Spill shouldn’t create more bureaucracy, less domestic energy

Mike Carey Contributor
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Even before the BP disaster in the Gulf, there have been countless fallacies reported in the media about offshore drilling, but they have gotten even worse. One of the talking heads suggested that by moving to green sources, including nuclear, would lessen our dependency on oil so that we could stop drilling off the coastline. It was quite a solution, unfortunately it doesn’t quite add up. To start with, nuclear power is used to generate electricity, whereas drilling oil is used to refine gasoline for our cars.

Halting offshore drilling will not force new technologies to market. Halting offshore will not make us less dependent on foreign oil. In fact, it will do the exact opposite. To stop drilling off our waters will hurt us in the long run. We currently receive 30 percent of our oil from offshore drilling. Turning off that spigot would make us more dependent on foreign oil from the Middle East. Many of these governments are not friendly to us and cause gas prices to fluctuate as the result of political turmoil. To stop offshore drilling is to cut off our nose to spite our face.

Perhaps new battery technology or electric cars will one day supersede traditional gasoline-powered cars. But the few non-gasoline powered cars that are in production are very expensive. Trucks, farm equipment and large construction vehicles are almost all gasoline dependent. By transitioning from a gasoline-powered auto to a fleet of electric cars will place new strains on our electric grid. Electricity is generated from coal, natural gas and nuclear power. Coal currently powers half of our electricity in this country and it the cheapest way to generate electricity. Renewables, including solar and wind power only two percent of our electricity but are incredibly expensive forms of energy, even after receiving enormous subsidies.

If we are serious about transitioning off oil via electric cars for our transportation needs, it is necessary that electricity remain inexpensive. Otherwise only the wealthy will be able to afford electric cars, which will not replace gasoline, powered automobiles. Washington has offered several proposals that would cause dramatic increases in the cost of electricity. These schemes would mandate shifting power plants from burning coal to natural gas. While natural gas is already more expensive than coal, forcing the use of natural gas as the main source of electricity would cause natural gas prices to dramatically increase causing electricity prices to skyrocket. If electricity prices are high, it will not help to transition us from oil as the primary fuel for cars to electricity to fuel our cars. Increasing demand while limiting the supply results in higher prices. It is simple economics, but the nation’s capitol seems to lack that basic understanding.

Furthermore, if we are pushing to lessen our oil dependency, electricity needs to become a less expensive source of fuel if we are going to rely in it to displace oil. Again, the more demand you place on one form of energy, the more price will increase. By shifting transportation needs on to electricity, the price will rise. We must keep the price of electricity low if these new technologies are going to depend on electricity.

Yet, the government keeps threatening to intervene either through a “cap and trade” which would tax all forms of energy and push our manufacturing and those manufacturing jobs overseas in the name of “capping” Greenhouse Gases (GHGs), especially carbon dioxide.

The Obama administration has decided to unleash its bureaucrats at EPA to regulate carbon dioxide and GHGs. In addition to all the vehicles produced in America, the EPA regulations will snare some six million buildings, facilities, farms, and other “stationary sources”. Hospitals, schools – even the local dry cleaners and the local Dunkin Donuts – will face steep new financial and administrative burdens as the EPA forces them to obtain new permits and upgrade to expensive new equipment and technologies.

Sen. Lisa Murkowski (R-Alaska) has introduced a “resolution of disapproval” (S.J.Res. 26) that would prevent the EPA from wreaking economic havoc. It effectively tells EPA to go back to the drawing board and not move forward with the regulations. This vote will occur this Thursday, June 10, 2010, and requires a simple majority of senators (51).

Our government should not pick and choose winners and losers of technology. The marketplace should be the final arbiter of ideas; the marketplace decides much better than the government what actually works efficiently. America is the most prosperous nation because throughout our history we have always had an abundant supply of cheap energy. America’s high standard of living is the direct result of our economic prosperity. We need to ensure that we maintain our standard of living that is fueled by our abundant energy sources.

Mike Carey is President of The American Council for Affordable and Reliable Energy (ACARE) a coalition of businesses, nonprofit organizations and individuals who support public policies that encourage the production and delivery of the energy required by a growing economy.