We hear a lot these days about high and rising gas prices and almost as much about how this is a very complex issue. This week, we offer a reminder that not everything about the price we pay for our fuel is complicated or beyond our control. Yes, oil and gas prices are influenced by many conditions outside our borders, but our own actions also matter. A lot.
First, an update on the fuel price situation. Brent crude oil is approaching $125 a barrel, WTI Crude is well over $100 a barrel, and the average American is now paying around $3.70 a gallon. Some of the reasons most commonly cited for this price surge include tensions with Iran, general instability in many oil-producing nations, a strengthening economy here in the U.S. and growing demand from nations like China and India.
We certainly cannot change the actions of other countries, and we certainly would not want this long-awaited, fledgling economic recovery to reverse course (though it is worth noting that the last time gas prices were this high was four years ago when the nation was plunging into recession). But as a country that accounts for a significant amount of both worldwide fuel supply and demand, we certainly have actions at our disposal to temper what has recently been an unmitigated rise in prices.
Here are a few:
Approve construction of the Keystone XL Pipeline – This project would deliver as much as 700,000 barrels of Canadian and American crude oil each day to refineries in the Gulf region.
Expand access to offshore resources – The Bureau of Ocean Energy Management estimates that the Gulf of Mexico alone holds proven reserves of 20.43 billion barrels of oil and 184.6 trillion cubic feet of natural gas … as well as unproven reserves of 4.12 billion barrels of oil and 7.3 trillion cubic feet of gas It also predicted that both figures would grow as drilling technology improves in the future. Not to be outdone, the Chukchi and Beaufort Seas off the northern coast of Alaska hold an estimated 27 billion barrels of oil and 132 trillion cubic feet of gas. Make no mistake, the quantities of oil and gas in the waters off our coasts are vast and policies that promote more leasing and swifter approvals of new projects can make a big difference in our domestic energy supply.
Ensure regulatory certainty for all on and offshore energy projects - When oil producers are subject to constantly shifting regulations covering their projects, they tend to produce less. Consider the 2010 moratorium on deep water drilling in the Gulf of Mexico and all the rigs that left the region for places like Angola, Egypt and Vietnam as a result. Policies can be changed easily and often, but the producers that must follow these polices are slowed down by an uncertain regulatory environment.
All of the above actions can be summed up in three words: improve domestic supply. We all know that supply is a key factor influencing prices. The worldwide political and economic factors that influence fuel prices may be complex, but we should not lose sight of the simple strategies we have at our disposal to take back some control by tapping our own natural resources.