Oil, like it or not, will continue to be essential to the economic health of the United States and other Western industrial democracies for the foreseeable future. Wishful thinking about "alternative energy" isn't going to drive the kids to soccer practice or make the lights come on anytime soon.
Oil at $140 a barrel and higher is having a huge impact on individual Americans and the nation's economy. It is driving up the cost of food and other products. And with gasoline averaging more than $4 a gallon, it's that much more expensive for Americans to get to work in order to earn the money to pay for it all.
There are a number of reasons for the run-up in oil prices — speculation, fears of war and terrorism. But the most powerful determinant of the price of oil, or any commodity, is supply and demand.
Demand for oil is surging as the emerging nations of China and India build their economies. But the supply of oil is being restricted by the Organization of Petroleum Exporting Countries, the OPEC cartel that produces 44 percent of the world's oil. OPEC nations are refusing to increase production to take pressure off prices.
So it is welcome news that President Bush is advocating steps to decrease our dependence on foreign oil. He has called for Congress to lift the long-standing ban on offshore oil drilling, wants to open a small portion of the Arctic National Wildlife Refuge to drilling and would lift restrictions on the mining of oil shale lands in Colorado, Wyoming and Utah.
While demand for oil has grown, our domestic oil production has fallen into a sorry state. For years it was cheaper just to buy the oil from overseas than to pump it here. Now, we're paying for that shortsightedness.
Annual U.S. oil production hit an all-time high in 1970 at 3.9 billion barrels (a barrel of oil is 42 U.S. gallons). It has declined steadily since. In 2007, domestic oil production was 1.9 billion barrels, down 43 percent from that peak. In 1985 we imported 1.3 billion barrels of oil; in 2007, 3.7 billion barrels — nearly three times as much.
We've known since the oil shocks of the 1970s that dependence on foreign oil put our national security and economic health at risk. Yet our policymakers have done nothing of substance in 30 years to address the problem.
Opponents of drilling complain that it provides no short-term relief for high prices, that new oil fields take years to come online. But we were debating drilling in ANWR a decade ago. If we had drilled then, we would have that oil now.
There are an estimated 75 billion barrels of oil in areas of the U.S., including offshore reserves and oil shale fields, where drilling is prohibited. Tapping that oil would give us better than 30 years of independence from OPEC.
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For another view on this issue, see Congressman John Tierney's letter elsewhere on this page.
