'Green' Politicians Add to Gas Price Woes
Amid the race between politicians to capitalize on consumer anger at high gas prices, at least one member of Congress, Rep. Marsha Blackburn, R-Tenn., expressed a much-needed perspective on the problem -- these same politicians own a share of the blame.
During an interview with Larry Kudlow earlier this week about rising gas prices, Rep. Blackburn observed, “If we're going to work toward [energy independence], we’re going to have to do some things differently. Now, I can tell you one of the things that I wish had been done differently is over the past 30 years, we have had environmental extremists driving energy policy in this country, saying no to everything.”
Certainly increased demand for oil from the growing Chinese and Indian economies and instability in the Middle East are major pressures on oil prices, but both Republicans and Democrats have added to these pressures by allowing the environmental movement to tie our energy policy in knots.
Bowing to environmentalist demands since the 1970s, Congress has blocked oil and gas drilling from areas like the Arctic National Wildlife Refuge (10.4 billion barrels of oil, according to the U.S. Geological Service) and the Outer Continental Shelf (86 billion barrels of oil, according to the Minerals Management Service).
As Cuba works out deals with Canadian, Spanish and Chinese companies to explore for oil as close as 50 miles to Key West, Sen. Mel Martinez, R-Fla., – apparently trying to appease the League of Conservation Voters which has given him a 10 percent rating – dubbed a proposal by Rep. John Peterson, R-Pa., to allow drilling 20 miles off the Florida coast as “crazy.”
Sen. Bill Nelson, D-Fla., and Rep. Connie Mack, R-Fla., also oppose OCS drilling thanks to oil spill hysteria whipped up by the Sierra Club.
Environmentalists helped pressure Congress in 1990 to require “reformulated” gasoline (RFG) supposedly to reduce the formation of ground-level ozone or smog. The RFG process requires use of additives such as ethanol or MTBE.
The RFG requirement raised the price of gasoline not only because of the cost of the additives but because different areas of the country require different blends of fuel to address different air quality circumstances. The 17 so-called “boutique” fuels used around the country make the national gasoline supply less fungible, which causes supply bottlenecks.
And for all this pain, there appears to be little gain from RFG. A 1999 report from the National Research Council reported that, “the net impact of RFG on ambient ozone concentrations...is a few percent. For this reason, it is difficult to quantify the specific contribution of the RFG program to the apparent downward trend in ozone.”
The final kick-in-the-teeth to consumers from the RFG program came last year when environmental groups like the Natural Resource Defense Council pressured Congress to not provide legal liability protection for MTBE makers, who will stop using the additive in gasoline on May 1. (MTBE from leaking underground storage tanks had been detected in groundwater around the country, raising the specter of lawsuits against MTBE manufacturers). Gas prices will soon jump again in many parts of the country as refiners try to avoid future MTBE-related legal liability by switching to the more expensive ethanol additive.
The policy missteps didn’t all occur in Congress.
In the 1990s, the environmentalist-friendly Clinton Administration made Environmental Protection Agency air quality standards much more stringent. Because states that fail to meet these standards stand to lose federal highway money, state governments now require gasoline refineries to install expensive air emissions equipment. The equipment is so expensive that it makes the expansion of existing refineries economically unattractive to investors – and you can forget about the construction and permitting of new refineries.
The problem here is that domestic refineries are operating at or near capacity -- limiting supply and putting more pressure on prices. A weather calamity like Hurricane Katrina can strike the weak link – Gulf Coast refineries – thereby limiting supply further and forcing the importation of more expensive gasoline to meet demand.
Not only are the alleged health and environmental benefits of these EPA regulations in doubt, but the EPA is getting ready to make the air quality standards even more stringent – virtually guaranteeing that expanding refinery capacity will proceed very slowly, if at all.
President Bush encouraged fuel conservation this week. That sounds reasonable and it may even be a temporary strategy for reducing gasoline demand and, therefore, prices. But conservation is not a viable long-term strategy for growing the economy. We’re going to need more energy in the future, not less.
Of all the proposals and ideas offered by politicians this week, only Rep. Blackburn’s questions Congress’ role in the problem. No other politician has even come close to hinting that Congress has allowed our national energy policy to be hijacked by environmentalists.
I’m all for environmental protection measures that do more good than harm. I’m also all for private research into alternative energy technologies that make economic sense and don’t require subsidies.
None of this, however, requires that politicians simply knuckle under to junk science-fueled environmental extremists.