The days are getting longer and temperatures are growing warmer. Summer is fast approaching. For a lot of folks, summer means family vacations and many miles on the road. Unfortunately, gas prices often rise during the summer months, making trips harder on families’ wallets.
Increases in energy prices do more than complicate the family vacation; they have a dramatic effect on family budgets. The Congressional Budget Office estimates that spending on gas and electricity amounts to 21.4 percent of income among the poorest households, but only 4.1 percent of income among the wealthiest. So, obviously, high gas prices have a disproportionately negative effect on the poorest among us.
Congress can take steps to help families and prevent steep rises in gas prices (and even reduce them) by boosting domestic energy supplies. The United States has vast reserves of oil and gas that remain untapped. The U.S. Geological Survey has estimated that one portion of the Arctic plain could hold 16 billion barrels of recoverable oil, enough to replace 30 years of Saudi oil imports. The Outer Continental Shelf and Gulf of Mexico are promising sources, and oil shale reserves on federal lands in Utah, Colorado and Wyoming are estimated to hold three times as much oil as the Saudi reserves. Yet, despite a number of Republican proposals over the years, much of the nation’s untapped oil and gas remains off limits.
President Obama’s announcement that he supports modest offshore oil exploration, while welcome, is less than meets the eye. First, his proposal is limited, encompassing just a small area along the southern Atlantic coast and in the Gulf of Mexico. Part of Alaska would be opened for exploration, but vast expanses would be put off limits, as would the Pacific and Northern Atlantic coast. Moreover, the president would cancel previously issued leases in Alaska. Some drilling is better than no drilling, but with the moratoria lifted in 2008 and the rhetoric about energy independence, I would have expected to see more areas opened to exploration and development.
Second, don’t expect to see oil wells popping up off the coast of Virginia any time soon (actually you wouldn’t see them anyway since they would be at least 50 miles from the shoreline). Production of new oil supplies is years away, following extensive studies, new regulations, and, quite likely, legal challenges. The promise of new supplies is worth the wait; but this complicated process means that, without a strong commitment to see it through, new energy production may never materialize.
The American people support using our domestic supplies of oil and gas, but the benefits of more exploration can be easily reversed if Congress and the administration go forward with policies that would increase energy prices. “Cap-and-trade” legislation, for example, would raise energy prices. So too would regulation of carbon dioxide emissions by the Environmental Protection Agency. If cap-and-trade passes and/or the EPA imposes a new regulatory regime, President Obama’s support for limited offshore oil expansion will be of no consequence. As the American Enterprise Institute’s Kenneth Green put it, “If the president gets the carbon price regime he craves, it might not be profitable for companies to pull the oil or gas out of the ground in the longer term anyway.”
I believe we must take steps to make energy more affordable. Others in Congress support policies, like cap-and-trade, that would make it more expensive. President Obama can’t have it both ways.
Sen. Jon Kyl is the Senate Republican Whip and serves on the Senate Finance and Judiciary committees. Visit his Web site at www.kyl.senate.gov.