As the New Year moves forward, Americans are pursuing resolutions that will help them improve their lives. However, the single most important action that can benefit the nation’s businesses, industry and consumers is the advancement of sensible policies that enable the full development of the United States robust energy resources. For this reason, the Obama Administration and state governments throughout the country should implement policies that will enable the economy to grow and allow the nation to continue as a global leader for the 21st Century.
Until this occurs, we will continue to see dreary headlines in the news, like the one that consumers may soon have to pay $5 per gallon or more for gasoline in the near future. With the global oil market becoming increasingly constrained, and the United States importing 11.8 million barrels per day of crude oil to keep our economy running, every time a disruption occurs -- like the threat to close the Strait of Hormuz -- American businesses and consumers will find themselves on the hook.
Due to our continued reliance on unstable energy supplies, Americans are quite literally being held hostage at the pump. This doesn’t have to be the case, and in fact we have all the tools necessary to reverse this trend. It only requires rejecting misguided policies that present us with false choices pitting the environment against energy development and a commitment to fully developing our nation’s vast energy resources.
One such misguided policy is the implementation of a low carbon fuel standard (LCFS). LCFS, at its heart, mandates the use of certain transportation fuels that are not yet commercially viable while penalizing affordable fuels, all based upon their "carbon intensity." Such a policy, supposedly designed to protect the environment, in practice only grossly distorts market dynamics. Ironically, many studies have found that the policy would have a net negative impact for the environment due to "crude-shuffling," or rising greenhouse gas emissions due to extraneous exporting and importing.
Predictably, the state of California -- no stranger to energy crises fueled by flawed ideological commitments -- has led the charge on LCFS implementation. That is, until its law was recently struck down by a federal judge for violating the Commerce Clause of the U.S. Constitution. Maine also recently announced it would abandon its support for an LCFS due to the economic hardship it would cause in the Pine Tree State.
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