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Politics, not geology spikes gas prices



Published: Sat, September 2, 2006 @ 12:00 a.m.



By BEN LIEBERMAN

HERITAGE FOUNDATION

Lost amid the anniversary articles about Hurricane Katrina is how we've dealt with the energy fallout. We've had a year to get used to $3-per-gallon gasoline and to come to grips with the vulnerability of our energy supplies. What have we learned?

We've learned that the impact didn't have to be so bad and that Washington can take measures to ensure that the next big storm won't hurt drivers and homeowners as badly.

The price of gasoline shot up a record-breaking 50 cents per gallon in the week after the storm, giving America its first taste of $3-plus gasoline. Natural-gas prices rose even higher in percentage terms, and only extremely mild weather prevented the 2005-06 winter heating season from being the most expensive ever.

Little wonder Katrina packed such a punch at the pump and in natural-gas bills, since nearly 25 percent of America's domestic oil and gas production was concentrated in its path. Offshore wells were shut down and evacuated in the days before Aug. 29, and many were damaged when the storm's 170-mph winds and massive waves swept through. Related onshore refining, processing and pipeline infrastructure in Louisiana also was hit hard, cutting energy production in the region dramatically for a few weeks and to some degree even today.

The national impact wouldn't have been so severe if it hadn't hit the only offshore area with extensive oil and natural-gas production. The Pacific, Atlantic and eastern Gulf of Mexico also have substantial oil and gas resources. And many onshore areas hold substantial untapped reserves as well. But federal restrictions have placed many of these areas off-limits to energy exploration and drilling.

Politics, not geology, is the reason America has concentrated so many energy eggs into one hurricane-prone basket off Louisiana and Texas. And future Katrina-strength storms seem inevitable.

Thus, if we truly want to take an energy policy-related lesson from Katrina, we need to allow oil and natural-gas production elsewhere. We'd have greater supplies, lower prices and less vulnerability to storms or other disruptions.

Environmentally safe

These restrictions were put in place years ago, at a time when energy was cheap and the need for additional production was not seen as significant. But circumstances have changed. Oil and natural-gas prices are almost three times higher than they were in the 1990s when much of this energy potential was placed out of reach. Also, drilling and exploration techniques have been refined to significantly reduce the risk of environmental damage. Experts say most oil found in U.S. waters results from natural seepage from the sea floor, and only 1 percent comes from offshore wells. And very little oil spilled from rigs in the path of Katrina.

Also, although this year's hurricane season has thus far been mercifully mild, most experts say that hurricane frequency runs in cycles and that we have begun a long-term period where powerful hurricanes are more likely.

Congress has before it bills to open some of these off-limits offshore areas as well as a small part of the Arctic National Wildlife Refuge in Alaska. Legislators have two months to do something constructive about energy before facing voters in November.

We have within our borders and our territorial waters tens of billions of barrels of additional oil and enough new natural gas to last for decades. And it is so spread out across the nation that no one storm could have the impact on supply that Katrina did.

It'll take more time to get over Katrina and the damage it did to one of America's most storied cities. But we can learn Katrina's energy lesson right now. And we can do something about it.

Ben Lieberman is a senior analyst specializing in energy and the environment at The Heritage Foundation. Distributed by McClatchy-Tribune Information Services




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