A real solution

The last time America faced an energy crisis was back in 1973 when Arab producing states (OPEC) cut the flow of oil to America and the west due to our support of Israel during the Yom-Kippur war. The war began on October 6th, 1973 when Egyptian and Syrian forces commenced a surprise attack on Israel during the Jewish day of atonement. The oil embargo began on October 17, 1973 and ended on March 18, 1974. During this six month period, the price of oil quadrupled to $12 per barrel causing gas prices to rise from 38.5 cents in May, 1973 to 55.1 cents in June 1974. At the time, 30% of America's oil supply was imported. While the gas price shocks had a profound effect on the U.S. economy, the Nixon administration's enactment of price controls led to the rationing of gas and a continuation of the economic downturn well into the Carter Administration. Unfortunately the government response at the time was limited to conservation such as the enactment of fuel efficiency standards, a national speed limit, etc., but domestic production never increased and foreign consumption continued.   

During the next three decades, several factors led to the current crisis; limited domestic production, no increase in refining capacity, economic expansion fueled by an oil based economy, increased population growth, an explosion in the sale of SUVs with no fuel efficiently standards, the emerging economies of China and India, and an increase of foreign oil imports subject to geopolitical volatility. The simple answer is increased world demand and the manipulation of the world supply by the Organization of Petroleum Exporting Countries (OPEC). By determining the supply, OPEC can set the price of oil. With our dependence on foreign oil increasing to 70% of our consumption, America has minimal leverage to effect the price of oil.

There are several steps that need to be taken to get America out of the current crisis. The first step would be to increase domestic production of oil and natural gas by lifting the congressional ban on off shore drilling, allow drilling in a limited area of the Arctic National Wildlife Refuge (ANWR), and allow the extraction of shale oil on federal land. The next phase would be to increase the number of nuclear plants, use of clean coal technology, solar technology, wind power, and alternative fuels. Other steps would include conservation by increasing vehicle CAFE standards (Corporate Average Fuel Economy) including SUVs, the use of energy efficient light bulbs, appliances, and the importation of natural gas and electrical power from our northern neighbor, Canada. Finally there needs to be a cooperative effort between the government and the private sector to fund research for other energy sources that are plentiful and inexpensive in comparison to the cost of oil. 

Unfortunately, it seems that some of our political leaders just don't get it. In what has been described as a political gaffe, presumptive Democratic presidential nominee Barack Obama recommended that Americans inflate their tires and get tune ups, "We could save all the oil that they're talking about getting off drilling if everybody was just inflating their tires and getting regular tune-ups. You could save just as much." After being criticized for being out of touch with the financial plight of middle class voters, Obama called for a rebate of $1000 to be paid by oil companies through the enactment of an excess profit tax. When this latest proposal appeared unworkable, Obama reversed his opposition to off shore drilling and is now supporting "limited additional offshore drilling". While we would agree that drilling is not the only answer, vehicle maintenance alone is not a real solution.