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    ATTACKS HEIGHTEN CALL FOR REDUCED DEPENDENCE ON FOREIGN; OIL

    BY Natalie M. Henry
    09/17/2001
    by Natalie M. Henry on 9/17/01.

    While some of the energy policy players in
    Washington were loath to comment on a likely shift in the

    energy debate due to Tuesday's attacks, policy and market analysts stated clearly that the picture has changed and the impetus to reduce dependence on foreign oil is as strong as ever.

    "Rightly or wrongly, ... initial speculation centers on Islamic terrorist groups, which are largely based in the Middle East, where most of the world's oil is located," said Adam Sieminski, a global energy strategist at Deutsche Banc Alex. Brown in Baltimore. "We expect these attacks to increase the desire for energy independence, particularly for supply. This could mean more political support for a gas pipeline from Alaska, and increased drilling from restricted land in the western United States, the Gulf of Mexico and perhaps even Alaska's Arctic National Wildlife Refuge."

    Sieminski also said, "From the demand side, we
    believe the attacks could lend momentum to a move
    toward increased automobile fuel economy and other measures designed to promote conservation and efficiency."

    The president of the National Defense Council Foundation, Milton Copulos, agreed. "Of course it's going to shift the debate, and I don't think there's much doubt that it will also give an impetus for moving into areas of domestic drilling, whether it's ANWR [the Arctic National Wildlife Refuge], offshore, what have you," he said. The foundation is a think tank for national security issues, specializing in energy concerns. "Senatorial advisers" for the foundation include Republican Sens. Trent Lott (Miss.), Larry Craig (Idaho), Orrin Hatch (Utah) and Don Nickles (Okla.).

    "It is vitally important that we reduce our import dependence," Copulos said. "The real issue becomes how do you accomplish that goal." Diversifying supply is critical and should be achieved through all available avenues, including increasing traditional supplies, taking advantage of technology, encouraging renewable energy and increasing conservation measures. "It also means building pipelines domestically," siting electricity transmission lines, building new power plants and increasing vehicle fuel efficiency, he added.

    Myron Ebell at the Competitive Enterprise Institute said Wednesday that open-ANWR provisions are sure to pass now, and Bob Ebel at the Center for Strategic and International Studies said international crises always spark energy debates with calls to increase supply through production and reduce demand through conservation. As a result, both sides in the ANWR debate have new fuel for the fire.

    ON THE HILL

    Rep. Ed Markey (D-Mass.), a strong opponent of drilling
    in ANWR, responded as Ebel predicted opponents would. "Responding to such terror by allowing oil drilling in the Arctic National Wildlife Refuge would be breathtakingly ineffective and irrelevant," Markey said, adding that improving the fuel economy of our transportation system would be more effective in reducing dependence on foreign oil.

    But strong words will not stop Sen. Frank Murkowski (R-Alaska), the tireless advocate for opening the coastal portion of ANWR to drilling. Murkowski, ranking member on the Senate Energy Committee, and Sen. Rick Santorum (R-Pa.), GOP conference chairman, cautiously demanded floor time for energy last week because of the critical role energy will play in any ensuing actions. Santorum said, "We know we're going to be engaged in that area of the world, so we should bring up the president's energy plan and debate it right away."

    Murkowski added, "Perhaps now we should, after some time, admit who funds terrorism: Mideast oil funds terrorism. The need to reduce our dependence on foreign oil is a legitimate need." Murkowski has linked the energy policy debate with foreign policy and national security for some time, claiming that the high-end estimates of the amount of oil contained in ANWR, 16 billion barrels, would replace imports from Iraq for 30 years.

    Sen. Mary Landrieu (D-La.), who supports drilling in ANWR, said tension in the Middle East makes a domestic supply of oil critical and justifies tapping into whatever supplies necessary. "No resource will be spared to keep the country operating," she said. "Supply of energy is crucial."

    MODERN WARFARE

    Indeed, energy security will be crucial if and when
    America engages in military action. Operating a modern
    war machine requires a lot more oil than it used to, according to Copulos. A contemporary 17,500-soldier U.S. Army armored division uses twice as much oil daily than an entire 200,000-soldier field army did during World War II. The 450,000 barrels of petroleum products consumed daily by the

    582,000 soldiers in the Persian Gulf War was four times
    the daily amount used by the 2 million Allied soldiers
    that liberated Europe from the Nazis. Today it takes eight times as much oil to meet the needs of each soldier than it did during WWII, and the Department of Defense accounts for nearly 80 percent of all U.S. government energy use. Of that total, nearly 75 percent is used for jet fuel.

    On the bright side, an increase in demand for jet fuel
    may make the oil market outlook a bit rosier,
    according to Judith Dwarkin at the Canadian Energy Research Institute. The outlook for next year indicated a weakening oil market, mainly because of a sluggish world economy. An increase in demand could boost the market and the economy, especially since the Organization of Petroleum Exporting Countries has ensured a stable supply, and the world does have some spare production capacity.

    Gareth Crandall, an analyst with the Canadian energy consulting firm of Purvin & Gertz Inc., said increased tensions and military action in the Middle East "could really encourage more development of domestic energy sources, even if they were at higher costs."

    And at the Heritage Foundation, which supports development in ANWR's coastal plain, Charli Coon, senior counsel for environment and energy issues, said that in the wake of Tuesday's tragedy and potential action in the Middle East, "perhaps those that have been opposed will take a second look and reconsider their position on increasing domestic supplies of oil," she said.

    If opponents to drilling choose to "reconsider" their positions, as Coon would have it, perhaps they will fold in a new "ethical dimension," as Patrick Burns at the conservative lobbying group Citizens for a Sound Economy would have it. "Our unwillingness to meet more of our energy needs at home may have helped to strengthen our enemies abroad," Burns said, and the energy policy debate is now an ethical one as well. "Our ever-increasing dependence on foreign sources of energy has afforded some foreign governments undue influence over the U.S. economy," he said, and while the environmental consequences of drilling in sensitive areas of the country are exaggerated, the threat of violence is real.

    Many environmental groups opposed to drilling in ANWR refused to comment on a possible shift in the energy debate after the terrorist attacks, including the Natural Resources Defense Council, Sierra Club and U.S. Public Interest Research Group. At the Alaska Wilderness League, Adam Kolton said repeatedly that it is too soon to tell where energy policy will fit into the congressional agenda, and it would be self-serving and insensitive for anyone to "use this national tragedy to advance an agenda."