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By Kenneth Green : BIO| 25 Aug 2020
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When it comes to fossil fuels, the political class (mostly, but not entirely, on the left) has developed a case of "investigitis." We're seeing this dynamic reappear along with the latest energy problem -- the BP oil pipeline shutdown. Calling for congressional hearings into the situation, Democratic Representative John Dingell, top Democrat on the House Energy and Commerce Committee, observed that "It is appalling that BP let this critical pipeline deteriorate to the point that a major production shutdown was necessary."[i]

This particular outbreak of investigitis is both ironic, and misdirected. It's ironic because the target of Democratic fury -- BP CEO John Browne -- has been a poster boy for the left's most-ardently sought regulation of greenhouse gas emissions.[ii] Vanity Fair lauded his "environmental conscience" only a few issues ago and Bill Clinton praised him for his responsible commitments to environmental goals in 1999. [iii] The call for an investigation is misdirected because the best target for investigations into irrational energy policy would be...Congress.

In the interest of helping to find some real answers to questions regarding energy, the various committees involving energy and environment should quiz themselves ruthlessly on several questions pertaining to the artificial constraints on supply that are mostly of their own creation.

Why, they might ask themselves, does Congress let a few state legislators prevent exploration and development of the oil reserves of the Outer Continental Shelf and federal lands that are the property of the entire American public? According to the U.S. Minerals Management Service[iv], there are about 86 billion barrels of oil under the Outer Continental Shelf. And according to the Energy Information Administration[v], total US oil imports from OPEC total about 2 billion barrels per year. That means we are sitting on offshore deposits that could replace OPEC imports in their entirety for 43 years.[vi] Such could buffer us against oil price shifts in the Middle East for far longer, even as a partial displacement of OPEC supply.

And how, Congress might ask, did Congress allow so many agencies to get their hand in this particular pie? The approval process for offshore exploration now requires satisfying the regulatory requirements of the Department of the Interior, the Environmental Protection Agency, the Department of Commerce, National Oceanic and Atmospheric Administration (NOAA), and the U.S. Fish and Wildlife Service, all agencies operating under Congressional authorization. What's that about too many cooks?

Another question Congress might ask itself is why they have restricted the development of known American oil and gas reserves, such as those in ANWR[vii], while consumers endure price spikes and fluctuations that could have easily been averted? It's long been understood that developing such oil can be done without causing significant environmental damage. The Department of Interior recommended developing that oil way back in 1987. Those 10 billion barrels of recoverable oil (a mid-range estimate according to the U.S. Geologic Survey[viii]) would look pretty good coming down the pipe right about now. I'm guessing most motorists would love to hear what an investigation into this question revealed as they fill their tanks with $3.00/gallon gasoline.

Finally, Congress might ask itself how they managed to let the United States EPA and a handful of other states fragment gasoline markets across the country into a crazy-quilt of mini-markets with fragile supplies. They wouldn't have to look hard for the answer: provisions in the Clean Air Act, and state requirements that equal or exceed the Clean Air Act requirements have fragmented the American market for gasoline so that rather than having one formulation of gasoline that can be moved across markets easily, we have 17 different blends, mixed in 3 separate grades, that can only be sold in specific markets. That raises fuel costs and leads to exaggerated regional price fluctuations when supply is interrupted. As the United States Government Accountability Office pointed out last year, "The proliferation of special gasoline blends has made it more complicated to supply gasoline and has raised costs, significantly affecting operations at refineries, pipelines, and storage terminals." Further, the GAO observed,

"The proliferation of special blends has...limited the number of suppliers of some of these fuels, posing challenges when traditional supplies are disrupted, such as during a refinery outage or pipeline delay. In the past, local supply disruptions could be addressed relatively quickly by bringing fuel from nearby locations; now, however, additional supplies of special gasoline blends may be hundreds of miles away."[ix]

There are a lot of things that Congress could investigate that might explain how various petroleum-driven parts of the U.S. economy came to be so fragile and susceptible to foreign disruptions. They would be best off starting the investigation by looking in a mirror.

Kenneth Green is a visiting fellow at the American Enterprise Institute, and the author of "Bringing Down Gas and Oil Prices," an AEI Environmental Policy Outlook.

[i] Reuters, "Democrats call on Congress to probe BP shutdown, August 7, 2006.

[ii] Ben Klayman, "BP Amoco to Introduce Cleaner Fuels in Next Two Years," Reuters Limited, January 27, 1999.

[iii] "President Bill Clinton in a statement lauded BP Amoco's cleaner-fuel plan and decision to hold Amoco to the same target as BP to reduce emissions. "These commitments demonstrate that leading corporations can serve their investors and their customers, even as they join us in the fight against global warming" he said. "BP Amoco offers further proof that a strong economy and a healthy environment go hand in hand."

[iv] United States Mineral Management Service, cached report (website unavailable directly), "Outer Continental Shelf Oil and Gas Assessment 2006" "The MMS estimates that the quantity of undiscovered technically recoverable resources ranges from 66.6 to 115.3 billion barrels of oil and 326.4 to 565.9 trillion cubic feet of natural gas. The mean or average estimate is 85.9 billion barrels of oil and 419.9 trillion cubic feet of natural gas."

[v] Energy Information Administration Basic Petroleum Statistics, updated July 2006:
Oil imports from OPEC = 5,508,000 bbl/dy, or about 2 billion bbl/yr.

[vi] CALCULATION BY AUTHOR: OPEC replacement years in OCS: (86 billion bbl/yr)/(5.5 million bbl/dy*365 dys/yr)= 43 years.

[vii] Elizabeth Shogren, "For 30 Years, a Political Battle Over Oil and ANWR," National Public Radio All Things Considered, November 10, 2005. "In 1987, when Reagan was still president, the Interior Department recommended that Congress allow drilling in the coastal plain of the Arctic refuge. It reported that the area represented the nation's best chance to boost domestic oil production."

[viii] United States Geologic Survey, Fact Sheet 0028-01: Online Report. "Arctic National Wildlife Refuge, 1002 Area, Petroleum Assessment 1998, Including Economic Analysis", last modified, August 2004. "The total quantity of technically recoverable oil within the entire assessment area is estimated to be between 5.7 and 16.0 billion barrels (95-percent and 5-percent probability range), with a mean value of 10.4 billion barrels. Technically recoverable oil within the ANWR 1002 area (excluding State and Native areas) is estimated to be between 4.3 and 11.8 billion barrels (95- and 5-percent probability range), with a mean value of 7.7 billion barrels"

[ix] U.S. Government Accountability Office (GAO), Special Gasoline Blends Reduce Emissions and Improve Air Quality, but Complicate Supply and Contribute to Higher Prices (Washington, D.C.: GAO-05-421, June 2005).

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