The recent spike in gas prices is a costly reminder that America needs a greater, more diverse supply of energy. Rising fuel prices disrupt our economy and place tremendous burdens on families, farmers and small businesses. I believe we can create a stronger America by reducing our dependence on foreign oil and acting on policies to expand domestic exploration, conservation, and alternative fuel research.
Oil demand is increasing at a time when global factors are drawing supply down. The demand for oil is greater than ever due to rapid industrialization in countries such as China and India, together comprising 40% of the world’s population compared to 5% in the United States. Supply disruptions in Nigeria, decreased production in Iraq, and the loss of 5 percent of our national refining capacity in the wake of last year’s hurricanes have presented great market challenges to our domestic energy needs. The foreign oil market is further complicated by political instability, namely in Iran and Venezuela. Each time their radical political leaders speak out, risk premiums on imports rise.
Considering these factors, it is unlikely that oil prices will significantly lower over a sustainable amount of time. Price controls, tax rebates and rollbacks, all ideas currently being debated, will only provide a temporary fix. We need to diversify and develop new resources and inspire consumer conservation to appropriately address long-term supply and demand issues.
There has been a lack of leadership in our country on this issue for many years. The blame is shared by many. We have not made enough gasoline for ourselves for years. While the demand for fuel never stopped rising, no new refineries have been built in the United States since 1976, leaving us at the whim of foreign market fluctuations largely beyond our control. At the same time, environmental interest groups have consistently and successfully blocked efforts to explore domestic resources in ANWR, the Rocky Mountains, and other locations. This must change.
Lawmakers, industry leaders, scientists, and consumers alike must mutually commit to bold new efforts to develop and use new technologies that will expand the diversification and conservation of energy resources. Together, we must work to meet the President’s challenge to expand our own energy self-sufficiency by at least 25% in the next two decades. Other industrialized nations such as Brazil have demonstrated that this goal is possible. There are many local solutions to this national problem. Undoubtedly, Kentucky can play a key role in our effort to achieve national energy independence.
Traditionally, Kentucky has had lower energy prices than most other states. Our great state has a wealth of resources that could significantly contribute to energy self-sufficiency including vast quantities of oil shale, tar sands, coal, and corn and soybean crops. These resources can provide new and renewable energy alternatives such as biodiesel, ethanol, clean coal and coal gasification. Locally, ethanol and biodiesel products are already being produced respectively at plants in Meade County and Daviess County. This week, Governor Fletcher announced that the state has finalized its proposal for the FutureGen project, a $1 billion public-private partnership to build the world’s first coal-fueled “zero emissions” power production plant. Central to the proposal is its location: a mine-mouth site in Henderson County. These are exciting developments that may very well position Kentucky as a leading force to meet our national energy needs through future decades.
The American Jobs Creation Act of 2004 and the Energy Policy Act of 2005 both included important provisions to further the use of alternative fuels, including tax credits for the creation and use of ethanol and biodiesel, as well as increasing the alternative fuel consumption requirements for the country. The Energy Policy Act of 2005 also made a significant commitment to rural electrification concerns, promoting clean energy, clean coal technology, and pollution control through several important tax incentives incorporated into the legislation through my efforts on the House Ways and Means Committee.
While Congress works to reduce foreign oil dependence, oil companies themselves need to do their part. These companies must answer the call of Congress to invest more in America’s energy infrastructure and resources. Increasing refinery capacity will boost supplies and reduce price burdens on American consumers. New drilling and exploration along American coasts and in Artic National Wildlife Refuge can provide at least a 30 year supply that can be utilized immediately, in an environmentally responsible manner, strengthening our national security by lessening our dependence on unstable foreign oil markets.
In the short term, Congress is working to pass legislation to criminalize price gouging at gas pumps, loosen regulations on boutique fuels, and temporarily suspend filling the Strategic Petroleum Reserve to ensure all available supplies of oil are made available on the markets. Though these measures will help, a broader national effort to conserve and diversify supply remains the only tenable solution for long-term stability.
The unparalleled spirit of American ingenuity and ambition, starting right here in Kentucky, can accomplish the bold objectives necessary to overcome these tough challenges. Be assured that I will continue to work hard to address gas and energy prices on behalf of those whom I represent.
