John Boehner, April 8, 2005

Whether it’s our heating and electric bills, or the sign outside a local gas station, there are everyday reminders that our modern civilization and all of its perks are rooted in reliable access to affordable energy. Keeping its price low is essential in maintaining and improving our standard of living -- but it isn’t as simple as many people think.

Because I receive a number of letters and calls daily on high prices at the pump, let’s use gasoline as an example. The Department of Energy has said it expects the price of unleaded regular gasoline to hit a peak national average of $2.35 a gallon some time soon. That’s about 38 cents more a gallon this summer than last, or about $180 more a year for the average driver.

Even with the increase in price, we continue to consume an average of 9 million barrels of gasoline per day. And demand is up about 1.8 percent over this time last year. This might not seem like much, but for the moment the only place to get more is from abroad. Our demand for imported gasoline now exceeds one million barrels per day, and we aren’t the only ones after it. The quantity demanded by Europe, and by large developing countries like China and India, is also on the rise.

Our problem then is three-fold. First, state and federal regulations for "environmentally acceptable" fuel have become more stringent. This means that it’s becoming more complex to make gasoline the way we want it.

Second, the infrastructure in petroleum exporting countries (like those in the Middle East) isn’t increasing at the same rate as demand. Those who export crude oil produce the same amount while the rest of the world demands more and more.

And finally, similar environmental regulations have made it difficult for new oil refineries to be built. In fact, there have been no new U.S. refineries built in the last 30 years, and many that had been operating have since shut down. In 1982, there were 324 refineries producing 18.62 million barrels of oil per day. In 2002, there were 153 refineries producing 16.78 million barrels per day. So even if we could buy more crude oil from abroad, we currently lack the capacity for refining enough to keep up with demand.

In other words, we’re basically competing with other (larger) countries from a pool of oil that isn’t getting any bigger. And since not all refiners around the world can make gasoline that meets our requirements, we’re shopping the world markets for an even smaller portion of the total supply.

All of this -- strict fuel standards, higher demand, static supply, and limited capacity -- leads to one thing nobody likes, whether you’re filling up your car or heating your home: sky high energy prices.

These high fuel prices have a broad impact on the economy. When shipping and transportation costs increase so too do the costs of the goods and services we buy daily. And when the cost of doing business goes up it’s harder for companies to hire more workers. The higher cost of crude oil used in the production of electricity hikes up our energy bills. And so on.

So what can the government do to help? Just recently the U.S. Senate voted to support oil drilling in a small part of the Alaska National Wildlife Refuge (ANWR).

Of course, if we expect to keep energy prices reasonable, much more needs to be done. The House of Representatives needs to pass an energy bill that increases both domestic oil production and refinery construction. We need to strengthen our energy infrastructure, focusing on market solutions rather than government mandates. We have to improve conservation, and work to promote the use of a mixture of fuel resources, including oil, natural gas, nuclear power, and other renewable energy sources.

Some politicians will use these high prices to grandstand and call for MORE federal regulations and intervention. None of their words will change the fact that our problems stem from our dependence on foreign sources of oil, and until we break free, our economy and our individual pocketbooks will suffer. The solutions are there; all we need is the political will to act on them.

Congressman John Boehner, a Republican, represents Ohio's Eighth Congressional District, which includes Miami, Butler, Preble, Darke, and Mercer Counties.