WASHINGTON - July 24 - Opening environmentally sensitive areas to oil and natural gas drilling won’t ease energy prices or reduce oil imports and should be rejected by the Senate when it votes this week, Public Citizen said today.
“With the November elections looming, congressional leaders are desperately seeking ways to convince the public that they are working to lower gas prices for consumers and improve national security by reducing energy imports, but this isn’t the way to do it,” said Tyson Slocum, director of Public Citizen’s energy program.
H.R.4761, which passed the House of Representatives on June 29 by 232-187, would open more of the Gulf, Atlantic and Pacific coasts to increased oil and natural gas drilling. In an effort to “bribe” coastal states, the legislation would, in many cases, give the bulk of the revenue earned from these leases to the states rather than to the federal government, as required under current law. The Bush administration estimates that the legislation will cost the U.S. Treasury several hundred billion dollars over 60 years. Companion Senate legislation (S.3711) also would open areas in the Gulf of Mexico to new drilling and would allow drilling off Florida’s coast after 2022. A key Senate vote is expected this week
But boosting drilling won’t help, as evidenced by the fact that the United States is awash with excess crude oil at a time of record high crude oil prices. In April 2006, U.S. commercial inventories of crude oil stood at 348 million barrels – the highest level since May 1998.
High gas prices are caused by a number of factors, including the fact that our consumption will continue to outpace our production. America is the third-largest producer of crude oil in the world but holds less than two percent of the planet’s reserves. We are by far the largest consumer of oil, with one of every four barrels of oil in the world used in America. We also are among the least efficient oil consumers, using double the oil per person than our competitors in Europe and Asia.
High prices are also the result of uncompetitive markets caused by the wave of mergers that have swept the oil industry, resulting in too few companies controlling too much of the refinery market. Since the 1990s, there have been more than 2,600 mergers and acquisitions in the U.S. oil industry, creating giant conglomerates such as ExxonMobil, Chevron Texaco and ConocoPhillips. These mergers have removed the financial incentive for major oil companies to build new refineries because they would rather keep markets intentionally tight to jack up prices than create surplus capacity that would push gasoline prices down.
Market manipulation is also suspected of contributing to high prices at the pump. The day before the House of Representatives passed its off-shore drilling bill, the federal government brought charges against oil company BP for manipulating the entire U.S. propane market to price-gouge millions of Americans.
Meanwhile, oil companies are raking in record profits – with the largest five (ExxonMobil, ChevronTexaco, ConocoPhillips, BP and Shell) enjoying $27 billion in profits in just the first three months of 2006.
Solutions include incrementally increasing fuel economy standards to 40 miles per gallon over the next decade, thereby reducing our oil demand by one-third; investing in the development of renewable energy; strengthening anti-trust laws by empowering the Federal Trade Commission to crack down on unilateral withholding and other anti-competitive actions by oil companies; establishing a Strategic Refining Reserve (financed by a windfall profits tax on oil companies) to complement America’s Strategic Petroleum Reserve; and re-regulating energy trading exchanges to restore transparency.
“Congress is foolhardy to believe that we can drill our way out of our oil consumption problem,” Slocum said. “The oil industry, which has showered Congress and the White House with $61 million in campaign contributions since 2001, is gouging Americans and enjoying the biggest profits in history. If lawmakers want to lower energy prices and stop global warming, they should re-examine their relationship with the oil industry and take real steps to help American consumers rather than oil companies.”