Senate Democratic leader Harry Reid, the Mr. Magoo of American politics,
stumbled onto the truth last week. He discovered the law of supply and demand.
"We want to put [more oil] on the market to increase supply and lower
prices," Reid said. "With oil and gas prices continuing to break
record highs every day, much more needs to be done."
Indeed it does. But Reid won't allow it. His understanding of economics only
extends to matters in which he might embarrass President Bush. The oil he wants
on the market is the oil the administration is buying for the Strategic
Petroleum Reserve (SPR), now nearly full. Reid got his way. The administration
now plans to stop oil shipments to the SPR next month.
Beyond that, Reid and his party are committed to suppressing increased oil
production in this country, as they wait for that magical day when fossil fuels
are no longer needed to supply the nation's energy needs.
That day may come in 50, 60, 70 years--or never. In the meantime, America needs
oil, and the good news is we're awash in the stuff. If the oil reserves miles
off the Atlantic and Pacific coasts, in the eastern Gulf of Mexico, and in
federally owned lands in the West and Alaska
were tapped, our dependence on foreign oil could begin to be reversed. In 10
years, half of America's oil
could be produced at home (up from 40 percent), with more coming from increased
exports from Canada.
We wouldn't achieve energy independence. That's a pipedream, and anyway it
isn't necessary in a global economy with multiple producers. But America would be taking a big step toward energy
security and reducing the flow of dollars to unstable countries--notably Iran and Venezuela--that do not wish us
So more oil production would strengthen America's national security. By
increasing the supply of oil, it would reduce the price, or at least ease the
pressure on price from rising world demand. And the mere commitment to boosting
production would have a soothing effect on a world market easily spooked by
threats to supply.
But there's a problem: Eighty-five percent of the untapped domestic sources
of oil have been put off-limits. There's a federally mandated moratorium on
drilling offshore, and huge roadblocks to exploiting the oil on the vast
federal lands have been erected.
"What keeps these areas closed are exaggerated environmental fears,
strong prejudice against oil companies and sheer stupidity," wrote Robert
Samuelson recently. Lifting the moratorium requires action by Congress and the
White House. So don't hold your breath. The Democratic Congress is a wholly
owned subsidiary of the environmental lobby, which regards oil exploration,
much less drilling, as a sin against nature.
Advances in technology, however, make serious offshore oil spills a thing of
the past. One hundred eight platforms were destroyed and hundreds more damaged
in the Gulf of Mexico by hurricanes Rita and
Katrina without a single major spill. Californians may remember the damaging
spill off Santa Barbara,
but that was 40 years ago and was the result of ancient technology.
New technology also means the coastlines would not be marred
by unsightly oil platforms. Drilling now goes miles deeper to capture oil once
out of reach--and much farther offshore. The moratorium doesn't take this into
account. It blindly bars drilling for 200 miles off the Atlantic
and Pacific shores.
The United States
is virtually alone in treating offshore production as taboo. Great Britain and Norway
drill off their coasts without polluting the North Sea.
has achieved energy independence not only by ethanol use but also by expanded
offshore oil production. China
is now drilling at Cuba's
behest in waters halfway to the coast of Florida.
There's another compelling reason to boost domestic production. Oil from
current sites is gradually being depleted. Unless new sources come on line in
the next few years, America
will produce less oil at home and become even more dependent on oil from
abroad, the Middle East in particular.
Reid and Democrats, OPEC's best friends, aren't noticeably concerned. Their
next step is to remove tax incentives to explore and drill for more oil. And
Senator Hillary Clinton is eager to impose a new windfall profits tax on oil
revenues. These measures have no purpose other than to punish oil companies.
They are counterproductive.
When you remove incentives to produce something and
when you slap higher taxes on its producers, one thing happens: You get less of
the product. In the case of oil, we need more of it and will for the
foreseeable future. The oil is there for the getting. But it won't come out of
the ground on its own.