With the new year comes a new Congress, and, as always, energy policy will be a major priority for this 114th session. Now that Republicans have regained control of both the Senate and the House, and with President Obama looking to establish his legacy, there is a unique opportunity to build positive momentum on energy security and reduce America’s vulnerability to the historically volatile oil market.
Oil prices are at their lowest in years, and Americans may be tempted to think we are entering a new era of stable, cheap fuel. Indeed, we find ourselves in a phase of temporarily low prices on the oil market rollercoaster. Unfortunately, those easily forgotten high prices will inevitably return, shocking the economy in the process and damaging U.S. productivity. This scenario will replay itself again and again, unless we take steps to avoid it.
Moving forward requires a new approach, one that focuses on addressing the national and economic security challenges that result from our near-exclusive reliance on oil to power American transportation.
We must begin by acknowledging that as the world’s biggest oil consumer — we use one fifth of global supply — the United States is dangerously dependent on petroleum. It composes more than a third of our primary energy demand, more than any other fuel, and we rely on it to power 92 percent of our transportation sector. As a result, the price of oil wields incredible influence over our economic health.
The wild oscillations of the global oil market make this dependence all the more hazardous, and there is little we can do to stop them. Although the United States now claims the position of top global oil producer, 90 percent of all proven reserves still remain under the control of national oil companies, many within the OPEC cartel. This fact alone illustrates how little control we have when we let the oil market determine our economic fate. And widespread geopolitical instability in oil producing countries like Libya, Iraq, and Nigeria will continue to raise the specter of supply disruptions that could send crude prices skyrocketing.
Surging American production has helped us lower oil imports, created hundreds of thousands of jobs, and has facilitated today’s drop in oil prices. However, increased production alone cannot produce true energy security. We must create a strategy that continues to encourage expanded domestic energy production while also diversifying the fuels that power our transportation sector.
Breaking America’s oil dependence will require policies that fuse supply-side and demand-side initiatives. Policymakers must craft legislation that tackles our dependence in order to move forward, and the clock is ticking.
One way to accomplish this is through the creation of an Energy Security Trust Fund, designed to facilitate expanded North American energy production while driving investments in technologies that can make the American economy less vulnerable to the whims of the global oil market. With the aim of using oil more efficiently and diversifying the transportation sector altogether, these investments would support basic research and development in cutting-edge components such as longer-lasting batteries and high-capacity storage tanks for natural gas trucks — not costly boondoggles on unproven technology or expensive “green” alternatives.
This R&D funding would originate from some of the revenues generated by new production in the Eastern Gulf of Mexico and other federal lands and waters currently not available for development. For conservatives, this is an opportunity to open new areas of production that otherwise would remain inaccessible due to government restrictions, while incorporating demand-side policies that would reduce American oil consumption and increase American national security in the process.
We have a unique opportunity to act quickly during this period of lower oil prices. Historically, we have moved on energy policy only in times of crisis, reacting after the damage has already been done. This was the case during the 1973 Arab Oil Embargo, and it will be the case again when the next oil price spike inevitably arrives.
We should seize this moment, working from a position of strength to lay the foundations for real, lasting U.S. energy security. We have a chance to pass effective supply-side and demand-side legislation that both sides can rally behind, putting us on the path towards an America that is more economically resilient and better protected from its enemies. That’s a good deal for all of us.