Anyone who’s been to a gas station recently knows the feeling. There you are, about to refuel, when you see the price of regular gasoline: about $3.52 per gallon, up 77 cents since 2010. Your pulse quickens. Your stomach sinks. Because this is not a dream. The days of $4.00-a-gallon gas are about to return.
How we got here is no mystery. The turmoil in the Middle East, including a supply disruption in war-torn Libya, raises market anxiety. The flood of money coming from the Federal Reserve contributes to commodity price inflation from food to precious metals to oil. Increased demand, in emerging markets in particular, translates into more expensive fuel at home.
The appropriate policy responses are also unmysterious: The sooner Muammar Qaddafi is overthrown, the faster supplies can be restored. Ending the Fed’s program of monetary stimulus would reduce the amount of dollars inflating the commodities bubble. And the best way to compensate for rising demand is to increase supply.
We wish we could say that President Obama is pursuing such a course. But the five people who managed to stay awake during his soporific press conference last week know that Obama’s lassitude is boundless. He says he wants Qaddafi out, but doesn’t appear interested in doing much to make it happen. He’s given Fed chairman Ben Bernanke free rein to accelerate the recovery, but doesn’t seem worried about the long-term consequences of inflationary policies. He proudly (and correctly) touts the fact that in 2010 domestic oil production reached its highest level in seven years. But he doesn’t grasp that supply must increase by a lot more, and a lot more quickly, if Americans are to enjoy affordable fuel.
“We need to continue to boost domestic production of oil and gas,” Obama said last week. How? The president wants to know if the oil companies are sitting on any untapped reserves. He’d like to see further research and exploration and “information gathering.” He said that “We’re looking at potential new development in Alaska.” Someone should put the president’s portrait next to the dictionary definition of “passing the buck.” There are plenty of ways to encourage production right now. Moping that it takes time for new fields to come online is no excuse. If the government had responded to the widespread outcry to drill three years ago, we’d be that much closer to having additional supplies of energy today.
All President Obama needs to do is to have Reggie Love print him out a copy of the “Roadmap for America’s Energy Future.” Authored by Republican Devin Nunes of California, the energy roadmap is a comprehensive strategy to increase production in a responsible way. Nunes would open the Outer Continental Shelf to oil and gas exploration, allow drilling in the Arctic National Wildlife Refuge after years of delay, restore oil shale leases that the Obama administration canceled in 2009, and repeal the prohibition on government purchases of “coal-to-liquid” synthetic fuel. He’d forbid the Environmental Protection Agency from regulating carbon dioxide as a pollutant. He’d mandate permits for 200 additional nuclear plants over the next 30 years.
Better yet, Nunes would do all this while establishing a “Renewable Energy Trust Fund.” Government revenue from carbon-based energy would be dedicated to research into alternatives like wind, solar, biomass, and more. The money would be disbursed through a reverse auction in which projects with the greatest potential energy efficiency win contracts. Once they enter into the contract, recipients would forgo all other tax credits and would place a deposit in the Treasury. If the project fails, the recipients lose funding—and the deposit.
The energy roadmap is another example of the GOP House setting the agenda for the eventual Republican presidential nominee. It’s a safe bet that demand for Nunes’s program will rise in direct proportion to gasoline prices. Nor will that demand be partisan. There are plenty of Democrats, many of them senators from red states, who are interested in reducing the de facto tax that voters pay whenever energy prices rise. We’re sure that Nunes would be happy to discuss his ideas with them, and with President Obama, at their convenience. If the meeting doesn’t take place, well, we’ll all be hearing from the American people—on energy, on health care, on the economy, on the budget, and much else—in November 2012.