The US Congress, as of presstime last week, seemed ready to pass comprehensive energy legislation. As a next step it should consider enacting something meaningful to supplies of oil and natural gas. The omnibus bill approved Nov. 14 by Republican negotiators fails in that crucial area.
The legislation takes many steps on many subjects, including some subjects pertinent to supplies of energy, even oil and gas. But it comes nowhere near fulfilling its press notices about significantly fortifying energy supply.
The legislation's steps on energy supply are varied and small. It commits money to the study of hydrogen as a vehicle fuel and to development of renewable energy. It provides incentives for drilling of deep wells on the Gulf of Mexico shelf and of wells in deep water. It provides measured price protection for marginal onshore wells. It gives independent producers tax changes they've long sought. It attempts to ease bureaucratic resistance to oil and gas work on federal land in the West.
Incremental supply
These moves can enhance energy supply incrementally. In relation to the growing US appetite for energy, however, and in comparison with what Congress could have done but did not, their potential contributions are modest at best.
Congress has refused to allow leasing of vast portions of the federally owned oil and gas resource in the Arctic National Wildlife Refuge coastal plain, off the East and West Coasts, in much of the West, and in the eastern Gulf of Mexico. It is fundamentally impossible to raise energy supply in significant amounts while locking away so much potential for commercial energy in deference to less-economic alternatives. Claims to the contrary are political salesmanship. Companies and trade groups will perform no public service by cheering this bill as a boost to energy supply when so much more could have and should have been done.
The energy bill's two major moves affecting oil and gas, in fact, don't directly involve supply at all. The moves, elements of a political deal, are the requirement for more than twice current volumes of ethanol in reformulated gasoline and protection against defective-product litigation for producers of methyl tertiary butyl ether. As a result of the ethanol mandate, prices will rise for a commercially, environmentally, and thermodynamically inferior product. Sound policy-making would never accommodate such an offense to energy consumers.
The US needs a new approach to the making of energy policy. Enactment of energy policy—any energy policy—has become an end unto itself. This has to change. The road to energy policy is littered with price controls, ethanol mandates, and countless other mistakes. The omnibus energy bill now set to pass began as energy policy but ended up as farm aid and litigation repellant with enough energy goodies left in to suppress dissent. It lost hope for becoming sensible energy policy when lawmakers precluded development of commercial energy while spewing public money at hydrogen and windmills.
As part of a new approach, politicians should refuse to act on energy during the warm-up to presidential election campaigns. When they yield to that urge, the interests of consumers and taxpayers give way to concerns of farm lobbyists, tort lawyers, environmental pressure groups, and oil companies insufficiently mindful of their customers.
Everyone can freshen the approach by decoupling energy from security in politics. Yes, the link between energy and security exists. It just never leads to constructive policymaking. One politician alarmed about security insists that the US pursue energy independence. Another suggests the country conserve its way to the goal. Others pile subsidies atop mandates for energy forms that never will be commercial but that don't come from abroad. Where is security to be found in economic folly?
Better focus
A better approach is to focus energy arguments on jobs and economic health. It's better because it works. Since 1989, the closest Congress has come to approving ANWR leasing was when the House included the move in its 2002 energy bill. It acted then because the Teamsters Union, sensing job creation, supported the initiative. This year, the union was silent.
Congress and the oil and gas industry were close to achieving comprehensive energy legislation last week. But sound energy policy was as distant as ever.