For the past 30 years, America has grown increasingly dependent upon foreign sources of energy, sending American dollars to countries that are hostile to American interests and leaving us vulnerable to wild fluctuations in energy prices.
This energy crisis has not gone unnoticed in Washington. Every U.S. president since Richard Nixon has spoken about the need to make America more energy-independent. Despite their strong words, no rational strategy has been implemented for achieving that goal. In fact, where government has acted, it has usually made the problem worse.
Let's be clear: our energy crisis is not due to a lack of American energy resources. We have more coal than any other country in the world. There are 86 billion barrels of oil and 420 trillion cubic feet of natural gas lying undeveloped offshore. Shale-oil reservoirs in parts of Colorado and Utah could hold upwards of 1 trillion barrels of oil—more than three times the proven reserves in Saudi Arabia. Nuclear power is a clean source of energy that produces zero carbon emissions. It generates 20 percent of America's electric power today, and with the right investment could generate far more.
Instead, America is suffering from an artificial energy crisis, one that is the product of our government's policies, not despite them. For example, until September 2008, Congress had made it illegal to drill for oil and natural gas in most areas off our coasts. Congress still forbids the development of the vast shale-oil reserves in the Rocky Mountains even though there are promising technologies that could make extracting oil from shale economically competitive. In addition, laws passed in the 1970s banning the recycling of spent nuclear fuel forced nuclear-power plants to invest in techniques to dispose of the fuel; the long-running feud over where to store the spent fuel has helped prevent the construction of more plants.
And now, in 2009, instead of making energy cheaper—which would help create jobs and save Americans money—President Obama wants to impose a cap-and-trade regime. Such a plan would have the effect of an across-the-board energy tax on every American. That will make our artificial energy crisis even worse—and raising taxes during a deep economic recession will only accelerate American job losses.
The Obama administration's own budget director is on record predicting an increase of about $1,300 in the price of energy for the average American from this type of energy tax. As a candidate, Obama himself recognized the pain this would cause every American: "Under my plan … electricity rates would necessarily skyrocket."
What America needs is a rational energy policy that utilizes all our homegrown energy resources while protecting the environment. For instance, in addition to opening up the Arctic National Wildlife Reserve and the shale-oil deposits in Colorado and Utah for drilling, we should change our federal law to give all states with offshore oil and gas the same share of federal royalties that other states get for land-based resources. Revenue generated from these royalties could help many cash-strapped states address their budget problems, in addition to funding alternative- and renewable-energy research. In addition, we should allow companies to write off 100 percent of their expenses in the first year if their refineries considerably expand America's oil-refining capacity.
The federal government should also develop a package of incentives to encourage clean-energy innovation. This should include a series of tax-free prizes to accelerate innovation in developing clean-coal technologies, as well as a $1 billion tax-free prize for the first hydrogen car that can be mass-produced at a reasonable price. We should make the wind- and solar-power tax credits permanent to provide long-term stability to these growing industries and develop long-distance transmission lines to move the massive amounts of wind power in the Great Plains to urban areas. We should also pass an open-fuel standard for 95 percent of the new cars sold in the United States, allowing the construction of flex-fuel vehicles (FFVs) that can run on a variety of fuels, including ethanol. Finally, America should implement a loser-pays rule for lawsuits against any energy company. This would guarantee that any lawsuit brought against an energy developer was not done solely to slow down the process through the courts.
These are the beginning steps of a rational strategy that fully utilizes our vast energy reserves to lower the cost of energy for every American and help create cleaner and renewable energy sources. It's time for America to end its artificial energy crisis.