Opinion: Domestic Energy Production Besieged

By Richard Moskowitz

Vice President and Regulatory Affairs Counsel

American Trucking Associations

This Opinion piece appears in the May 16 print edition of Transport Topics. Click here to subscribe today.

Recent events in the Middle East have refocused the world’s attention on petroleum markets and the United States’ dependence on foreign sources of oil. As the price of a barrel of oil stands in excess of $100, we should remember how dependent the trucking industry is on petroleum-derived diesel fuel.

The trucking industry annually consumes 35 billion gallons of diesel to deliver life’s essentials. Food, clothing, medicine, fuel and virtually all consumer goods are delivered to retail stores by trucks. Each penny increase in the price of diesel fuel costs the trucking industry more than $356 million annually.

Against this backdrop, American Trucking Associations has been advocating for a comprehensive domestic energy policy. We recognize that there is no single solution to high oil prices. We are not going to be able to conserve our way to energy independence, substitute renewable fuels or simply drill our way out of this crisis. We must adopt an “all-of-the-above” approach.

Trucking companies recognize the importance of fuel conservation to their bottom line and have embraced slower speeds, route optimization, driver incentive programs, anti-idling devices, and other technologies to reduce their fuel bills. Earlier this year, the federal government, with ATA’s support, proposed the first-ever fuel efficiency standards for new heavy trucks.

The government also has created a market for renewable fuels. These government mandates to use alternative fuels are expensive and create challenges for consumers; however, alternative fuels represent an important part of the “all-of-the-above” approach to energy policy, and we should support efforts to overcome these challenges and ensure that renewable fuels are affordable and accessible for consumers.

While conservation and alternative fuels are two legs of a three-legged stool, our government seems to have turned its back on the third leg of the stool and has failed to aggressively develop our domestic petroleum resources. In fact, domestic petroleum production in the Gulf of Mexico and Alaska is under siege. Even natural gas production is coming under attack by environmental groups.

The trucking industry and American consumers need more from our government. We need our government to unlock the vast oil resources we have here at home to meet our need for fuel until alternative energy sources are ready for prime time.

While we as a nation work on these new energy sources, the trucking industry will continue to depend on a plentiful supply of diesel fuel for many years to come.

Using the recent oil spill in the Gulf of Mexico as a catalyst, environmentalists have pushed hard to advance their anti-fossil-fuel agenda. This pressure has led the Obama administration to close off vast parts of our country to oil drilling and development.

Taking this future supply off the table affects the commodity markets and has helped push oil prices higher, even though no shortages exist today. However, high oil prices take a toll on consumers and continue to threaten our fragile economic recovery.

Following the accident in the Gulf of Mexico, the administration properly focused attention on regulations to ensure that the petroleum industry engages in safe and environmentally responsible drilling. Unfortunately, the Obama administration went far beyond the revision of safety regulations and embarked on a concerted effort to reduce U.S. offshore oil production. This overreach included a moratorium on drilling, delayed decisions on drilling permits and the exclusion of vast areas of the outer continental shelf from the government-required environmental studies that must be completed before future drilling operations can begin.

The oil industry assumed financial responsibility for the spill in the Gulf of Mexico, has taken steps to prevent future disasters and has developed a robust spill response and containment strategy. With these measures in place, it is now incumbent on the administration to work to increase the domestic supply of oil and gas.

Here are five simple steps the government can take to boost U.S. energy production and help insulate our economy from rapid spikes in gasoline and diesel prices:

1. Resume issuing permits at an efficient rate for both shallow and deep-water drilling in the Gulf of Mexico.

2. Pursue environmental impact studies that consider all our offshore resources, including off the Atlantic Coast and in the eastern portion of the Gulf of Mexico.

3. Develop our vast oil-shale resources in western states such as Colorado, Utah and Wyoming.

4. Invest in coal-to-liquid and gas-to-liquid technologies to convert our country’s vast coal and natural gas reserves into diesel fuel.

5. Offer incentives for the use of natural gas. Right now, natural gas technology is a promising alternative fuel for some trucking companies; however, government incentives to purchase natural-gas-powered trucks and build out refueling stations are a necessary prerequisite to the adoption of this alternative technology.

As we begin a transition to alternatives, we must not forget that the trucking industry and our economy will continue to depend on diesel fuel for the foreseeable future. The failure to boost domestic fossil-fuel supplies during this transition will simply translate into increased dependence on foreign sources of oil, damaging fuel-price spikes and a continuing threat to our economy and national security.

American Trucking Associations is a national trade federation for the trucking industry with headquarters in Arlington, Va., and affiliated associations in every state. ATA owns Transport Topics Publishing Group.