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Yesterday, I listened in to a blogger conference call with Peter Robertson, Vice Chairman of Chevron's board. Much of the call naturally centered on gas prices and, of course, the basic issues of supply and demand which drive pump prices. I can't say I agreed with his statements about the need for biofuels (I've been pretty clear on where I stand on that), but Robertson was pretty effective in making a single point: The only way to bring prices down is to increase the supply. And if Congress wants to take action, the best way to do that is to get rid of the myriad regulatory barriers that impede investment.
Right now, the U.S. actually employs far less of its offshore drilling capacity than many other countries – even European countries. Denmark, for example, leases 100% of its offshore capacity; the U.K. uses nearly all. Here in the U.S., on the other hand, regulations prohibit exploration of 85% of the continental outer shelf.
We hear a lot about, say, ANWR, but the regulatory barriers to expanding production even at uncontroversial sites is high; Robertson said that at one location near San Diego, Chevron had been trying to get an expansion permit now for four years.
Meanwhile, every few years or so, Congress tries to impose "windfall profits" taxes on oil companies – taxes that are sure to discourage investment and drive up prices. (These efforts seem to ignore the fact that the total amount of income tax oil companies pay has already shot up more than 600% since 2002, to more than $90 billion a year. )
There's obviously no perfect, easy legislative solution to gas prices. But the sort of obstructionism we see now from energy regulators certainly isn't going to move us in the right direction.