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December 2006
Energy Tribune

Dear Nancy: Here's Your Energy To-Do List

Now that the Democrats have won both the House and the Senate, you have a mandate to change direction on Iraq and a number of other fronts. If you are serious about dealing with energy, here's your to-do list:

1. Quit talking about energy independence. It makes you look dumber than John Kerry - and that's hard to do. Face the facts and admit the obvious: America will never be energy independent. In 2000, the U.S. imported less than eight percent of its gasoline needs. This year, it's importing about 13 percent. Like it or not, foreign refineries, just like foreign microchip foundries and foreign shoe factories, are providing commodities that are essential to American consumers.

We need foreign natural gas, too. By 2010, according to the Federal Energy Regulatory Commission, the U.S. will be importing about 10 percent of its daily gas needs in the form of liquefied natural gas (LNG). Much of that gas will come from OPEC countries like Qatar and Nigeria. By 2025, the FERC expects LNG to account for 20 percent of America's daily gas consumption.

The last time the U.S. was independent of energy imports was 1949. Despite these facts, there you were, on November 8, on national television, saying that Americans want "energy independence and all that means." Maybe you're listening to different people, but I never hear any of my friends talking about energy independence. Regardless of who you're listening to, it ain't gonna happen. Ever. Move on.

2. Enforce federal rights to offshore minerals by a) going after the oil companies for royalties they owe the federal treasury, and b) reasserting federal control over deepwater oil and gas.

These issues are winners. First, you establish your populist credentials by going after Big Oil for the royalties they owe the federal treasury. In late October, it was reported that the Minerals Management Service was dropping its claims against Chevron for allegedly underpaying its federal offshore royalties by at least $6 million. That's probably just a drop in the bucket. According to several stories, a number of energy companies have been incorrectly claiming exemptions from federal royalties since 2003. These royalty payments are worth billions of dollars to the federal treasury. Remind your colleagues (and voters) that the federal government owns those offshore minerals and then demand that Big Oil pay up. Rather than fight the bad publicity, they will.

Once that's done, convince your colleagues that it's time to open up America's offshore waters to oil production - and not just those properties that lie off the coasts of Texas and Louisiana. I'm all for federalism, but the states have never had rights to the minerals that lie more than three miles off of their coasts. And yet, over the past few years, Congress has been increasingly Balkanized as several coastal states have worked to restrict offshore drilling.

Don't ignore one of the most important and accessible areas: the eastern Gulf of Mexico. The Minerals Management Service figures it holds 20 trillion cubic feet of gas and 3.6 billion barrels of oil. Those huge resources can easily be accessed thanks to the huge amount of infrastructure in the western Gulf. Getting at those reserves will require more than a little courage on your part. You'll have to remind your colleagues that the U.S. needs more domestic energy production. And that means reminding them that offshore resources belong to taxpayers in all 50 states - not just to those in the coastal states.

3. The fuel tax. If the Democrats are serious about conserving oil and reducing imports, the easiest way is to raise the federal fuel tax by a dime per gallon every year for the next ten years. It won't be politically popular but it's the best solution.

Okay, that's it. Good luck working as the majority party. You're going to need it.

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