Terrorist Attacks Highlight Old Energy ConcernsCommentary by H. Sterling Burnett
September 17, 2001
We have many new lessons to learn in the years to come from the horrific terrorist attacks in New York and Washington, D.C. One lesson, however, is an old one: "those who do not learn from history, are doomed to repeat it." Our nation's prosperity depends in large part on our oil supply and our energy use. Oil is more than a fuel source. It is a feedstock for plastics, pharmaceuticals, fertilizers, lubricants and construction materials. Robert Ebel, of the Center for Strategic and International Studies, has even argued that oil is a national security priority, saying: "Oil fuels military power, national treasuries, and international politics. It has been transformed into a determinant of well-being, of national security, and of international power for those who possess this vital resource, and the converse for those who do not."
Yet from the Arab oil embargo in the 1970s, through the Gulf War to today, the U.S. remains dependent upon foreign nations for a majority of our oil needs. Even though a majority of these countries are in regions of the world that are politically unstable and/or have governments that are hostile to U.S. interests.
The results could be seen less than six hours after the terrorist's attack, when many parts of the country began to see an exorbitant rise in gasoline prices. While price "gouging" undoubtedly played some role in the price spikes, rising prices were also a result of gas station owners fearful that a shooting war was about to break out between the U.S. and one or more oil exporting nations, which would reduce the supplies of oil for gasoline and raise their cost.
Now, while our nation's memory is clear and our will is focused, is the time to begin changing our state of dependence. America's leaders could take steps to reduce our dependence on oil from distant lands, but each step requires political courage. Leaders must put aside regional concerns and the demands of special interests for the good of the nation.
By all accounts, America's remaining large deposits of oil lie either under public lands, or offshore. Unfortunately, these areas have been placed off-limits to oil production due to environmental concerns. It is time to choose: our national security, or marginally protecting sea birds and otters.
Take the Arctic National Wildlife Refuge (ANWR) for example. The Energy Information Agency estimates that ANWR contains between six and 16 billion barrels of oil under its frozen expanse. By comparison, the United States imports approximately 7 million barrels of oil per day. Even if only six billion barrels of oil were recovered in ANWR, during a time of emergency the U.S. could cut all imports of foreign oil - including imports from friendly nations like Canada - for two years with little or no effect on our economy.
Critics of opening ANWR to exploration have argued that it would take ten years to recover any oil found there. These same arguments were made 11 years ago during the Gulf War. But if we had made the decision to drill then, we would have less to fear from taking needed military action in the region today. The question is, will our national security be held hostage to OPEC in the future.
In addition, politicians must stop interfering in energy markets. Every time politicians ham-handedly intervene in the market to keep energy prices artificially low, they further ensure our continued dependence on foreign oil. High energy prices are a sign of scarcity and serve as a signal to small independent oil companies and large corporations alike that there is profit to be made if they can bring new supplies of fuel to the market. As the past demonstrates, once new fields are in production and supplies increase, competition will drive prices down. Price controls on energy do nothing more than guarantee further scarcity, since it tells potential oil entrepreneurs that the expensive and highly risky exploration they undertake in the quest for new oil fields will not be rewarded.
America will never have complete energy independence, nor should we attempt it. Relying only on domestic supplies of oil when less expensive foreign alternatives are available would be as foolish as our current policy of dependence. Instead, our energy policy should allow us access to cheap, abundant foreign energy when political winds are favorable, while removing political obstacles to domestic production so that in times of crisis, America's prosperity is not held hostage to hostile foreign powers.