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Press Release

    Kerry’s Energy Agenda

    08/13/2004

    This article also appeared at National Review Online on August 12, 2004.

    Senator John Kerry has said that he wants to bring down energy prices for families and businesses, and make America less dependent on foreign sources of energy. But Kerry's Senate record contradicts his campaign rhetoric.

    Over the last three years, Kerry has played an active role in blocking the Bush administration's comprehensive energy bill, which aims to modernize conservation, increase our domestic energy supplies (including renewable energy), and increase our energy security. Although the president's energy bill passed the House of Representatives with the support of 46 Democrats, Kerry, his running mate, and the Democratic leadership have repeatedly used procedural hurdles to stymie the bill in the Senate.

    Seeking to capitalize on the public's concern over rising gasoline prices (and to perhaps divert attention from Kerry's past support of a 50-cent hike in the federal gasoline tax), the Kerry campaign recently announced a new “energy independence” plan. To promote the "energy of the future," Kerry wants to mandate that 20 percent of electricity come from renewable energy sources — such as wind, solar, and biomass — by 2020, up from the current 2.2 percent. Given current trends, renewable energy will make up only 3.7 percent of electricity generation by 2025, according to the Energy Information Agency. Implementing Kerry's mandate would yield a significant increase in electricity prices for consumers, because renewable energy sources are 3 to 15 times more costly than conventional fossil-fuel-generated power.

    And despite his campaign rhetoric, Kerry has refused to support even the modest renewable-energy provisions in the administration's energy plan, including an extension of the production-tax credit for wind energy, and a renewable-fuels program to use five billion gallons of ethanol in gasoline by 2012.

    The Bush administration's energy legislation also calls for modernizing conservation: by applying new technology to increase energy efficiency by creating an income-tax credit for the purchase of hybrid and fuel-cell vehicles; providing a tax incentive to promote investment in energy-efficient "combined heat and power" generators; and promoting hydrogen technologies. Again, Kerry opposed the energy bill that included these pro-conservation and pro-energy-efficiency measures.

    In reality, promoting conservation and funding renewable energy are only part of the solution. To achieve energy independence and ease energy prices, we must increase the amount of oil and natural gas produced in the United States. This effort has also met fierce political opposition from Kerry and others. America has vast reserves of untapped oil in Alaska, particularly in a remote section of the Arctic National Wildlife Refuge (ANWR). Geologists and energy experts have studied the ANWR region for more than 30 years, and a small section of this oil-rich area could be developed in a way that ensures protection of the environment.

    Congress debated whether to open ANWR to exploration in 1988 and 1989, when U.S. oil imports first exceeded 50 percent of our consumption. Today we import more than 55 percent of our oil, and the percentage is steadily on the rise. The ANWR proposal was considered again in 1995, but it was vetoed by President Clinton.

    Had the plan gone forward back then, about one million barrels of additional domestic oil would be flowing through the Alaska pipeline today — an amount equal to 12 percent of our daily imports. The U.S. Geological Survey estimates that ANWR could produce as much as 16 billion barrels of recoverable oil — enough to replace imported oil from Saudi Arabia for 20 years. But some in Congress are still opposed to developing ANWR's oil resources.

    Citing America's growing dependence on foreign oil, the Bush administration's National Energy Policy warned of price spikes if demand for oil outpaced production, or if refinery capacity became inadequate — both of which have now happened. The National Energy Policy noted that the oil-refining industry has been running at close to 100 percent of its capacity, with no new refineries being built to meet America's increasing need for gasoline. It also noted that the nation's domestic oil production is declining, leading to ever-increasing dependence on imports.

    Unless we expand our refining capacity, the tight gasoline situation is likely to continue. Throughout the 1990s, the refining industry suffered from poor profitability and low rates of return on investment, which discouraged the building of new refineries and contributed to the closure of 50 U.S. refineries. In addition, no new U.S. refineries have been built for nearly three decades.

    To compensate for the lack of refining infrastructure, the United States has been relying more on imported gasoline. But imports are not meeting the increased demand either, because most foreign refineries are not equipped to produce the specific gasoline formulations required by U.S. environmental regulations. The result has been declining inventories of gasoline, which, in the face of rapid demand growth, has only added to the problem.

    To improve the investment climate for additional refining capacity, President Bush proposed reforms to the "New Source Review" (NSR) program making refineries less difficult to license and build, and providing more regulatory certainty for investors in expensive refinery projects. John Kerry voted against bipartisan NSR legislation and has joined Senator Hillary Clinton's court challenge of those reforms.

    The sustained rise in oil prices has clearly weakened the economic recovery, as evidenced by the lower-than-expected 32,000 jobs created in July. While the Bush administration has implemented many of the initiatives called for in the National Energy Policy, many if its other recommendations require changing current laws or enacting new ones — which can only be done by Congress.

    President Bush should call on Congress to vote once again on the long-overdue comprehensive energy bill — and give Senators Kerry and Edwards another chance to reduce energy prices for consumers, strengthen our economy, and make America less dependent on foreign sources of energy.

    Cesar Conda is a principal of Navigators LLC, a Washington-based public-affairs firm, and a senior fellow of FreedomWorks.