By Rep. John Duncan Jr.
Our nation currently faces the beginning of a serious energy crisis. The prices of natural gas, coal and oil have all reached record high levels in recent weeks, and the American economy stands to suffer long-term damage as a result.
In order to alleviate our dependence on foreign energy sources and ease this economic burden, we must pursue sound policies that encourage domestic energy production and decrease these spiraling prices.
Although natural gas is hailed by many for its relatively small environmental impact, current government policies hamper its production and result in steadily rising prices.
Energy Secretary Spencer Abraham has estimated that 40 percent of the United States’ natural gas resources, a stunning 213 trillion cubic feet, cannot be accessed as a result of environmental regulations.
These policies have yielded an increase of more than 200 percent in the price of natural gas and pose a tremendous risk to American businesses. As prices continue to rise, the cost of conducting business will continue to increase and restrain our economic growth.
The skyrocketing cost of natural gas has helped boost coal prices to new highs. As the supply of natural gas continues to multiply costs, coal has become a viable alternative for energy. Unfortunately, this has yielded little in the way of financial relief for our economy.
Environmental regulations continue to plague the coal industry as well. These policies increase the cost of coal operations, and more than 1,000 American mines have closed in the past decade.
Last year at this time coal prices averaged $30 per ton. Following a year of increasing demand on an already tight supply, prices now exceed $60 per ton, up more than $19 a ton since January.
The American economy, already struggling to confront record coal and natural gas prices, must also endure the highest oil prices in history. To further exacerbate matters, many analysts believe oil costs will eventually reach between $50 and $60 per barrel.
These figures hold extreme consequences for the American economy. Diesel prices have already reached their highest rate in our nation’s history, averaging $1.87 per gallon on Aug. 23. This represents a 5-cent increase over the previous week and a 25 percent increase over the last year.
Economists estimate that every penny increase in the price of fuel drains $1 billion from our economy. In fact, 1,000 small trucking firms are forced out of business with every 10-cent increase in fuel prices.
Industry analysts estimate more than 7,500 trucking operations have either closed or filed for bankruptcy in the last four years. To no one’s surprise, fuel costs rank as the single most important factor in these businesses’ decline.
Environmental regulations, however, continue to discourage domestic production and the construction of new oil refineries. As a result, no new refining facilities have been built in the United States since 1975, and approximately 35 have been forced to cease operation since 1980.
Our nation must dramatically increase its domestic energy production in order to avert serious economic consequences in the near future. We must adopt a comprehensive energy plan and enact policies at the federal level that allow our nation to free itself from its current level of dependence on foreign energy producers.
This goal can be accomplished only by encouraging a growth in domestic production and freeing our domestic energy producers of onerous environmental regulatory burdens. Our nation’s long-term economic health depends on such actions.
Rep. John Duncan Jr., R-Tennessee, has served in the U.S. House of Representatives since 1988. The Knoxville resident has been named among the five most fiscally conservative members of both the House and Senate by the National Taxpayers Union. He serves on the House Transportation Committee and the House Resources Committee.