June 2, 2004
The Department of Energy estimates that a rise of 10 percent in the price of oil cuts U.S. gross domestic product (GDP) growth by roughly 0.1 percentage point. Based on that, the 38 percent rise in oil prices over the past year has cost the economy roughly $46 billion in lost output.
In the event of a real disruption, oil's price -- and its economic costs -- could soar.
But we can take steps right now to boost our energy independence. According to Investor's Business Daily, we are only hurting ourselves by not exploiting our own sources of oil and other energy to their fullest. Here are a few ideas:
- Develop the Arctic National Wildlife Refuge in Alaska: It's a mammoth tract of unspoiled land -- the size, roughly of Maryland, Vermont and New Hampshire combined; yet oil production would require only a few thousand acres.
- Build more nuclear power plants: The United States has 103 nuclear plants, safely producing 20 percent of our electricity; but just one new plant replaces the equivalent of 8 million barrels of oil a year.
- Find new sources of energy: The most promising oil replacement is hydrogen power; scientists believe hydrogen fuel cells will be economically viable in as little as 20 years. .
Given recent events, Congress should understand our economic prosperity depends on our long-term energy security. If those in Washington fail to grasp this, voters may have to remind them, suggest IBD.
Source: Editorial, "Thinking Long Term," Investor's Business Daily, June 2, 2004.
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