Our Energy Crunch and How to Fix It
With plenty of untapped energy in the ground beneath us, all we currently lack is the will to harvest it.
We all know that gasoline has gotten way too expensive over the last 18 months, and most of us have an intuitive sense of why: Joe Biden’s government has made it harder to explore for and transport oil.
To that end, a recent series of posts at The Daily Signal took a deep dive into the issue, speaking not just to the policy aspects controlled by government but also how they affect us in areas outside the energy realm.
In reading the series, it becomes even more clear that our government’s policy of leaving oil and natural gas in the ground is damaging our overall economy.
Over decades, a system has evolved to benefit both producers and consumers, whereby private companies assess potential areas of exploration, known as the “mineral estate,” and lease parcels from either private or public landowners. State and private land makes up 1.5 billion acres of the mineral estate, while the onshore federal share is 700 million acres. Offshore parcels make up the other 1.76 billion acres of federally controlled mineral estate, and the problem we have is illustrated by this frustrating fact: “According to the Department of Interior and the Energy Information Administration, federal offshore oil production was only about 15% of total U.S. oil production in 2020, and federal onshore production was only about 8%.” In other words, while the federal government controls about 60% of leasable oil area, we only get 23% of our production from it.
There’s little doubt that Biden administration policy, with only grudging approval of new leases and increased fees for companies extracting our energy, will keep the federal portion of the mineral estate from reaching its full potential.
But even if the current regime had a change of heart, there would be other issues affecting our supply, as refining and transporting facilities also need to be upgraded. According to the Energy Information Administration, American refineries have a capacity of 18 million barrels of oil per day; however, that’s two million barrels short of our typical usage, and the problem will worsen as current policy is encouraging operators to convert oil refineries to biofuel production. Meanwhile, Biden’s cancellation of the proposed Keystone XL project is just the tip of the federal iceberg, with other pipelines coming under increased scrutiny and potential shutdown, further strangling supplies for various parts of the country.
Yet this latter-day energy crisis affects our economy in other ways as well. At their most obvious, increased pump prices are taking a bite out of our wallets and our ability to go places, but right behind that on the priority scale is the rapidly inflating price of powering our homes. Not only are we enduring huge increases in the price of natural gas, but the cost of electricity overall is surging as utilities increasingly depend on natural gas for generation, whether as a primary source or as the backup for the solar panels and wind turbines required by various renewable energy mandates and carve-outs at the state level.
We also see the problem manifest in our transportation industry, as the high price of diesel fuel requires shippers to increase their rates, which then raises the price of goods on the shelves. And as our nation begins its fall harvest, farmers will get a double whammy as the price for transporting their meats, grain, and produce to market surges alongside the cost to run their own facilities and equipment. While the price of corn has long been propped up by the federal government’s foolish ethanol mandate, the overall cost of energy is swallowing up that small benefit to certain farmers.
Because of its increased cost, energy is now a significant issue in this year’s midterm elections. Although a red wave in November wouldn’t necessarily solve all the problems that have cropped up in the brief period since our nation enjoyed energy independence under Donald Trump, a rebalancing of our energy priorities could turn our recessionary economy around and provide centrist Democrats an opportunity to work with a new GOP majority for our common good.
The Daily Signal concludes its series by stating: “In the end, U.S. policymakers are not without tools to relieve pressure on gasoline prices today. The way out of high prices is increased supply and innovation. Americans should be free to invest in, explore, produce, build and operate the necessary infrastructure, and use the types of energy that meet their needs. Such a policy agenda would strengthen the United States and protect American consumers no matter what the future holds.”
Or, to put a new twist on an old phrase, “It’s the energy economy, stupid.”
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