A four-year legislative battle came to a disappointing close last week when the U.S. Senate approved a bill permitting drilling in the Arctic National Wildlife Refuge. With gasoline prices up 35 percent from last year, the Bush administration’s renewed interest in ANWR should come as no surprise. The powerful oil lobby, along with President Bush, has been pushing for the opening of the refuge for years, but have been stymied by Democratic filibusters in the Senate. Now, a potential filibuster has been thwarted by tacking the proposal onto a budget bill. In addition to the drastic environmental impact of the bill, its supply-side solution represents a troubling misdirection of U.S. energy policy. The Bush administration has implemented a short-sighted energy policy, which will be ineffective in addressing the real challenges that lie ahead.
- Ken Srdjak
Conservationists have vehemently opposed lifting the drilling ban in the refuge, citing the inevitable deterioration of a sanctuary so isolated it is only accessible by air. While they will likely be active in monitoring the drilling process, it will be impossible for the oil companies to avoid leaving a dirty footprint on an untouched wilderness home to a broad diversity of animal and plant life.
Supporters of the bill use rising oil prices and increased demand for fuel as evidence of the need to expand U.S. output of oil. The U.S. currently consumes over 20 million barrels daily. Yet, government studies have found that the impact of drilling in the refuge, which would take almost a decade to begin, would only increase production by a few percentage points. In the face of record oil prices (recently topping $57 per barrel), the U.S. Department of Energy has concluded that the impact of drilling in the refuge would lower prices by less than 50 cents a barrel.
The struggle to chip away at price increases by expanding supply is a losing battle. Petroleum production increases will not keep pace with the expected growth in consumption. Developing nations with booming economies are greatly increasing their demand for petroleum — the Energy Information Administration estimates that China, currently responsible for over 30 percent of the recent increase in global oil demand, will more than double its oil consumption over the next 20 years.
The root of high energy prices lies in consumer demand, domestically and internationally, which cannot be satiated by supplementing domestic production. If the administration is serious about its commitment to reduce U.S. dependence on imported oil, it must decrease its reliance on all oil. By removing current industry subsidies that keep down the price of gasoline and raising federal gasoline taxes, drivers would experience prices closer to those of other nations. While initially painful, demand for gas-guzzling sports utility vehicles would drop almost instantly, and automakers would have a real incentive to develop more fuel-efficient vehicles. Just as during the energy crisis of the 1970s, rising costs in all industries would put strong pressure on consumers and investors alike to start considering alternative energy sources. The federal government can help by offering tax breaks and subsidies to promote research and development of these alternatives and encourage public transportation initiatives.
The amount of work that has been done to push this bill through is not worth its potential impact — suggesting that its importance is primarily ideological. There are still obstacles ahead before the drilling will actually commence, but much of the path has already been cleared. The ANWR bill opens up a potential for future drilling in even more environmentally sensitive areas and represents a troubling turn in U.S. energy policy. Congress needs to stop pandering to the powerful oil lobby and take action to combat long-term consumer demand.