The strategic reserve we’re not willing to tap
posted at 9:30 am on March 9, 2011 by Ed Morrissey
Rapidly rising gas prices at the pump have finally gotten some Democrats concerned, although not enough to get them thinking long term about American energy policy. According to the US Energy Information Administration, the average price of gasoline across all grades has risen 47 cents since the first of the year, an increase of over 15% in just ten weeks. The increase has a multiplier effect across the economy as higher gas prices force increases in the costs of goods brought to market, especially in produce. As Americans pay higher and higher bills at the pump and at the grocery-store register, the Obama administration and Democrats on Capitol Hill have nervously toyed with the idea of tapping the Strategic Petroleum Reserve:
Some Democratic lawmakers say yes, and assert that now is the time for the United States to dip into itsStrategic Petroleum Reserve, which is brimming with 727 million barrels of crude.
“We encourage you to consider utilizing the Strategic Petroleum Reserve (SPR) now,” Rep. Edward J. Markey and two other House Democrats said in a letter sent to President Obama on Monday. They called the reserve “the only tool we possess which can counter supply disruptions and combat crippling price spikes in the short term.”
“From my perspective, it certainly would make sense for the president to begin selling oil from the SPR,” Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.) said Monday, citing soaring prices and fighting in Libya.
But the Obama administration has been noncommittal. White House chief of staff Bill Daley said on NBC’s “Meet the Press” on Sunday that “we’re looking at the options” but noted that past releases had happened only on “rare occasions.” On Monday White House spokesman Jay Carney was even more circumspect,saying “it is an option we are considering, and again, within the broader context of the system that exists to deal with a major disruption, should that occur.”
Instead of tapping the SPR — on which more in a moment — why not just start drilling for oil and natural gas in the US? Three years ago, the US went through a similar price shock on oil, and with the unrest sweeping the oil-producing nations of Southwest Asia and North Africa, the uncertainties will continue for some time. CNS News asked Interior Secretary Ken Salazar why the US isn’t drilling for its own oil in the Arctic, and Salazar scoffed at the notion that “Drill Baby Drill” could solve America’s energy needs:
“We don’t believe that you need to drill everywhere and we don’t believe that the ‘drill, baby, drill’ program is the way that’s going to get us to the energy independence that we need for America or that will power our economy and that’s why the President has been so clear from day one and we in the Department of Interior have been so clear that what we need to do is need to have a robust energy program that includes a number of different sources of energy and while yes, we are pushing forward with oil and gas development both offshore and onshore which was the subject of much of the hearing today, we’re also moving forward with renewable energy,” he told CNSNews.com after testifying before the House Natural Resources Committee about his Department’s FY2012 budget.
“The President has said we are supporting nuclear, we’re support other clean air energy forms and at the end of the day, this is a place where there is hope that perhaps some of the Republicans in the House would come together and say that we can move forward with energy legislation that moves us into this new energy future.”
So tapping the SPR “moves us to the future” of energy policy, but actually getting oil and natural gas does not? That sounds a lot like Vivian Schiller’s explanation of NPR’s independence from government through government subsidies.
In my column today at The Week, I explain that the SPR holds about 38 days of American oil consumption. Tapping it won’t have any impact on price for longer than a few days, and at the end of that period, we’re still in the same position: oil-producing nations that supply world markets will still be unstable, and perhaps more of them might be unstable at the end of it. The SPR is intended to provide the US with a short-term supply for disruptions caused by catastrophes, not to manipulate spot prices on the commodities markets, a mission for which it is completely unsuited.
But we do have strategic reserves that are suited for that purpose, and “tapping” those would bring a lot more benefit than rolling out the SPR barrels:
Instead of tapping our strategic reserves, we should be drilling for our own energy resources, and not just oil. We could convert oil and coal to cleaner natural gas, for instance, if we allowed ourselves to do the drilling and extraction necessary to ensure reliable supplies on the scale needed. Such an effort would allow for cheaper and more stable energy supplies, but would also pay off for the U.S. economy in other ways. Exploration and extraction create jobs on a large scale. Those jobs tend to be high-paying union jobs, which should have the labor movement clamoring for action. Not only would we have cheaper energy to make investing in the economy more efficient and effective, we would also create hundreds of thousands of new private-sector jobs and get Americans back to work.
That last price shock launched the “Drill Here, Drill Now” movement that succeeded in breaking down a few barriers to an expansion in American production before the economic collapse cut prices in half again. We need to restart that movement and break down the rest of the barriers and stop being held hostage to decades-long promises that renewable energy is just around the corner, and put in place a realistic plan to use American resources to buffer the US economy from the vagaries of kleptocracies and dictatorships on the other side of the globe.
Or, as I ask in the column, shall we wait until the next crisis to ask why we didn’t act now?