A rational energy solution

By Richard A. Baker

We need someone representing us in Congress who understands the impact of our nation's approach to energy, someone who can propose viable, practical solutions to a rapidly increasing expense that is hurting everyone on the North Shore. The burdensome spike in oil costs is the result of complex factors that require a multi-pronged solution to effectively address our short term and long term needs.

It will take at least twenty years for America to migrate to alternative energy. The American infrastructure depends on oil. Nearly every family has at least one gasoline powered car, and most families' homes are not within walking distance of public transportation. To weather the harsh New England winters, most of our homes are heated with oil or gas. Assuming that a cheaper energy solution suddenly became available, the changeover costs would be prohibitive for most households: as much as $40,000 per family to replace automobiles, and another $10,000 per family to replace a home heating system.

For the short term, America's highest priority is managing the price of gasoline and oil. The data (International Herald Tribune, May 14, 2008) is showing that our use of oil has dropped significantly since the price of oil has risen. We are carpooling, using public transportation, and driving slower to reduce costs. These consumer-based initiatives are helpful (and are happening without government edict), but conservation alone cannot keep pace with oil prices' continuous rate of increase.

To begin bringing immediate relief, the United States Congress must use the strategic oil reserve to manage oil prices. The reserve contains 700 million barrels of oil, and was created during the 1974 oil crisis to provide America with the means to balance the oil markets during times of short supply.

With prices increasing rapidly in 2008, it is time to sell some of this reserve into the open market, adding to the supply of oil on the market. Since the reserves are located close to US refineries, this oil will rapidly find its way into the US market. Congress should specify that the timing of these sales should be managed to disrupt the speculators of oil futures by releasing the large quantities of oil without warning into the market. Since speculators buy oil futures in anticipation of short supplies and high prices, an unexpected increase in supply will cause the price to drop. With the price drop, speculators will lose money on their investment, and look elsewhere for speculative investments.

Another short term solution is to repeal provisions of the Energy Policy Act of 2005 that require ethanol to be added to gasoline. This corn-based product is not an efficient fuel. It is expensive to process, reduces gas mileage and increases smog, while it boosts grocery prices by taking acreage away from food production.

The mid term solution is to increase the supply of oil on the market by the responsible drilling of oil in ANWR. It will take 3-7 years for newly drilled oil to arrive on the market. The United States Geological Survey estimates that there are 10 Billion barrels of oil in ANWR, about 25% of the available oil in the United States. Hurricane Katrina's path through the oil fields in the Gulf of Mexico without a single oil spill demonstrates that we have the technology to drill without environmental damage.

For the long term, America needs to develop alternative energy solutions. This current energy crisis is already propelling and accelerating innovative research. Even existing solutions that were not cost effective when compared to $40 per barrel of oil are now viable alternatives compared to $150 per barrel oil. For instance, solar and wind power are beginning to complete with oil at the current prices. The variety of solutions could increase phenomenally in the next few years, provided that we encourage innovation.

America's free market must be ready to reward teams and individuals who develop cheaper, more efficient energy solutions. As such, we need to maintain a strong patent system to encourage inventors to investigate energy solutions. We need to minimize regulations and allow inventors and companies the freedom to innovate.

Americans are among the most innovative people in the world. With encouragement and freedom we will find long term, inexpensive, and safe alternatives to our oil-based economy. We need Congress to do its job without hindering the citizens from doing theirs.