Oil Woes Simplified

On July 15, Brian Kennedy and Dr. Bill Koetzle from the Institute for Energy Research (IER) spoke at the Heritage Foundation on America’s energy crisis. They boiled down complicated oil issues into simple fundamental issues of economics that the government seems to be ignoring.

The IER opened a D.C branch a few weeks ago and is a “free market organization that believes that government needs to get out of the way when it comes to energy,” Kennedy said.

A large problem with today’s energy policy is the misdirection of blame, he argues.

“There are 68 million acres that are currently being leased and not being used,” Koetzle said. “And 2 billion acres that the American government is stockpiling. It’s not speculators; it’s the problem of supply and demand.”

Koetzle further explains. “World-wide supply is tight. World-wide demand is growing. It’s common sense to increase supply but we’re not doing that…Frankly, the world has an enormous amount of untapped resources.”

Stateside, a common option thrown around is Arctic National Wildlife Refuge. However, some politicians believe that drilling there would not benefit the U.S.

“When you hear politicians say ‘Oh, ANWR only produces 1.5 million barrel per day, that’s nothing,’ they are wrong,” Kennedy said. “Spare capacity is at 1-1.5 million barrels per day.”

With the oil produced from ANWR, spare capacity would be doubled. When spare capacity is low, gas prices are high. Therefore, the theory goes that as spare capacity increases, prices drop.

Another less tangible problem linked to increased oil prices is the weakened dollar. Moreover, countries world-wide are evolving, enhancing the importance (and cost by association) of oil and energy exponentially.

“The growth of emerging countries is directly tied to increased energy demand,” Koetzle said. “Energy is the lifeblood of economic growth.”

Sandy Linczer is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.