Does Congress like $4-a-gallon gasoline? Or natural gas selling at double what it was a year ago? We know $4 a gallon has motorists in the mood to step up domestic oil production, and skyrocketing heating costs will likely do the same for homeowners, come winter. But is Congress willing to do something to drive down prices?
We'll soon see, thanks to Rep. John Peterson. After its July 4 recess, the House will have a chance to vote on his measure to allow drilling off our coastline. The Pennsylvania Republican has made a distinguished career of trying to end the ban on offshore drilling that Congress has renewed each year since 1982. The latest prices have changed his prospects. A vote of the full House Appropriations Committee on his amendment was put off last week. Peterson believes this was because the Democratic leadership concluded they didn't have the votes to stop him. But, then, why would they want to stop an effort to drive up supply and drive down prices here at home?
"The Democrats and environmentalists have made a conscious decision that we're not going to produce fossil fuel," Peterson says. "The problem is we're locking up all of it before we have a replacement."
The party of manufactured scarcity wants to continue to keep 85 percent of the outer continental shelf off the lower 48 states from being open to U.S. gas and oil exploration. Peterson's measure would allow drilling between 50 and 200 miles off the U.S. coastline. (Rigs can't be seen beyond 11 to 14 miles.) Estimates for the reserves there are as high as 8.5 billion barrels of oil and 29 trillion cubic feet of natural gas. There's also potential undiscovered resources of 86 billion barrels of oil and 420 trillion cubic feet of gas. Says Peterson, "We haven't allowed modern measurement out there in 30 years."
Yes, a lot has changed—measuring techniques, advances in drilling and environmental protection, $4 gasoline. Oh, and the reality of the Cubans negotiating with the Chinese to drill off our coast. They can drill there. U.S. companies can't. What kind of energy policy is that?
Peterson thinks opening up these areas will take the "fear factor" out of today's market. But ending this would make sense even if it didn't instantly lower prices because it addresses our long-term needs. Demand for oil and gas is only going to go up worldwide -- an estimated 45 percent from 2006 to 2030.
Here's something else to mull: Today's $4 gasoline is not the result of any crisis, storm or a terror attack that disrupts production or trouble in one of the unstable regimes that produce a third of the globe's oil. "We got to this price with none of this happening," Peterson says. "One, two or three of those could happen this summer. The problem today is that there's no extra supply in the system."
The Democratic response is that there would be plenty of supply if the evil oil companies would use the nonproducing federal leases they're now sitting on. They have a report that says the companies have leases for 68 million acres that could produce loads of fuel. Use it before asking for more.
There are a few problems with that line of argument. One, there are already use-it-or-lose-it provisions in current law. Two, the Interior Department can't figure out how Democrats calculated their production totals. Three, those allegedly idle leases are not idle at all.
"The existence of a lease does not guarantee the discovery of, or any particular quantity of, oil or natural gas," Assistant Interior Secretary C. Steven Allred has told Congress. "To truly determine this, lessees must develop data and eventually explore their leases, which requires numerous permits. ... This process often takes months or years. In addition, lessees undertake a vast array of business steps prior to making a decision to move a lease into production and must obtain another set of . . . permits to do so."
Beyond that, the 68 million-acre figure is swell -- if blaming the oil companies is your energy policy.
If it's not—and you don't like the idea of $4-plus-a-gallon gasoline for years to come—it's time to start tapping our own offshore reserves.
"We can't drill our way out of this. We need to do a lot of things," says Peterson, who favors conservation and alternative energy sources. "But every day we don't increase our drilling we increase our dependence on foreign energy."