June 21, 2007
Welcome to the first summer driving season with gasoline at $3.40 per gallon -- and up.
Lawmakers have responded, predictably, by vowing to do something to bring prices down. Unfortunately, when Congress gets involved, prices usually go up. Take alternative fuels. Lawmakers love to tout their support for ethanol mandates, and farmers here in Illinois share their enthusiasm. But, in the big picture, ethanol is bad for Americans, farmers included.
For drivers, the problem is that ethanol costs more to make than gasoline, yet provides fewer miles per gallon. Consumers end up filling up more often and paying more each time they do -- both at the pump and through ethanol subsidies.
Meanwhile, because so much of our corn crop is being used to make fuel, there's less available for food. Everybody winds up paying more for corn and corn-fed beef and poultry. Instead of settling the energy market, Washington has only disrupted it.
The Senate is considering legislation requiring the nation to use 36 billion gallons of ethanol and other renewable fuels by the year 2022. That's an ambitious goal, especially considering that the current target is 7.5 billion gallons and is costing us enough.
Lawmakers assume somebody will develop a way to produce more than 20 million gallons of cellulosic ethanol (ethanol not made from corn), which would require a major technological breakthrough. If they're wrong, we'll all pay the price.
Meanwhile, any individual farmer who thinks federal ethanol mandates will help may be in for a rude awakening. Because 96 percent of the world's population lives outside the United States, our farmers must be able to export if they're going to thrive. High prices keep American corn out of foreign markets.
Yet those same artificially high corn prices will tempt more people to plant corn, both here and in other countries. That could eventually lead to the overproduction of corn and end up triggering a sudden collapse in corn prices. Something similar happened to wheat farmers in the 1920s, creating the "Dust Bowl" that threatened to wipe out American agriculture. It could happen again to corn farmers if our government keeps meddling in the agricultural market.
Ethanol isn't the answer, but one solution can be found under U.S. soil and territorial waters. The United States has plenty of domestic oil and natural gas. Yet we're the only nation that restricts access to a substantial portion of our domestic energy potential.
We need to allow oil exploration in the Arctic National Wildlife Refuge. If the federal government would let companies drill in just a tiny portion (about the size of an airport) of the 19 million acre refuge, we could begin recovering the estimated 10 billion barrels of oil believed to be there.
Meanwhile, the federal government has put 85 percent of federally controlled offshore areas off limits, including the Pacific and Atlantic coasts. The Interior Department estimates those areas hold 19 billion barrels of oil and 84 trillion cubic feet of gas, just waiting to be tapped. And as Hurricane Katrina proved, offshore drilling is more environmentally secure than ever.
It'll take years to bring this domestic oil to market. But it will always be years away until lawmakers act. It's time for them to act. But they must take the right steps, not merely ramp up the failed policies that have exacerbated today's high gasoline prices.
Ed Feulner is president of the Heritage Foundation.
First appeared in the Chicago Sun-Times