Kerry and energy policy

John Kerry has finally started to unveil his views on energy. He just yesterday pronounced that we should stop filling up our Strategic Petroleum Reserve (SPR), and instead feed crude oil into the market so gasoline prices would moderate. Since he was on a run, Senator Kerry also mentioned that President Bush doesn't seem to care about the issues at the gasoline pump and is doing nothing. In a separate comment, Senator Kerry spoke out against the drilling offshore Florida.

Taking crude oil from the SPR is certainly tempting. We tried this once before during the Clinton administration, and gasoline prices abated for a short time. It has been calculated that dumping oil into the market might lower gasoline prices a few cents per gallon. This would only be a temporary lowering of prices, and would not solve the underlying problems causing energy prices to increase. However, there is at least some public sentiment supporting anything which would help lower gasoline prices. Even Jerry Taylor from the Cato Institute claimed on Fox News that Kerry had a point because it would be hard to imagine a scenario that would create a crisis meriting the use of our Strategic Petroleum Reserves.

The Bush Administration is now on track to expand the SPR to one billion barrels and is still buying crude oil to increase our stockpile from the current 600 million—plus barrels. The target of one billion barrels is part of the proposed Energy Policy now before Congress.

Just a short time ago, the world took notice that terrorists attacked a facility in the Yanbu area of Saudi Arabia. This facility, on the western coast near the Red Sea, was the first attack on Saudi petroleum facilities ever, and started many worrying about security in the Eastern Province, home of the world's most productive oilfields. All the major oil fields and oil processing facilities are in the Eastern Province.

The president of Saudi Aramco had to issue a statement informing the media that their facilities were well—guarded and the oil supply was safe. However, this issue revealed the nightmare scenario that al—Qaeda, or some other terrorist organization, might conceivably strike a blow at a key oil facility and create a major disruption to global oil supply.  Since the US imports over 3 million barrels daily from Saudi Arabia, this is a scenario that would justify using the SPR for its intended purpose of protecting the US from a major disruption in oil supply. Also, we have to note that adding crude at $35 per barrel was not so stupid when oil is now closer to $40 per barrel.

In return for saving a few pennies a gallon of gasoline for a short period of time, Senator Kerry is evidently willing to cash—in an insurance policy which has been protecting America from serious harm to our economy, and potentially to our military capability. The SPR is called 'strategic' precisely because it serves the function of guaranteeing certain basic capacities in the event of a readily foreseeable attack disrupting world flows of oil.

The issue of President Bush 'not caring' about oil prices and our energy supply really tugs at my heart. Of course, Senator Kerry did not mention that a new Energy Policy has been DOA in Congress since 2002, after being crafted in the early days of the Bush Administration. The latest issue obstructing it, pushed by Tom Daschle, seems to be over the use of the additive ethanol. Too bad for the corn farmers of South Dakota, but this bill is urgent, and has already been pending for almost two years while we wonder what to do about high gasoline prices.

Finally it is worth noting that Senator Kerry objects to the drilling offshore Florida, but no one seems to be able to find the drilling rig. Did he misspeak again or is the Kerry campaign finally found a real issue? With the economy now roaring and clearly on the mend, maybe the focus of the Kerry Campaign will be on the energy crisis and maybe we can see some real progress towards energy independence. Or maybe we will just hear ad hoc positions taken because they make for good sound bytes.

Dan Berard is our energy affairs correspondent