You Know the Drill

Rich Tucker
Posted: Aug 19, 2006 12:33 AM

Thank goodness that’s over.

Just a few weeks ago much of the eastern United States was baking under record temperatures. Washington, D.C. hit 100 with a heat index near 110. Utilities asked customers to conserve power, as their grids were stretched to the max.

Ah, but cooler air has moved down from Canada, so there’s nothing to worry about until next year, right? Wrong.

Perhaps the greatest strength Americans enjoy is our ability to put problems behind us and move on. But, when it comes to energy policy, that strength is becoming a liability. We’re ignoring important lessons and we’re not taking the necessary steps to prepare for the future.

Look no further than Hurricane Katrina.

The lesson of the storm wasn’t that a direct hit from a hurricane can devastate an American city -- Hurricanes Hugo and Andrew had already taught us that. And the lesson wasn’t that a disaster can generate wasteful spending -- the federal government was spending $1 billion a day after Katrina, and we now know a lot of that was wasted.

No, the real lesson is that we don’t have enough oil refineries or domestic sources of oil. When Katrina forced many refineries in Louisiana and Texas to shut down, the price of gas quickly jumped.

That’s partially because there haven’t been any new refineries built in the U.S. since the 1970s, even though our demand for gasoline increases every year. Of course, in a truly free market we’d expect entrepreneurs to see the need for more refineries and open them. But the oil industry isn’t governed by the free market -- it’s regulated from Washington.

Government policies make it almost impossible to get a new refinery approved. And the refineries that have remained open are more expensive to operate every year. Since 1990, refinery owners have been forced to spend as much as $4 billion each year to comply with complex regulations.

We’re all paying the price for that. As the Federal Trade Commission but it, “new environmental regulations have required substantial investments in refineries, and a gallon of environmentally mandated gasoline costs more to produce than a gallon of regular gasoline.” It’s past time for Congress to ease the regulations and allow new refineries to come online.

At the same time, the U.S. should focus on developing our domestic energy supplies. There’s plenty of oil under American soil, but too much of it is off-limits. Congress has banned drilling in the Artic National Wildlife Refuge, for example, even though the U.S. Geological Survey estimates that we could get 10 billion barrels of oil if the government would allow drilling in just 2,000 of the refuge’s 19 million acres.

There’s even more oil and natural gas waiting offshore. But again, federal law prohibits drilling for it. Some 85 percent of offshore fields are closed, leaving only those in the central and western Gulf of Mexico open to exploration.

Ironically, that’s exactly where Hurricanes Katrina and Rita swept through last year, and there’s a lesson in that. Even though many oil platforms took direct hits from hurricanes, there was little environmental damage to the Gulf. Surely that should prove it’s safe to drill elsewhere.

But oil isn’t our only energy concern. The U.S. also needs new power plants.

Every summer, portions of the country suffer a heat wave, reminding us that our electrical capacity is stretched to the max. But when the temperature drops, so does the sense of urgency. For example, after California suffered rolling blackouts in 2001, residents understood it was important to build more power plants, and energy regulators okayed 23 new ones. But by 2004, with the crisis virtually forgotten, only eight new plants were approved. Last year there were two approvals, and this year there haven’t been any. And when the weather turned hot this summer, California’s power grid was again strained.

We simply don’t have enough new plants coming online to meet demand. The government’s Energy Information Administration says providers plan to add 94 gigawatts of electricity over the next five years, far less than the 227 gigawatts added over the last five years.

That will cause problems. At peak periods our system operates at full capacity, and there’s little doubt we’ll need even more power in years to come if we want to keep our air conditioners, computers and flat screen TVs running.

We need more nuclear plants (the last commercial nuclear plant was ordered in 1973) and more clean coal plants (the U.S. has enough coal to last for hundreds of years). And, since it takes years to bring a plant online, we need to start building right away.

Next summer will be hot, and so will every summer after that. We’d better increase our supply of energy while we can. Or else eventually we’ll all be in the dark.