Volume 9 | Issue 3 | Year 2006

Every day our nation’s industries, workers, and yes, even each and every one of us, consumes energy. We are the pinnacle generation of consumers. We have grown accustomed to an ever-increasing disposable barrage of consumer products, content, news and information, technology, and yes, energy.

But, while technology has made us not only more dependent upon energy consumption, it’s also made it easier to devour – at the flip of a switch, the turn of a key, and the push of a button. Long gone are the days when manual labor was just that – manual. We have science, technology, research and development, andinnovation to thank for our improved mechanisms to manufacture goods, our ability to harness and access energy, and also to better utilize, conserve and develop it as well.

Yet, despite these advances, America’s energy crisis runs on. Energy – once a rare commodity is no longer seen as a luxury, but a necessity to modern living. The cost of nearly everything Americans need and enjoy, from bare necessities to luxury goods, depends on energy. The manufacturing industry, which accounts for more than one third of total U.S. natural gas consumption, relies on oil and natural gas to run factories, operate machinery, fuel production and ship consumer goods to market.

So, why, when the overwhelming need to have affordable and adequate supplies of energy is obvious to anyone who earns or spends a pay check, is there such a lack of reasonable answers?

To say that there is one quick fix to our energy problems is not only short-sighted, but dangerous. Quick fixes not only fail to address the larger issues of supply and demand, but risk our future energy and economic security. The solution to our energy crisis must go beyond rhetoric, beyond blame and beyond partisan politics.

Capitol ideas needed
If our legislative leaders are genuinely concerned about getting to the truth of this problem, they need look no further than their immediate surroundings on Capitol Hill. The simple reality is that we are caught up in a worldwide energy crunch, and if Americans are suffering more than others, it is because Congress has consistently and repeatedly over the years refused to authorize development of more domestic resources of energy. We have been conveying this message to Congress for many years employing every known means of communication, but somehow the message has not gotten through. Now we are paying the price for our failure to communicate.

Escalating energy prices have significant and far-reaching consequences for a sector of the economy that has historically been a barometer for the overall strength of our nation. The price surge has been a primary factor in the loss of 100,000 jobs nationwide in the chemical industry. Additionally, the forest and paper industry has closed 200 mills and cut 146,000 jobs since the run-up in natural gas prices began. Even the booming construction industry is now experiencing higher material costs. And the impact on individual consumers is no brighter.

This is not just a problem of gasoline prices at the pump. The price of natural gas is in many ways an even bigger problem because millions of our fellow citizens depend on it to heat their homes, and manufacturers use it both for energy and heating, and in many cases also as a feedstock. Thus while the cost of gasoline is driving drivers off the road, the soaring price of natural gas is burning up consumer spending power and sending thousands of jobs overseas.

Oil prices are determined by a world market in which U.S. oil companies control only 13 percent of the supply. They may seem like huge corporations to us, but in the world at large they are small players. They don’t have the clout to manipulate prices. As for natural gas, there is no world price because it is primarily domestically produced and used. This is despite a federal moratorium essentially locking up about 85 percent of the Outer Continental Shelf (OCS) to exploration and development. We have only four liquefied natural gas terminals in this country – the same number as South Korea – and thus we are almost totally dependent on our limited domestic production.

Unfortunately, Congress is also powerless to repeal it. Economies around the world have been growing rapidly in recent years, most notably China, and thus the worldwide demand for energy is growing equally rapidly. Because so much of the world’s oil is found in the Middle East, recent troubles there foster what Secretary of the Treasury John Snow calls “a premium for uncertainty.” All of this was exacerbated by the disruptions of domestic oil and gas production caused by Hurricane Katrina last year, from which we have not yet fully recovered.

This situation will not resolve itself – in fact, it will only worsen. We cannot expand our economy or compete globally while countries like China and India are developing their energy infrastructure at a rate of 10 to our one. U.S. production of natural gas has remained flat for nearly two decades, and demand for natural gas is forecast to increase by 40 percent by 2025.

Options to consider
If Congress is serious about energy – and up until now it hasn’t been – there are a few clear options that will produce results fairly quickly.
• Open the Outer Continental Shelf (OCS) to oil and natural gas exploration and development. This can be done quickly and without damage to the environment. The OCS has enough natural gas to heat 100 million homes for 60 years and enough oil to drive 85 million cars for 35 years. • Open the Arctic National Wildlife Refuge (ANWR) to development. This will take a little longer, but it is our biggest reserve of oil, 10.4 billion barrels, and natural gas, 70 trillion cubic feet.
• Give the go-ahead to development of new nuclear power plants. Even the more extreme environmentalists are now acknowledging that nuclear power is one of the safest energy options we have.
• Enact the House Gasoline for America’s Security Act to accelerate construction of additional refining capacity, plus necessary infrastructure.
• Accelerate construction and siting of clean coal plants.
• Pass the Clear Skies legislation.
• Reform the Clean Air Act to allow for fuel-switching in times of crisis.
• Codify the New Source Review reforms to streamline the air quality permitting process.
The National Association of Manufac-turers is committed to working with the Administration to push for these reforms. We continue to work to ensure that our nation’s manufacturing base – the engine that fuels our economy – will be able to manufacturer the products we need every day, and keep the American jobs here
at home.

We have also joined with leading industry and individual consumers to form a new coalition called the Consumer Alliance for Energy Security to urge Congressional action toward addressing our natural gas crisis, and unlock our domestic supplies.

While it’s true America is a nation of consumers, we are also a nation of doers. We have the ambition to succeed, but we need the energy to take us there. Congress has led us into the quagmire we find ourselves, and it’s time they lead us out.

Michigan Governor John Engler is president of the National Association of Manufacturers, whose mission is to enhance the competitiveness of manufacturers by shaping a legislative and regulatory environment conducive to U.S. economic growth and to increase understanding among policymakers, the media and the general public about the vital role of manufacturing to America’s economic future and living standards. Visit: www.nam.org.

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