A Refinery(ed) Energy Policy – Alternatives versus Placation

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With all of the distraction and noise surrounding the Iraqi War debate and the Supreme Court nomination scrutiny, are our legislators overlooking a more menacing threat to our nation’s security?

The lack of a strategic energy policy could well spell big trouble ahead.

After Hurricane Katrina temporarily knocked out 30% of America’s oil refinery capacity and caused gasoline prices to spike, it became dramatically obvious that the nation needed to build more refineries away from the vulnerable Gulf Coast. But when a bill to streamline the permitting process and provide incentives to build refineries on closed military bases was headed for the Senate floor, Sen. Lincoln Chafee (R., R.I.) joined with every Democrat on the Senate Environment Committee and blocked the bill.

Mr. Chafee says he opposed the bill only because it lacked provisions to develop alternative fuels and raise fuel-economy standards, although he offered no amendments to that effect. But even if conservation takes center stage in the future, existing energy sources must be expanded now before the economy’s health is jeopardized.

A just published report by the New England Energy Alliance warns that “energy shortages could be acute soon–by 2010 at the latest” if policy makers in the region don’t act aggressively. Unfortunately, Mr. Chafee and other senators appear more concerned about fending off the aggressive criticism of the green lobby.

There’s definitely a place and need for conservationsim involving the use of energy sources, but a blind eye should not be turned to the need for refinery development to occur as soon as possible.

Yes, market demands and pricing constraints can play a role in developing more “stewardship type” behavior when it comes to energy consumption.

Are there other drivers though that need to be considered and addressed?

In reality, high energy prices are often the direct consequence of misguided government policy. After House leaders were forced to remove natural gas drilling provisions from the budget, Jack Gerard of the American Chemistry Council said he was “flabbergasted that some in Congress continue to live in a fantasy world, in which the government encourages use of clean-burning natural gas while cutting off supply, and then they wonder why prices go through the roof.” Natural gas prices recently spiked at $14 per million BTUs, the highest in the world and the equivalent of $7 a gallon gasoline.

Not only will such price spikes increase the cost of heating homes this winter, but they are already costing jobs. Andrew Leveris, CEO of Dow Chemical, testified before Congress this month that high energy prices were a major reason that Dow has closed 23 of its plants in North America, shedding 7,000 of its 25,000 U.S. jobs. Out of 120 chemical plants currently under construction around the world, only one is being built in the U.S. More than 50 are going up in China, where natural gas costs half of what it does in the U.S.

A dangerous dynamic certainly where current (and future) energy costs and availability would appear to place the U.S. in even more of a competitive disadvantage in the world marketplace.

Greater attention, focus, and action needs to be paid now in regard to pursuit of a viable energy strategy and policy by our legislators (apart from lobbying interests) or we will all be paying quite dearly in the future.