Although we import half our oil, you might be surprised to learn the United States is brimming with energy options. Indeed, we have more than enough oil, coal, uranium and natural gas to safely exceed our energy needs for hundreds of years. Unfortunately, restrictions imposed by our government have made these sources nearly impossible to tap.
The most public example is Alaska's National Wildlife Refuge (ANWR), where 7 billion barrels of oil could be safely drilled, significantly contributing to supply. Tree hugging environmentalists, along with sympathetic legislators, have kept exploration in that area off limits. It was only this week the House voted to approve the initiative as part of the president’s larger energy bill.
But ANWR is just the start. 200 miles off U.S. coasts sits the Outer Continental Shelf (OCS), where an estimated 46 billion barrels of oil sits waiting to be tapped. Yet government regulation and environmental controls restricts access. More than half the oil in the OCS, most of it located off California, is off-limits thanks to a government ban.
Regulation hasn’t only impeded finding energy, but competitively delivering it as well. Among power utilities, for example, draconian permit applications and suffocating environmental laws has slowed expansion to a crawl. So although nuclear power offers a cheap, reliable and safe energy source, no new nuclear reactors have been approved for nearly 25 years. And despite a huge surge in productivity, there are now fewer refineries in the U.S. than there were 20 years back. Since 1970, domestic oil production has actually dropped.
The root of the problem is twofold: The most damaging impact comes from the environmentalists, who aren’t intent on cleaner energy production, but less energy production altogether. This is a constituency who’d rather improve the life of a school of fish or herd of caribou than a human being. And it’s the politicians, so easily swayed by lobbyists from Greenpeace or the Sierra Club that turn their unscientific propaganda into policy.
If the government eliminated onerous regulations and allowed capitalist innovation to occur, supply would go up, prices would come down, and we’d finally return to the free market principles on which this country was founded.
This weekend our Business Block has much more on high oil and gas prices. Tune in Saturday 10am — noon ET.
Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC and is a markets columnist for Smartmoney.com. He appears regularly on FNC's business program Cashin' In.