Last week President George W. Bush held a press conference on the current state of the economy and the high cost of energy. In it he made several important points. First, he noted that one reason gas prices are increasing is that global supply has not kept pace with the growing demand worldwide. Members of Congress, he noted, "have been vocal about foreign governments increasing their oil production; yet Congress has been just as vocal in opposition to efforts to expand our production here at home. They repeatedly blocked environmentally safe exploration in ANWR. The Department of Energy estimates that ANWR could allow America to produce about a million additional barrels of oil every day, which translates to about 27 millions of gallons of gasoline and diesel every day. That would be about a 20% increase of oil...and it would likely mean lower gas prices."
Senator Charles E. Schumer's (D-NY) response: "Unless the [Bush] Administration gets [the Organization of Petroleum Exporting Countries] OPEC to increase oil supply, American consumers are going to be in for a scorching summer of $4 gasoline with no relief in sight." Apparently Senator Schumer expects President Bush to bully other countries into relieving our economic problems. This is wise foreign policy advice if ever there was some. And if foreign governments do not want to help us we should not expect Congress to do anything about it. After all, why alleviate needless financial hardship when some Senators can use it as a political weapon?
Another factor contributing to the high cost of energy is that America's refining capacity has been stagnant for 30 years, the last time a new refinery was built. Like ANWR exploration, Congress repeatedly has blocked efforts to build more refineries and expand capacity. It has done the same with the use of nuclear energy. Congress also is "considering bills to raise taxes on domestic energy production, impose new and costly mandates on producers, and demand dramatic emissions cuts that would shut down coal plants, and increase reliance on expensive natural gas," as President Bush stated.
Finally, there is no end in sight for Federal subsidies to multi-millionaire farmers. These subsidies, as this column has noted before, cost American taxpayers millions of dollars a year, are wasteful, and generally hinder the development of more productive farmland and the planting of market-driven crops. Yet Congress shows no inclination to cut subsidies from the current Farm Bill. By paying farms to plant specific crops regardless of the demand for those crops or allowing their fields to lie fallow, these subsidies unintentionally raise the price of other commodities that could be planted instead. President Bush was correct to note that Congressional support for farm subsidies will do little other than contribute to the rising prices of food.
President Bush should be commended for giving this speech. He was correct to remind Americans that if we want to lower the cost of energy we must be willing to use our own resources, whether they are natural or those we can build, rather than rely upon others to provide for our needs. After all, isn't self-reliance part of the American spirit. We should not rely on foreign governments, many of which are volatile, to supply our energy needs, nor should our large farmers rely on Federal Government handouts to prop up their financially lucrative businesses.
Throughout this economic downturn it has seemed as if Congress, the Federal Reserve and other government agencies have reacted to the crisis rather than thought of productive ways in which they could lead on the issue. It is wise for the President to begin to exert some leadership on this issue. Hopefully he will maintain a spotlight on this issue and pressure Congress to initiate some constructive change, not implement more regulation and taxes.