies not only raise gasoline prices but also ultimately raise the prices of food, electricity and all consumer goods for America’s families. Lower- and middle-income families struggling to pay for their homes, food and clothing are hurt most by what is, in effect, a regressive tax as a consequence of the government’s counterproductive energy policies.
Some will say Americans need to learn how to live with costly energy and the inflationary prices and lost jobs that come with it. I disagree. With the uncertain dynamics in the Middle East and North Africa, the increased demand in growing economies of China and India and our own need to recover jobs lost in the recession, the common-sense course is obvious. There is no time like the present to open our reserves in the Gulf of Mexico, Alaska, Virginia and elsewhere to increase supplies and keep gasoline and electricity affordable and putting Americans back to work in the process. Congress should block any attempt by the EPA to mandate a carbon-dioxide regulatory scheme. And we must improve the permit process to increase access to our resources and safely speed up production - from Alaska oil to Wyoming and Appalachian coal to offshore and on-shore oil and natural gas.
It is time to start our creative engines and open the flow of our own American energy resources to finally take control of our destiny.
George Allen is a candidate for the U.S. Senate in Virginia, where he was formerly governor and U.S. senator.