Rising global oil prices lead to significant and adverse economic consequences for the United States. Last week alone oil prices rose by almost four dollars a barrel. America continues to be dependent on the Middle East and unstable regimes for its oil supply, despite the fact that we have enormous, yet untapped reserves in our own country and neighboring countries in our hemisphere.
The U.S. uses about a fourth of the world’s oil supply. Across the world, oil supply remains limited, and demand is steadily increasing. Oil has skyrocketed to $135 a barrel, leading to record high gas prices. The costs for certain industries are staggering. For example, the airline industry is looking to offset jet-fuel costs that are up about 80 percent from a year ago. President Bush has properly requested that the Saudis pump more crude oil, but we need to do more at home to increase supplies. The ability to tap global supplies is positive, but it makes little sense to ignore supplies in the U.S. that are kept off limits.
The United States has several opportunities to increase domestic oil production, as well as work with neighbors Mexico and Canada. The Arctic National Wildlife Refuge, offshore resources along the Continental Shelf, and the rich oil shale in Colorado are a few domestic examples.
ANWR alone has about 10 billion barrels of recoverable oil. These reserves are significant and would place downwards pressure on price.
The U.S. should also work with neighboring Mexico to reinvigorate oil production in their declining fields. By the end of 2007, Mexico’s largest oil field was said to be producing 29 percent less than its peak rate in 2004. Canada’s tar sands hold an estimated 174 billion barrels of crude oil, making those second only to Saudi Arabia in global reserves.
Unfortunately, new federal environmental standards enacted in the 2007 Energy Bill may put this supply off limits for the U.S. These are two vital resources the U.S. must continue to tap. Finally, we also have a 54 cent-per-gallon tariff on Brazilian ethanol that limits our access to this fuel supply.
With gas prices continually rising, we simply must be able to tap into our own oil reserves, and increase the oil supply we have right in our backyard. Efficiency is not enough. Drilling for new supplies is part of the answer as are reduced barriers for imported biofuels. Increasing our supplies from domestic and neighboring sources would decrease the price of oil and our dependence on unstable regimes such as Iran and Venezuela. And an aggressive effort would ease the pain that Americans feel every time they fill up their tanks.
Glenn Hamer is president and CEO of the Arizona Chamber of Commerce and Industry.