Crapo: Affordable Energy, Better Future

In January 2007, a gallon of gas cost an average of $2.21. At the end of June 2008, 18 months later, the average cost was $4.15. More than any other factor, the basic principles of supply and demand for this global commodity—oil—have put steady upward pressure on prices. The plausible solution to the problem of high fuel costs is to take policy steps that affect supply and demand factors. Frankly, had Congress passed progressive energy legislation five or ten years ago, we’d likely be better off today. We can’t change the past, but we can do something about the future. Aggressive exploration, research and development and conservation measures enacted now will generate beneficial energy supply changes over time.

Solutions are anything but simple, and multiple efforts must be undertaken simultaneously. Together, these changes provide a better outlook for our energy security.

• Fully utilize coal-to-liquids technology for U.S. coal reserves (projected four percent reduction in oil imports by 2022);
• Drill off shore and in the Alaska National Wildlife Refuge, and develop oil shale;
• Research and develop renewable energy resources including nuclear, geothermal, biofuel, solar and wind (non-hydropower renewables account for about four percent of our current energy supply);
• Increase energy efficiency and conservation for buildings, all transportation modes and industrial processes.

I co-sponsored the Gas Price Reduction Act of 2008 (GPRA) because it provides a range of policy answers to the problem of high fuel costs. GPRA includes deep sea exploration off the Pacific and Atlantic coasts; oil shale exploration in Colorado, Utah and Wyoming; support for research and development efforts of batteries for electric vehicles; and funding for the Commodity Futures Trading Commission to help it better review and enforce commodity market rules and regulations and increase transparency of these markets.

Of particular interest to many Idahoans, we’ve had encouraging nuclear energy developments. In a Zogby poll of 6,200 U.S. adults, close to 70 percent indicated support for nuclear energy. This is heartening; it suggests a considerable shift in national sentiment toward support for nuclear energy. The 2005 Energy Bill provides loan guarantees, production tax credits and risk insurance to the first few nuclear reactors built. The Department of Energy is expected to receive $900 million for its nuclear energy program this year. The Idaho National Lab (INL) is involved in research on the Next Generation Nuclear Plant, and $196 million is slated for this program at INL.

Despite the promise of new energy resource development, there are no easy answers for today’s pain at the pump. The price of gasoline reflects crude oil costs, refining costs, distribution and marketing and taxes. The cost of crude oil—the largest percentage of the cost of gasoline—is affected by market reaction to world events including political stability of oil-producing nations, the dollar’s value (which is now historically low) and increased demand pressure from developing countries whose economic growth has exploded in recent years. Many of these circumstances are out of our control. However, this doesn’t mean that we have to adjust or learn to accept the outrageous cost of gasoline today. It does mean we will have to take action to regain control of energy prices.

A former Saudi oil minister was quoted as saying: “The Stone Age did not end because we ran out of stones.” In the same way, we need not run out of oil to end excessive dependence on it. If we support ingenuity and reduce barriers to research and development on alternative energy resources and traditional sources, we can create an affordable, sustainable, environmentally-friendly energy supply.