Breaux: Congress Should Not Wait for a Crisis to Act

Posted March 26, 2009 at 1:18pm

When crude oil prices hit record highs of more than $147 per barrel in July and gasoline prices at the pump reached nearly $4 a gallon, the American public stormed on Washington, D.C., demanding that Congress do something, do anything. They said, “We need relief and we need it now!—

Today crude oil is in the $40-$50 per barrel range, natural gas is less than $4 per thousand cubic feet from a high of $13 per mcf and the marchers have all returned home to focus on the financial crisis, lost 401(k)s, lost jobs and failed banks.

The question now is: Will they have to come back? What will be the situation in six months or a year if nothing is done to address our energy situation?

When traditional oil and gas prices peaked, there was a rush to see if other fuels could help us break the Organization of Petroleum Exporting Countries’ stranglehold on America. Geothermal, solar power, windmills, ethanol from algae and corn and biofuels were all ideas presented. Tax incentives to develop these fuels, along with suggested mandates requiring the use of non-hydrocarbon fuels, were heatedly debated and still continue today.

It seems that Congress best responds to a crisis, and when the crisis goes away, so does the demand for Congress to move quickly to respond to the problem. I believe there is still a real need to develop alternative fuels such as solar, wind and geothermal nuclear, but the real question is: Will Congress still feel the pressure to act?

I think the answer is yes. Yes, because maximizing our country’s energy supply is necessary to protect our national security both from an economic perspective and from a national defense standpoint. This is true whether crude oil is $20 a barrel or $100 a barrel.

We already see a determined effort by traditional oil and gas companies to diversify into alternative renewable fuels with dedication, money and determination. At the same time, smaller, innovative companies, many of which did not exist a few years ago, are finding new avenues to expand our energy portfolio, and they are moving as fast as they can.

The development of alternative fuels will continue with existing government subsidies and constituent support. The question is when, how fast and at what price?

The argument for “energy independence— makes for a great bumper sticker but doesn’t add up to being realistic. We live in a global world of interdependence. To attempt to “go it alone— makes as much sense as building a Chinese wall around our country.

Alternative fuels, while extremely important, will not allow us to be sufficiently independent from others with regard to energy. Even with government mandates to produce 36 billion gallons of biofuels by 2022, we should remind ourselves that in this country we still consume more than 320 billion gallons of oil per year.

There is no doubt that lower prices affect energy production. Lower oil and natural gas prices have decreased exploration for both. Figures show the number of rigs producing oil and gas has fallen from 2,400 rigs to about 1,200 now. While the cost of finding new fields has more than doubled over the past four years, we also see a drying up of capital available to explore and develop.

So what is the proper course for the United States to pursue? Let me suggest that it is not an either/or situation. It is not a question of putting all our efforts into hydrocarbon fuels nor should we abandon that effort to focus entirely on producing alternative renewable fuels — we should do both. We must produce both.

There is no real reason other than politics to think it is OK to explore and produce oil and gas in the Gulf of Mexico (which we have done since the 1950s), but not off the East and West coasts of the United States. In addition, the Arctic Wildlife Refuge Act set aside a small portion (about the size of Dulles airport) out of the 19.5 million acres it protects, to explore for energy, and Congress has blocked it. The United States is truly the Saudi Arabia of natural gas, which is the cleanest-burning fuel, and we should not lock ourselves out of taking advantage of producing this clean fuel, but rather encourage it, especially in the oil and gas shale areas.

At the same time, new alternative, renewable fuels must be developed. These will not free us from dependence on other countries for energy, but, moving forward, they should be part of the comprehensive plan.

We at the Breaux Lott Leadership Group work with and represent both traditional oil and gas companies, as well as companies that only produce alternative, renewable fuels. I believe there is a need for both types of energy for the security of all Americans. The time to make these tough decisions is not in the middle of an energy crisis with people marching on Washington, but rather let us now produce a balanced plan that encourages both traditional hydrocarbons and alternative, renewable fuels.

Former Sen. John Breaux (D-La.) is co-founder of the Breaux Lott Leadership Group in Washington, D.C. At the firm, he provides strategic advice on an array of public policy matters, with concentration in the areas of health care and energy.