NCPA - National Center for Policy Analysis


February 7, 2008

If gas prices stay at current levels, then in 2008 Americans will pay about 1 percent of Gross Domestic Product (GDP), or $130 billion more for oil than they paid in 2007, and $180 billion more than they paid in 2006.  These are significant increases, about the size of the economic stimulus package being debated in Congress.  Put it another way: if we could get oil prices down to 2006 or 2007 levels, we wouldn't need a stimulus package, says Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, and a senior fellow at the Hudson Institute.

What are our politicians doing about this?  Not enough, says Furchtgott-Roth:

  • President Bush's 2009 budget, released on Monday, recommends spending $687 million on electricity from nuclear power; the funds would primarily be used to help the regulatory approval process and develop technologies to reduce and dispose of waste.
  • Nuclear power could generate clean electricity that could substitute for coal, if regulatory and liability problems could be worked out, but until plug-in cars become widely available, atomic fission cannot be harnessed to propel vehicles, which account for about 24 percent of American energy consumption.
  • So far companies have not been willing to go through red tape, public anxiety, and risks of lawsuits to build nuclear plants; no new power plant has been ordered since 1978, and the last one finished was in 1996.

The president's other energy proposals are either counterproductive, or mere window-dressing, says Furchtgott-Roth:

  • He proposes to double the Strategic Petroleum Reserve — buy more oil at high prices and take it off the market, which would raise prices, not lower them.
  • He wants $648 million for clean coal technologies and $400 million for research into clean technologies for developing countries to help alleviate global warming.

Source: Diana Furchtgott-Roth, "The Right Energy Solution," New York Sun, February 6, 2008.


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