| Banned
Join Date: Mar 2008 Posts: 440
| Dear Don:
Thank you for contacting me about the escalating price of gasoline andU.S. dependence on foreign oil. I appreciate hearing from you.
Currently, about 67 percent of the oil consumed in the U.S. is imported, 33 percent is produced here at home. Experts project that this trend will continue for many years. While it sounds logical to just say that if we produce more here at home, then we'll have to import less, in reality, if the only U.S. policy is to more rapidly deplete our own reserves by drilling for oil here at home, we will become more dependent on foreign oil in the long-run. The reason is simple. The U.S. has only two percent of the worlds projected oil reserves. We have already used 63 percent of our total historical and projected reserves, while other countries have used 20 percent of their reserves. So, if we just run through our limited oil reserves more quickly, then we will become even more dependent on foreign sources of oil in the future.
As you may know, the federal government has encouraged oil and gas development and the amount of drilling onfederal lands has steadily increased. The number of drillingpermits has exploded in recent years, going from 3,802 five years ago to 7,561in 2007.Between 1999 and 2007, the number of drilling permits issued fordevelopment of public lands increased by more than 361%. Combined, oil and gas companies hold leases to nearly 68 million acresof federal land and waters that are not currently producing oil and gas.Oil and gas companies would not buy leases to this land without believing oiland gas can be produced there, yet these same companies are not producingoil or gas from these areas already under their control. The bottom line is that oil and gas companies have greater access to federal lands and have thousands of new drilling permits, yet gasoline priceshave also risen dramatically. This contradicts the argument that moredrilling means lower gasoline prices. There is simply no correlation.
With respect to opening up the Alaska National Wildlife Refuge (ANWR) to oil drilling, it is important to keep in mind that 91 million acres in Alaska are already open to drilling. It is only a small part of Alaska's pristine Arctic tundra, on the North Slope, that has been set aside as a wildlife refuge. It isn't clear there is enough oil underneath ANWR to make it worth the large cost and environmental destruction to extract it. Studies done by the Bureau of Land Management and the General Accounting Office separately concluded that there is "a greater than 50 percent chance that no economically recoverable quantities of oil would be found in the refuge." Another study by the U.S. Geological Survey, found that the Arctic Refuge would only potentially produce a total of 898 million barrels of oil. That means that the Arctic Refuge's potential production would only provide enough oil to supply the U.S. with fifty‑one days of oil barely 14 percent of one year's use.
And, most reports I've read also indicate that it would take 10 years to get ANWR oil to the market. So it is certainly not a short-term solution. Plus, since the price of oil is determined by global markets rather than domestic production, there would be nothing to stop OPEC from cutting back on oil production when ANWR oil hits the market in order to keep the world price high.
That is why I think the key to reducing our reliance on foreign oil is to reduce our reliance on oil overall by developing alternative fuels and improving the efficiency of current oil use. I support bipartisan legislation, H.R. 670, to require a reduction in U.S. oil consumption by 2.5 million barrels a day within 10 years. This would be accomplished by expanding federal research into alternative fuels, providing incentives for American automakers to speed commercialization of more efficient and alternative fuel vehicles, providing farmers with support to grow crops for use as fuel, increasing support for public transit, increasing the number of flexible fuel vehicles on the road, and increasing tax incentives for consumers who purchase fuel efficient vehicles.
There are simple and small steps each of us can take to save more oil than the refuge could ever provide. For example, according to the American Tire Institute, Americans waste two billion gallons of gas a year, due to under‑inflated tires. The amount of oil used to produce two billion gallons of gas is approximately the same amount of oil that would potentially be found in the Arctic National Wildlife Refuge. A simple tire pressure check could prevent a need for drilling the Arctic Refuge.
That said, until this more sustainable future arrives, I believe that consumers deserve protection from price gouging by oil companies. The reality is that the price you and I pay at the pump is not determined by market forces. Given the vast control of OPEC and the few remaining oil companies, I believe it makes sense to protect consumers from price gouging. What Enron did to electricity consumers in California is exactly what oil companies are doing to consumers today.
I have reintroduced legislation, the Gasoline Price Stabilization Act, H.R. 1500, to combat rising gas prices. My legislation requires the President to file a trade complaint with the WTO against OPEC for illegally colluding to raise oil prices, which violates global trade rules. We must challenge OPEC when they distort the free market and gouge us with ever rising oil prices.
Regarding the issue of building oil refineries, there is no evidence, or at least none that I'm aware of, that environmental laws have limited the ability to build refineries. In fact, from 1975-2000, the EPA received only one permit request to build a refinery, so it's not like the EPA has been rejecting applications left and right.
Oil companies have not been building refineries because (1) they've chosen to expand capacity at existing facilities rather than go through the expense of building news ones, (2) increasing consolidation in the industry means that the few remaining companies profit handsomely when there are supply restrictions. The largest five oil refiners in the United States now control more than half of domestic refinery capacity. Just a decade ago, the top five controlled only 34.5 percent of the capacity.
The bottom line is that the oil companies are not adding refinery capacity because it is not in their economic interest to do so. They're making bucket loads of money now, why would they want to increase supplies and see prices fall?As Washington Post columnist Steven Pearlstein wrote, "When President Bush floated the idea last year of speeding site approval by locating new refineries on inactive military bases, Valero's [a major oil refiner] chief operating officer declared he wasn't interested. When you look at industry rates of return, he told the Post's Justin Blum, it's just not worth it." Further, the head of ExxonMobil has said, "When we do the numbers, you don't need another refinery."
I am also a cosponsor of H.R. 594, which would subject all oil trading to the same regulation as other commodities. Seventy-five percent of the oil supply is traded off the books. Speculators and oil companies secretly buy and sell contracts repeatedly to drive up the price and create profits. Commodity experts say regulation of these markets could lower prices as much as 25 percent.
For too long, our nation's energy policies have been stuck in the 1950s. We need to commit to a sustainable, clean energy future in the same way President Kennedy committed to landing a man on the moon. A clean energy future can sound like a science fiction dream, but it is entirely doable. We just need to break the hold that big energy companies have on federal policies.
Thanks again for writing. Please keep in touch.
Sincerely,
Rep. Peter DeFazio
Fourth District, OREGON |
Why Drill in ANWR when the lower 48 states is a wash in oil? 
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