North Carolina is among three states whose governors have said they support the economic slowdown caused by rising gas prices. Average gas prices are now hovering around $4.00/gallon nationally and will likely continue to increase with the rising global demand for oil.
While a switch to renewable energy sources has been touted by some as the way to control gas prices, there has been much confusion over this issue. For most applications, “renewable” sources such as wind or solar power can do nothing to replace the need for petroleum. Petroleum is a fuel – not an electricity source. It can only be replaced by other fuels. However, biofuel technologies are still significantly more expensive (and less efficient) than gasoline.
Hence, the only realistic solution to lowering gas prices is to increase the supply. This would mean opening up the United States’ vast oil resources to production. (This would have the added benefit of reducing American dependence on oil imports from politically volatile regions.)
The US Department of the Interior’s Bureau of Land Management recently found that only 8 percent of onshore oil is open to drilling under normal leasing terms while 31 billion barrels of onshore oil (62 percent) are closed to drilling altogether. Meanwhile, the Minerals Management Service has estimated that there are 115.43 billion barrels of oil on the Outer Continental Shelves of the United States. A federal moratorium on offshore drilling prevents these resources from being developed. RAND further estimates that there are 800 billion barrels of recoverable oil (using current technology) in the shale of the Green River Formation in the Western United States.
There has been recent discussion among some policymakers of ending the federal moratorium on offshore drilling and allowing states to decide whether they will permit offshore drilling. However, Governors Easley (NC), Schwarzenegger (CA), and Corzine (NJ) have already voiced opposition to lower gas prices (and the ensuing increase in real wealth).
Governor Corzine cites New Jersey’s need to protect its tourism industry from the view of drilling platforms which would be so far out that they would not be visible. He says, “Our $35 billion economy is driven by tourism and the use of the shore.” This is from the guy who supports making New Jersey’s biggest tourist destination, Atlantic City, look like this.
Governor Easley cited similar reasons saying, “It’s too much squeeze for the juice when you look at real estate on the coast, recreational fishing and tourism that could be adversely affected by some problem.” Yet, Governor Easley signed a Renewable Energy and Energy Efficiency Portfolio Standard into law last year. This law will almost certainly do that exact same thing to North Carolina’s coastline.
Apparently, noisy 500-foot wind turbines that produce no useful electricity are better for tourism than drilling platforms that would be miles off of the coast. Apparently, raising electricity prices in lieu of lowering gas prices will be better for the North Carolina economy. That’s what ASU’s recent modeling of climate change legislation portends to be true.
In reality, however, the economic well-being of North Carolina and every other state is dependent on access to reliable and inexpensive energy sources. A move towards expensive energy will cause real people in North Carolina to lose real jobs. Expanding the supply of relatively inexpensive energy – thereby lowering its cost – would be a boon to North Carolina. I wonder where the Governor’s true allegiances lie.
Cross-posted at http://www.environmentnc.com.
