Famed cynic Ambrose Bierce once wrote that war is God’s way of teaching Americans geography. Maybe so, but natural disasters are God’s way of teaching us some simple lessons of economics. The effects of Hurricane Katrina are enormous by any measure. On the energy front, the recent numbers from the prestigious and non-partisan Joint Economic Committee are staggering:
— Some 1.4 million barrels of offshore crude oil production was “shut in” as a result of the storm.
— Over 80% of natural gas production was “shut in”.
— At least 7 drilling rigs were adrift and 8 refineries were shut down.
— The storm disrupted the importation of one million barrels of crude oil shipped through the affected area.
And the expected effects on consumers is even more dire. Thanks to some analysis of the Energy Information Administration (EIA) data from the American Gas Association, the impact on consumers is clear. Says the EIA:
“The general expectation of residential-per-household expenditures for fuels this winter (assuming a medium-speed recovery from Katrina) are as follows: +47% for natural gas; +17% for electricity; +31 % for heating oil and +40% for propane. Increases are expected to be greatest in the Mid-west.”
But all is not lost. There is an enormous reserve of oil and gas in Alaska. Remember that the Arctic National Wildlife Refuge is a place the size of the state of South Carolina. Drilling will occur in a place the size of Dulles Airport. There are enormous reserves in the Outer Continental Shelf as well, but states are unable to access 85% of these reserves due to federal restrictions. US coal reserves are equal (in BTU’s) to the world’s petroleum reserves, but we are in a constant fight to be able to use it. And, we are the only country in the world that restricts access to its own natural resources. Heck, even the French get 80% of their power from nuclear plants.
It seems to us the way is clear, and indeed there appears to be renewed interest on Capitol Hill in exploration of all these areas. It is time. All of this can and will be done in an environmentally-sensitive way, and ought to be. As voters’ frustration climbs with the price of these various fuels, their patience will run out. Truth is, most all of them well understand the law of supply and demand. So-called environmentalists can’t stick with the “just say no” approach when even their European counterparts have embraced widespread use of nuclear energy. The problem with the environmental movement is that they have no alternative to “no”. No drilling in ANWR, no exploration of the OCS, no more coal, no more nuclear. We are starting to see the effects of their philosophy. Quite literally, American consumers are paying the price for the environmentalists’ death grip on America’s energy policy. Time to loosen that death grip and begin easing the one part of the supply/demand equation we can control. The environmentalists haven’t led, they haven’t followed. Time to get out of the way.
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