Consider responsible drilling on US soil
SEATTLE — Facts are stubborn things. So are cherished beliefs - especially when they're shared by adversaries who, for reasons of their own, find them too convenient to shed. And among the greatest of our shared delusions is the belief that high oil prices accomplish something. They don't. Fortunately, there is a way to ease the crisis: BRAC it. However, before explaining what the Pentagon's Base Closure and Realignment Act has to do with the price of gas, it's necessary to define, then shred, the wrong idea that "the market" has much to do with fixing this mess.
According to common belief, high prices inevitably call forth both consumer conservation and increased supply. The political left, broadly defined, favors the former; the right extols the latter. But it doesn't work that way.
Demand for oil, especially gasoline, is inelastic for three reasons. First, too much stuff and too many people simply have to move too far. Second, those who can afford those SUVs can generally also afford higher gas prices. Finally, for several score million Americans, from teenagers to the working poor to the elderly, automobiles offer freedom. Americans will cut back on food before they give up their cars. Nothing short of a price that would wreak economic havoc will induce serious conservation.
Nor do higher prices elicit increased supply. Oil is an extractive industry. You pump the easy pools first. Costs of production increase with volume. Then there's the paradox of the market. At $150 a barrel, say, there's plenty of oil, but few could afford it, so prices drop to the point where it doesn't pay to pump. Big Oil learned about this in the 1980s and doesn't care to repeat the experience.
Then there's what happens when price mixes with politics. The world's major foreign producers do not wish us well. But it's domestic politics that has us stymied.
A de facto alliance of left and right, of environmentalists and Big Oil, prevents development of American resources and capacity. The environmentalists and their political backers want no new development, period. As for Big Oil, you don't need to be a sprocket scientist to know that it's economically better to sell the same gallon of gas for $3 (or $4) than for $2. Such left/right alliances are nothing new. Over the past few decades, they've emptied America's mental hospitals, blocked missile defense, and made illegal immigration a growth industry. Over and over, these alliances, and the convenient political stalemates they generate, trump the market.
Now, about BRAC.
As the cold war ended, the Pentagon found itself with hundreds of excess or obsolete domestic bases and facilities. However, every installation is in someone's state and district; Congress was notoriously averse to shutting down anything. So in 1990 Congress passed the Base Closure and Realignment Act, turning the whole process over to an independent commission that would provide lists of places to be closed or (in some cases) expanded. The key provision: Congress had to accept or reject each list as a whole, thereby providing political cover for legislators whose turf took the hits.
It worked. Not perfectly, of course. But the process of intensive hearings and studies, followed by firm recommendations and consideration of civilian alternatives, has now entered its fifth round.
In similar manner, Congress should appoint an independent commission, composed of government, energy industry, and public interest and environmental representatives to study which areas, now off limits, can be opened for exploration, extraction, and refining with maximum economic benefit and minimal environmental disruption. As with BRAC, lists would be presented to Congress for an up-or-down vote. As with BRAC, there should be several rounds, depending on need.
Congress should also create a separate agency to manage and enforce the following:
• Strict environmental standards, including oversight of technologies used.
• Protection from ruinous and predatory lawsuits, in exchange for a simple code of behavior. If you mess it up, clean it up immediately. If you hurt others, make them quickly whole.
• Allocation of a percentage of profits to production (not research) of alternative fuels, either by the corporation involved or as investment in other companies.
• Keeping the price of this oil at some level below market prices, as a stabilizer.
• Keeping the oil at home.
America will never achieve energy independence. But we can strive for security at affordable and reasonably stable prices as we make the inevitable slow transition to a nonpetroleum-based economy.
And best of all, we won't have to believe in the salvific power of "the market" quite so much anymore.
• Philip Gold is president of Aretéa, a Seattle-based writers' group, and author of the forthcoming book "The Coming Draft."