A Fairy Tale: Cheap Gas

A National Public Radio report, last night, described a purported breakthrough in what had been a congressional “logjam” in tackling the nation’s high gas prices. A bipartisan coalition of 10 senators, who refer to themselves as the “Gang of 10,” suggested a compromise energy strategy. Coming on the eve of a five week congressional recess, nothing will happen soon. But the bill they proposed yesterday — the New Era Energy Reform Act of 2008 — offers a sense of what will be on the table when the lawmakers return.

And I, for one, am not impressed. I think they’ve got it all wrong — and largely because they’re playing for votes, not looking at what’s in the nation’s best interests.

The bill recommends new offshore drilling for oil (at least 50 miles off the Southeast coast, for instance, and at new sites in the Gulf of Mexico) in addition to more aggressive investments in alternative energy sources. Within 20 years, some 85 percent of U.S. cars and trucks would also have to be able to run on something other than oil.

Estimated to cost some $85 billion, much of the money for this new energy program would come from “raising oil-company royalties and taking away some tax breaks,” according to David Welna’s NPR story.

Borrowing from Shakespeare, Sen. Ben Nelson (one of the gang) argued that the dilemma being fought over will no longer pivot around whether “to drill or not to drill. That’s no longer the question.”

Added his Senate colleague Mary Landrieu: “This bill will do more to lower gas prices at the pump today than anything that this Congress has done in recent memory.”

I’m not sure I buy her assessment. But even if that’s how it would play out, that’s not what we should be working toward. The goal should not be to lower the price of gasoline at the pump. That sends a signal to continue the fuel profligacy that has reigned for decades in America.

Oil is not cheap. In a real sense, it never has been. But through a series of subsidies and a failure to capture the life-cycle costs of oil’s use, we Americans have lived this fairy tale existence suggesting that our fossil fuels are cheap.

There are and always have been huge costs to fossil-fuel exploitation. It starts with the immense health costs for coal miners and oil roughnecks. It continues with the environmental degradation associated with acid-mine drainage and oil spills. It also includes costs paid by the hearts and lungs of everyone forced to breathe air polluted by liquid-hydrocarbon and coal-burning emissions. And it ends with the global costs paid by people and wildlife affected as their climate is altered by rising greenhouse-gas concentrations.

None of these costs are captured by prices at the pump or by the electricity bill paid by consumers of coal-fired electricity. And it’s because we’re not seeing these costs that we pretend they don’t exist. Or that it’s somebody else’s responsibility to cover them.

And that’s why I subscribe more to the assessment of Senate Majority Leader Harry Reid (D-Nev.) than to the Gang of 10’s new proposal. “Drilling is not the answer,” Reid said in response to hearing of the new bill. “The answer to the problem of America’s dependence on foreign oil is to lessen our dependence on foreign oil. And I think that can only be done by having a ‘we’re going to get to the moon’ approach to renewable energy.”

Now I realize why that’s not a particularly popular concept for the Gang of 10. They largely represent rural areas where high energy costs can’t be ducked. There are no hybrid combines to harvest field grains. No bus from the farm door to the grocery in town or light rail to the feed store 20 miles down the road.

And with farm roots myself, I’m quite sympathetic to this — and the financial hardship of blue-collar workers who can’t afford to live within a short drive of the good-paying jobs. That’s why I’d argue that a better way to survive the nation’s near-term transition to higher-mileage and/or lower-carbon vehicles is to find a way to help those who must drive get some temporary tax break. Uncle Sam should also be looking long and hard at offering carrots to encourage the purchase of gas-sipping vehicles.

We’ve got to drop this mindset that anyone should be entitled to cheap gasoline, diesel fuel, or coal. The only reason our fossil-fuel resources ever appeared cheap was because users got away without having to pay the health and environmental costs associated with their exploitation.

We’re now smart enough to know not only that there are high and tangible costs, but also what those costs are. And as such, it’s time we started budgeting to pay those costs. And investing in substitute energy technologies — ones that will substantially reduce cradle-to-grave costs associated with future energy use.

By the way, if you want to praise or criticize the Gang of 10’s proposal, here’s who you should contact: Saxby Chambliss (R-Ga.), Kent Conrad (D-N.D.), Bob Corker (R-Tenn.), Lindsey Graham (R-S.C.), Johnny Isakson (R-Ga), Mary Landrieu (D-La.), Blanche Lincoln (D-Ark.), Ben Nelson (D-Neb.), Mark Pryor (D-Ark.) and John Thune (R-S.D.).