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Rethinking America’s Energy Policy

Tuesday, April 10, 2012

It is an exciting time for American energy, but only if American energy policy spurs innovations rather than stifling them.

U.S. energy policy needs a reboot—a broad reassessment of our strategies—because much of what we thought we knew has either dramatically changed or turned out to be plain wrong.

When I first became involved in these issues, President Jimmy Carter told us our domestic energy supplies were running out and a foreign cartel would determine everything from the cars we drove to the temperatures in our homes. The future he painted looked bleak.

Consider oil and natural gas. Not long ago, many believed supplies had peaked and it was only a matter of time until we were left with nothing but dry holes in the ground and increased dependence on foreign imports. Based on this belief, Washington decided that American taxpayers needed to spend dramatically on developing alternative supplies to replace hydrocarbons.

President Obama continues this policy today. During his recent energy public relations tour, he repeatedly referred to Republicans as subscribers to the “flat earth” worldview because we do not share his affinity for massive taxpayer spending on more expensive energy sources. But if anyone is stuck in the past, it’s President Obama, as he has refused to acknowledge the great potential of America’s energy resources thanks to new technologies that help us unlock them.

New discoveries and production of resources like shale oil and gas are dramatically altering our energy supply outlook and the entire global geopolitical landscape. And the pace of change—particularly in the past few years—continues to accelerate.

When it comes to energy supply, efficiency, and environmental safety, our prospects are better than they have been in a long time. And the outlook will only improve if the government unleashes the private sector and stops getting in the way.

North Dakota’s story is illustrative. As recently as 2006, the state ranked ninth in the country in oil production. By 2013, the state could move to the number three spot, behind only Texas and Alaska, according to The Institute for Energy Research. In fact, North Dakota's January oil output eclipsed the current third place holder, California. Production may more than double again within five years.

Private sector breakthroughs created this new energy boom; the federal government is not involved.

It’s a mistake to declare war on any source of supply because, if we have learned anything about energy, it is that future technology will not be what is now predicted.

By fully harnessing the power of our own previously inaccessible energy resources—and by forging strong partnerships with neighboring nations—America is on the cusp of being able to chart a course toward North American energy independence. It is an exciting time for American energy, but only if American energy policy spurs these innovations rather than stifling them.

Despite imperfect knowledge about what lies ahead, we have learned important lessons from the past that are guiding our reforms. The House Energy and Commerce Committee, of which I’m chairman, has already begun this fundamental reform effort and we will continue our activities in the months ahead.

First, government choosing technology winners does not work. Instead, we too often pick losers. In the late 1970s, billions were wasted on synthetic fuels. Today it’s Solyndra. It turns out that our energy outlook has changed not due to government subsidies, but to private sector technology innovation. For example, America is now the largest natural gas producer in the world and could become the largest oil producer by 2017. Why? Because private sector know-how and market forces helped unlock previously inaccessible supplies. The House Energy and Commerce Committee is conducting an exhaustive review of the limits of government-sponsored energy production, and hopes to release our findings in the next several months.

Second, we need not stifle resources to protect the environment. We can develop energy resources as we improve environmental safeguards. For example, horizontal drilling technology means that a single surface operating structure can replace several surface structures. Likewise, the pipelines we build to carry oil and natural gas will employ, wherever needed, state-of-the-art inventions such as automatic or remote control shut-off valves and leak detection systems that didn’t exist just a few years ago. I made sure that provisions for those technologies were included in the pipeline safety reauthorization bill that President Obama signed into law on January 3. This year, my committee will provide the American people even more information about how technology has improved the energy and environmental outlook.

President Obama has refused to acknowledge the great potential of America’s energy resources thanks to new technologies that help us unlock them.

Third, we need an “all may compete” energy policy. In this hyper-partisan age, vilifying certain types of energy has become a common way of promoting others. This will not improve energy affordability. It’s a mistake to declare war on any source of supply because, if we have learned anything about energy, it is that future technology will not be what is now predicted. My committee will continue to assess whether current policies advantage some energy sources over others.

Finally, given our new knowledge about resource abundance, including the power of technology to unlock supplies and use them in cleaner, more efficient ways, we should do all that we can to reduce barriers to responsible development of domestic resources. Approving projects like the Keystone XL pipeline or streamlining the extensive permitting process for energy projects are two examples of how we can get government out of the way. Before the end of the year, the House will pass measures to spur energy development by cutting through the red tape.

We stand at a unique and bright moment in our energy history. To take full advantage of the opportunities that lie ahead, it is imperative that we reconsider our basic assumptions about energy policy, including rethinking the correct role of the federal government. Ingenuity and freedom have produced a more abundant energy future than we ever imagined. Misguided Washington interference is the biggest threat to these gains.

Rep. Fred Upton (R-Michigan) is chairman of the U.S. House Committee on Energy and Commerce.

FURTHER READING: Nick Schulz interviews Upton in “Revolution in the Rust Belt.” Kenneth P. Green contributes “Not Free to Choose: The Reality behind Clean Energy Standards” and “Government Is a Lousy Venture Capitalist.” Mark J. Perry says “Unleash Private Sector to Produce Energy, Create Jobs.” Jon Entine asks “Future Energy: Natural Gas Fracking—Who Blew Up the 'Bridge to the Future'?” Arthur Herman adds “Framing the Keystone Debate.”

Image by Rob Green / Bergman Group

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