November 11, 2005
Pump Seriousness Into Energy Policy
By Charles
Krauthammer
WASHINGTON -- Thank God for $3.50 gasoline. True, we had it for
only a brief shining moment, and there is not much good to be
said about the catastrophic hurricanes that caused it. But the
price was already inexorably climbing as a result of 2.3 billion
Chinese and Indians industrializing. Their increased demand is
what brought us to the energy knife's edge and makes us so acutely
vulnerable to supply disruptions.
Yet, the
Senate is attacking the problem by hauling oil executives to hearings
on ``price gouging.'' Even by Senate standards, the cynicism here
is breathtaking. Everyone knows what the problem really is. It's
Economics 101: increasing demand and precariously tight supply.
Yet for
three decades we have done criminally little about it. Conservatives
argued for more production, liberals argued for more conservation,
and each side blocked the other's remedies -- when even a child
can see that we need both:
Demand.
Just yesterday we were paying $3.50 at the pump and ready to pay
$4 or $5 if necessary. No blessing has ever come more disguised.
Now that we have lived with $3.50 gasoline, $3 seems far less
outrageous than, say, a year ago. We have a unique but fleeting
opportunity to permanently depress demand by locking in higher
gasoline prices. Put a floor at $3. Every penny that the price
goes under $3 should be recaptured in a federal gas tax so that
Americans pay $3 at the pump no matter how low the world price
goes.
Why is this
a good idea? It is the simplest way to induce conservation. People
will alter their buying habits. It was the higher fuel prices
of the 1970s and early '80s that led to more energy-efficient
cars and appliances -- which induced such restraint on demand
that the world price of oil ultimately fell through the floor.
By 1986, oil was $11 a barrel. Then we got profligate and resumed
our old habits, and oil is now $60. Surprise.
The worst
part is that much of this $60 goes overseas to foreigners who
wish us no good: Wahhabi Saudi princes who subsidize terrorists;
Hugo Chavez, the mini-Mussolini of the Southern Hemisphere; and
(through the fungibility of oil) the nuclear-hungry, death-to-America
Iranian mullahs. This is insanity. It makes infinitely more sense
to reduce consumption, drive the world price down and let the
premium we force ourselves to pay at the pump (which begins the
conservation cycle) go to the U.S. Treasury. If the price drops
to $2, plow that $1 tax right back into the American economy by
immediately reducing, say, Social Security or income taxes.
The beauty
of a gas tax at $3 is that it obviates the waste and folly of
an army of bureaucrats telling auto companies what cars in which
fleets need to meet what arbitrary standards of fuel efficiency.
Abolish all the regulations and let the market decide. Consumers
are not stupid. Within weeks of Katrina, SUV sales were already
in decline and hybrids were flying off the lots.
Supply.
For decades we've been dithering over drilling in a tiny part
of the Arctic National Wildlife Refuge. Look, I too love the caribou.
They are sweet, picturesque and reputedly harmless. But dire predictions
about the devastation that Prudhoe Bay oil development would visit
upon the caribou proved false. They have thrived. Let's get serious.
We live at the edge of oil shortages and in perpetual vulnerability
to oil blackmail. We have soldiers dying in the oil fields of
the Middle East, yet we leave untouched the largest untapped oil
field in North America so that Lower-48ers can enjoy an image
of pristine Arctic purity. This is an indulgence bordering on
decadence.
As is our
refusal to drill on the continental shelf. Offshore drilling technology
is far safer and more efficient than it was decades ago when this
prohibition was passed. We're starving ourselves.
The same
logic applies to refineries. We have not built a new one since
1976. Gasoline doesn't grow on trees. The U.S. refining industry
operates at 96 percent capacity. That is unsustainable. We need
the equivalent of the military-base closing commission, whereby
outside experts decide which bases should be closed in the national
interest. A refinery commission that would situate 15 new refineries
scattered throughout the U.S. (some perhaps on Army bases scheduled
for closing) would spread the pain, depoliticize the process and
arm us against future shortages.
With these
simple steps, we could within a decade finally escape the oil
noose. But don't hold your breath. The Senate just loved its little
oil-executive inquisition. The House Wednesday night stripped
out the ANWR drilling provision. And there is not a single national
politician who dares propose raising gas taxes by even a penny.
We are criminally unserious about energy independence and we will
pay the price.
©
2005, Washington Post Writers Group
