Having just gotten back from the NFIB’s Small Business Summit in Washington, D.C. where an audience of business owners were addressed by the likes of Senator John McCain, Meg Whitman (former CEO of eBay), legendary quarterback and entrepreneur Roger Staubach, and several others, I went on the obligatory “Capitol Hill visits” with our Florida delegation. At a time when oil is at $135 a barrel and gasoline costs $4 a gallon, you’d think our elected representatives would be working overtime to combat these realities and steer our economy back from the brink. Think again.
In office after office, we heard familiar refrains: “It’s an election year, so nothing will get passed between now and January” . . . “It’s really difficult to get the parties to agree on a common direction for the country any more” . . . “There’s no reason to draft legislation that has no chance of getting passed this year” . . . “There are some pretty complicated issues out there right now” . . . etc. As a decisive, well-informed, and forward-thinking business owner, I turned many different shades of green and struggled not to vomit. If I ran my business like they run our government, we’d be out of business. But, I guess that should only be expected as merely a prudent American family or business would balance their budgets or risk going bankrupt from crushing debt. Those same, common-sensical rules don’t apply in Washington, where politicians think the “good times” last forever and find it the epitome of civil discourse to make sport of partisan disagreements. It must be nice to live with such delusions . . . on our dime.
In each Congressman’s office we visited, I pressed for the obvious: “When will you and/or your party put forth a comprehensive energy plan?” To me, it doesn’t really matter which political party gets its act together sooner; I just want our economic course to be set once again for growth, not retraction. I want our country to continue to be great, not flop into a slow and painful decline of their doing. As naïve as it may sound, I sort of thought that occasionally politicians do what’s in the best interest of the country as a whole, irrespective of what it might do to them in their next election. Well, the answers I got were pretty grim. It became obvious that these staffs — and even some of the Congressmen themselves — had long-ago forgotten that simple, foundational concept from Econ 101: Supply versus Demand.
First, let’s address supply: with nearly 11 billion barrels of oil in that artic no-man’s-land, otherwise known as the Artic National Wildlife Refuge (ANWR), just sitting there waiting to be drilled, we continue to be more concerned with the caribou than our economic future. This, despite evidence that caribou herds, other wildlife, and vegetation in frigid climates actually flourish near the warmth of oil pipelines. This, despite overwhelming support by the residents of Alaska to drill in ANWR. This, despite ANWR being so remote that virtually no one lives on this barren moonscape. Oh, and I almost forgot: this, despite $4-a-gallon gasoline.
By perfecting the refining of solid shale rock into diesel or gas, American engineers may have the largest oil supply in the world on our hands — in the American West with 1.8 trillion barrels estimated. That’s enough to meet present U.S. demand for over 200 years! But can we get at it? Unfortunately, we can’t. Some Congressmen thought it wise to prohibit the leasing of federal interior lands that contain at least 80% of our shale.
Our Outer Continental Shelf is estimated by the Interior Department to contain some 86 billion barrels of oil and nearly 420 trillion cubic feet of natural gas, but 97% of the Shelf’s 1.76 billion acres is undeveloped and 85% is off-limits to drilling. At least 8.5 billion proven barrels of oil sit off our Pacific, Atlantic and Gulf coasts, but our esteemed legislators won’t let us get at it to attempt any semblance of energy independence. The primary argument always put forth of “oil on our beaches” or some other environmental concern is speculative at best. One only has to look to Hurricane Katrina’s decimation and note that no significant oil leaks occurred despite wrecked oil rigs all over the Gulf. Any industry insider will promptly explain that the “problem” only occurs from leaking, sinking or wrecked tankers, not from the platforms themselves — the technology these days is just that sensitive and superior. So “oil on beaches” is a fairly far-out hypothesis and putting rigs 40+ miles out is far enough that beach-going tourists will never even see them against the curvature of the Earth. Besides, as I type this, the Chinese are preparing to drill in Cuban waters less than 60 miles off the Florida coast — so is it just better to continue bickering on the sidelines about this or perhaps DO SOMETHING?
As for demand, we know that isn’t exactly slowing down. China and India’s lightening-quick growth of their middle-classes and the infrastructure that accompanies it is a tremendous development for our economy, the world’s economy, and the world’s stability over time . . . but their demand for oil will continue to grow even when our demand starts to plateau in the future. Sure, we’ll develop (and are developing) alternative energy sources, but relying predominately on one source is a doomed strategy that oil over-reliance has already taught us by now. Variety is what we need. Hybrid and electric cars are but one part of the long-term solutions. Solar, wind and hydro-electric energies will continue to come down in costs and wide-spread adoption will ensue with proper market pressures and incentives. But, nuclear energy needs to be included, as do new oil refineries. We can no longer afford to take a back seat to the French, a country with nearly 85% of its power from nuclear and virtually energy independent. They once learned from our revolution; we need to adopt this particular one now from them.
Of course, some people will argue that it takes nearly a decade for a new refinery to come on-line or a nuclear power plant to be built and become operational, but immediately lifting the bans on these sends a very strong signal to speculators and OPEC that the weaning will commence. Allowing drilling in ANWR and along the coastlines, and letting the individual states decide to drill or not to drill, would cause the price of oil and gas at the pumps to plummet overnight as the perception of tight supplies in the future would evaporate. And with 57% of Americans now favoring “drilling in U.S. coastal and wilderness areas now off-limits” in a recent Gallup Poll, it would appear that our demand for a change in energy policy is accelerating. We cannot let this massive transfer of our wealth to other countries (including totalitarian dictatorships and absolute monarchies) continue and hope to still be an economic powerhouse in the future.
As I see it, we have an obvious leadership crisis, not just an energy one, on our hands. With comments like those above, is it any wonder that the so-called “best and brightest” don’t go into politics anymore? Is it any wonder that some of the current proposals to address our energy crisis involve suing OPEC or increasing taxes on “windfall” oil company profits? Sounds like more of the blame politics of victimhood to me, and last time I checked, only true Socialists have such problems with “profits.” Many leftists have the same problem with pharmaceutical companies until a pharmaceutical company’s R&D efforts (fueled by profits) save a relative’s life. So how about proposing something that might actually WORK in the real world . . . say, away from Washington? Essentially, my recipe is above IF anyone has the courage to act on it. Whether it can get passed or not at the moment is irrelevant — since politicians follow the polls, it’s only a matter of time before these measures become law. But any smart politicians should be leading this charge, not catching up to it much later. And the time to take action is NOW!
Finally, you may have heard one of the largest discoveries of oil has just been found in recent weeks off the coast of Brazil. But do we see the legislators in Brasilia hemming-and-hawing about speculative environmental damage? Of course not. They’re busy preparing to launch their country into the upper echelon of world oil players! Our politicians, by contrast, are busy looking for someone or something to blame and talking-up the “greening of America” as THE solution. Hoping on one magic bullet is a risky strategy. Sadly, we look to be on a long-term economic decline due to our misguided representatives who long-ago forgot their Econ 101 lessons and even who they represent. And I used to think South American governments could learn a thing or two about capitalism. I guess I should’ve just dropped the “South.” It’s only a matter of time until Brazil starts acting and looking like the U.A.E. Skyscrapers and ski-jumps in the Amazon, anyone?