Energy strategy

American Petroleum Institute Pres. Red Cavaney says the US needs to open a discussion on drafting a national energy strategy.

American Petroleum Institute Pres. Red Cavaney says the US needs to open a discussion on drafting a national energy strategy.

He told a National Association of State Energy Officials meeting in California that there is a widening gap between the growing energy demands of the economy and the country's ability to meet those needs from its own resources.

"If we are to reverse this troublesome trend, our nation must develop a more contemporary energy policy. Few subjects will be more important for the new president and the Congress when they take office in January."

Cavaney said the current economic boom has changed the political climate in Washington and made it possible to focus on a budget surplus rather than a deficit.

"There is, however, a neglected side in the economic reverie," Cavaney said. "In spite of the bountiful prosperity available to us, we—as a country—have chosen not to address some chronic needs essential to the continued improvements in our nation's quality of life.''

Shortages

He said gasoline supply and price problems in the Midwest this summer and earlier heating oil concerns in the Northeast show "that our nation has fallen short of addressing our energy challenges in a sustainable, strategic fashion."

Cavaney said it has been a quarter century since the country broadly debated its energy policies and, while they may have been satisfactory for those times, "we have a very, very different world today."

He said the petroleum industry wants at least four elements in an energy policy: greater access to resources on federal lands, onshore and off; an end to unilateral sanctions that ban US companies from operating in some nations; a balanced approach to environmental regulations that considers the nation's energy needs; and expedited permitting for the construction and modernization of refineries, pipelines, and other facilities.

The climate

For many years, the US has had an informal energy policy: reliance on cheap foreign oil.

In 1998 and early 1999, the cheap oil policy worked pretty well. The Organization of Petroleum Exporting Countries outproduced demand. Consumers bought gasoline at rock-bottom prices, and the economy soared. Only pinched US oil producers were suggesting the nation needed an overriding energy plan.

A spurt in heating oil prices in New England last winter and sharply higher gasoline prices across the nation this summer have flipped the energy policy debate. Now congressmen and consumers are lamenting the need for an energy policy.

Energy has not been a major issue in the US presidential campaign. Gasoline supplies are adequate, and prices have dropped.

But there are problems on the horizon. This fall, US consumers will feel the bite of sharply higher natural gas and heating oil prices.

Heating oil price rises usually anger consumers more deeply than gasoline and diesel fuel price jumps: winter warmth is essential.

When the next Congress begins work in January, one of the hottest issues waiting for it will be public anger over winter fuel costs and supply.

That will launch inquiries into US energy strategy—or the lack of it.

Producers have a lot at stake in such a debate, and API is smart to get the issue in the open as soon as possible.

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