3/29/2001 12:00:00 AM - Cal Thomas
NEW YORK -- Mayor Rudolph Giuliani last Tuesday mentioned two words not heard from a Republican since the days of Richard Nixon: price controls. Giuliani wants a "temporary imposition" of more stringent price controls on wholesale electric power rates in New York State. He believes that will head off a possible energy shortage in the city this summer.
On Aug. 15, 1971, President Nixon tried to right the economy from the "guns and butter" policies of Lyndon Johnson -- who thought he could simultaneously fight the Vietnam War and overspend on his Great Society programs without hurting the economy. Nixon's chosen weapons to control the resulting inflation were wage and price controls. They were a disaster, producing the opposite effect of their intended purpose.
If there are energy shortages in New York, California and elsewhere this summer, it will be due in part to our own short-sightedness. Price controls will only ensure there will be even less energy, because the incentive for discovering, refining and delivering energy - which is the profit motive for those who have not studied capitalism in some time - will have been stunted.
Tuesday's decision by the California Public Utility Commission to hike electricity rates up to 46 percent to force people to conserve is also wrongheaded because it does nothing to produce new energy. California's problem is that it has knuckled under to environmental groups who oppose nuclear power and the construction of new conventional power plants. These would have allowed production to keep up with increasing demand.
It's time to reconsider some of the myths of energy development. Typical of the mythology is a March 15 New York Times editorial on carbon dioxide and President Bush's supposed "turnaround" on a campaign promise to reduce its presence in the atmosphere. The Times believes CO2 makes up a "great portion" of our atmosphere. In fact, according to the 1990 issue of American Scientist, CO2 is just four-hundredths of one percent of the air we breathe. The latest technology allows for the mining of coal in much cleaner ways that are less threatening to the environment than they have ever been.
Mythology also rules among the alarmists who oppose any drilling in Alaska's Arctic National Wildlife Refuge. Some environmental groups claim the natural beauty of the region would be destroyed if we tapped the huge petroleum resources available on our own land, thus reducing dependency on foreign oil. They said the same more than three decades ago about the pipeline between Prudhoe Bay and Valdez, Alaska. No harm was done to the land or animals. The caribou population, which was said to be in danger from drilling at Prudhoe Bay, has increased to record levels.
A study by the U.S. Geological Survey found that the ANWR contains undiscovered resources of up to 16 billion barrels of crude oil, which experts estimate could actually yield 10.4 billion barrels. That estimate is based on technology available in the mid-'90s. Technology is rapidly improving, including one technique that allows lateral drilling from a hole several miles from the source, further protecting virgin land.
Of the entire reserve (19 million acres), only 8 percent would be considered for oil exploration, leaving 92 percent permanently closed to any kind of development. Oil production on the North slope has declined since its peak in the 1980s but still generates 25 percent of U.S. domestic production. New exploration in the ANWR could significantly increase our energy sources and decrease our dependence on foreign oil.
New jobs would be created if the ANWR exploration is approved - between 250,000 and 735,000 by some estimates. Billions of dollars in federal and state revenue would also flow in the form of taxes. And most of the new oil would go to meet West Coast needs, as is now the case with oil from Prudhoe Bay.
America does not have to be in a panic or overly dependent for its oil on the whims of Arab dictators. A cooperative effort between energy companies and the government, and the development of new energy resources, not government price controls, is part of a truly responsible energy policy.