When the U.S. Senate recently voted — by a whopping 73-27 margin — to end the 45-cents-per-gallon tax credit for ethanol, it did more than deal a glancing blow to a politically pampered product. It sent a signal that not even Big Corn, which for decades held Washington politicians in its iron grip, is safe from the harsh fiscal realities of a sputtering economy.
To be sure, ethanol is down, but not out. The vote was on an amendment to a controversial bill that is not likely to be enacted. But a public rebuke of this magnitude to the once-mighty corn lobby shows that Congress — at long last — is having second thoughts about subsidizing non-competitive energy sources in perpetuity. Killing subsidies to phony industries (let’s hope wind and solar power are next) is one way to get serious about providing America with affordable energy, but more needs to be done.
A good start would be to remove the regulatory barriers standing in the way of untold billions of barrels of oil off Alaska’s coast. Two of Alaska’s Arctic seas — the Beaufort and the Chukchi — are estimated to contain up to 27.9 billion barrels of oil and 122 trillion cubic feet of natural gas, according to the United States Geological Survey (USGS). This resource, if developed, could produce up to one million barrels of oil per day. What’s more, the oil riches are located in relatively shallow waters, where, with state-of-the-art safeguards, the chances of a spill are remote. Yet this huge domestic source of energy is being withheld from American consumers by a game of regulatory ping pong within the Environmental Protection Agency (EPA) and by lawsuits filed by anti-fossil fuel environmental groups.
Earlier this year, Shell cancelled plans to drill in the Beaufort Sea, after trying for five years to get a federal air-emissions permit from EPA. The agency initially approved the permit but then referred the matter to an internal review panel, the Environmental Review Board (ERB), where it festered for years. Run by judges who wear robes and write briefs, the litigation-happy EAB is notorious for dragging its feet and leaving companies like Shell in limbo. Shell finally had enough and took its business — and the jobs that went with it — elsewhere.
This is no isolated incident. Realizing the immense potential of Arctic energy resources, the Interior Department commenced lease sales for the Beaufort and Chukchi Seas in 2006. It has been five years since the initial lease purchases — valued at billions of dollars — and federal permitting process began, yet not a single well has been drilled thanks largely to inconsistent actions on the part of EPA.
The future of drilling in the Beaufort and Chukchi Seas is closely tied to the fate of one of America’s premier energy arteries: the Trans-Alaska Pipeline System. Originally designed to handle 2 million barrels of oil per day, this 38-year-old engineering marvel currently transports fewer than 700,000 barrels of oil per day from Prudhoe Bay on Alaska’s North Slope south to Valdez. This decline is expected to continue, as oil reserves in Prudhoe Bay and the Kuparuk River dry up. Unless new sources of crude oil are tapped, the pipeline will have to shut down. And once it shuts down, it must, under law, be dismantled. This, of course, is exactly what environmentalists want, hence the never-ending lawsuits and their vehement opposition to drilling in the Arctic National Wildlife Reserve (ANWR). If the environmentalists get their way, Alaska will be transformed into a depopulated wilderness and America’s dependence on foreign oil will rise accordingly.
None of this has to happen, and if a couple of forward-looking members of Congress have their way, it won’t. Representatives Cory Gardner (R-CO) and Gene Green (D-TX) have introduced a bill, the Jobs and Energy Permitting Act of 2011, designed to eliminate needless permitting delays that have stalled the energy-production process off the coast of Alaska. Among other things, it specifies that any drilling vessel must be considered a stationary source of emissions under the Clean Air Act — and must be regulated as such — once drilling commences. It clarifies that service ships supplying drilling platforms are to be regulated as mobile, not stationary, sources of emissions. Finally, the bill specifies that air impacts from offshore drilling are to be measured on land, at the point where they could affect the public.
Thanks to the bountiful gifts of geology, America is in the midst of an energy revival that could pave the way for a lasting economic recovery. From the Marcellus Shale in the East to the waters off Alaska’s coast, we have resources at our disposal that can supply affordable energy to American consumers and revitalize our manufacturing sector. It’s time for Congress to cut the red tape, so the country can get down to business.
Bonner R. Cohen, Ph. D., is a senior fellow with the National Center for Public Policy Research in Washington, D.C.