Tight energy supplies are creating mounting headaches for US policymakers, who fear voters may blame them for summer power outages and higher gasoline prices. In quick fashion, both Democrats and Republicans on Capitol Hill are pointing the finger at each other. Nevertheless, it is a comfort to some in industry that lawmakers on both sides have labeled the situation an "energy crisis," a phrase that offers the rare implication that the US Congress may react quickly to solve the problem.
The administration of President George W. Bush clearly concurs: US Energy Sec. Spencer Abraham's first major policy address was entitled: A National Report on America's Energy Crisis (OGJ, Mar. 26, 2001, Newsletter, p. 7). In that speech, he endorsed industry's longstanding request to open up restricted public lands to exploration as a way to boost domestic supplies and mitigate price volatility in regional markets. Bush also has been calling current market conditions a "crisis" and recently signaled he would consider drilling on all public lands, even if acreage is now restricted for environmental concerns (see related story, p. 36).
Political expedience
Crisis or no crisis, however, the public relations battle is far from over. Soon after Abraham's speech, oil industry critics charged pro-industry forces in the Bush administration were overselling the "energy crisis" to score quick political victories.
"If it is truly a crisis, then, of course, one would think that, as in a war, certain mandatory requirements would come into play-like dealing with [energy] conservation and fuel efficiency standards," commented a congressional staffer who represents a key Democratic leader on Capitol Hill. "But every [industry] witness who has testified before a committee so far has argued against mandatory conservation actions on the grounds that they are not effective-which of course, is ridiculous. Republicans say it's all because of big government-the big evil, unless of course you want government to open up public lands."
Deeper problems
Industry officials and their advocates in Washington deny they are exaggerating their case to accelerate legislation. Some companies nevertheless are mindful of this criticism:
"This isn't a traditional crisis in the sense that we have physical shortages," said an official with a major pipeline company. "It is and always will be a cyclical business and, right now, production is not keeping up with demand."
Semantics? Yes. Yet no one in industry disputes a problem is here and won't go away unless policymakers acknowledge it is time to take another look at the way energy is captured and sold.
And to most companies and veteran industry watchers, now is not the time to be subtle. The longer it takes to get a solution, the more likely it is that a full-blown economic crisis occurs.
"There is an energy infrastructure crisis that has been developing for some time, and that has evidenced itself with a vengence after the financial and economic crisis of 1998," said energy analyst Adam Siemenski of Deutsche Bank AG. "As a nation, we have created enormous bottlenecks to the development and delivery systems for energy, and we had better fix this soon, or our economy will suffer."
