Tightening the Noose
The Nation Hasn't shown much energy in curbing its fuel fix
Not long ago, with gasoline at $1.70 per gallon and oil at $28 a barrel, President Bush's spokesman Ari Fleischer could volley a "big no" back to a questioner who asked whether Americans needed to make any lifestyle changes to help solve the nation's energy problem. The goal of policymakers, he said, should be "to protect the American way of life." And he added, "We have a bounty of resources in this country."
That cocksure attitude seems no longer appropriate after four years of global political and economic upheaval and two catastrophic hurricanes. Analysts see little chance that U.S. consumers will be paying much less than the current average of $2.80 per gallon at the pump in the coming weeks as the price of crude creeps upward from $65 a barrel. While perhaps not the forecast "storm of the century," the receding waters of Hurricane Rita--and the aftereffects of Katrina--still left 15 percent of U.S. refining capacity sidelined for at least two more weeks. And it could take months to restore devastated natural gas production in the Gulf of Mexico to prior levels. That assures consumers will face record-high heating bills this winter.
Conserver in chief? The about-face goes all the way to the top. President Bush last week appeared at the Energy Department to noodge drivers to use less gas. "We can all pitch in . . . by being better conservers of energy," Bush said. Forgo the unnecessary trip, he advised.
But fewer country road jaunts won't get Americans out of an energy mess years in the making. Not only is much of the world's oil in unfriendly hands, but the United States hasn't built a new refinery since 1976. Global demand, meanwhile, has ratcheted upward, both because of Asia's growth and because American drivers have until recently drifted toward bigger cars and trucks that consume more gas.
As soon as Bush took office, he detailed Vice President Dick Cheney with the task of crafting a national energy plan. Congress enacted a dramatically stripped-down and larded-up version only weeks before the hurricanes hit. "Energy is the most special-interest-driven field that the federal government wrestles with," says Philip Clapp, president of the National Environmental Trust. "The U.S. has been absolutely paralyzed on energy policy because of the power of coal, oil, auto, and utility industries on the Republican side and [unions] on the Democratic side."
Congress was back at the drawing board last week, working on a new energy bill to expand domestic oil and gas drilling and to encourage new refinery construction, mainly through the most dramatic rollback of the Clean Air Act since its 1970 enactment. But even if the legislation passes, it could take years before it reduces the tightness of the nation's energy supply. And that effect is likely to be modest, since most of the world's oil and natural gas is still outside the United States.
Refining historically has been the low-profit end of the business. As a result, the nation's current refining capacity of 16.9 million barrels per day, up from the mid-1990s, is still down 9 percent from the 1981 peak, with 175 refineries closed since then. Although the industry now rakes in cash--one estimate has its profits up 255 percent over 2004--refiners have realized only 5 cents on the dollar since 1990, half the profitability of oil exploration. Small, so-called teakettle operations have shut down, and giant companies have fled the industry.