The gas crisis: two approaches

Tuesday, June 24, 2008

I have invited Tennesseans to send me e-mails or to write letters about how high gas prices are affecting their daily lives. I am hearing from a lot of them.

Pat Taylor of Morristown, who is the director of the local Meals on Wheels program, tells me the drivers travel 1,100 miles a day to deliver meals, but food and gasoline prices could force many meal recipients into retirement homes if something is not done. Mileage reimbursements are not sufficiently covering the expenditures of drivers. Dr. Kathryn Stewart, of Winchester, tells me that the school nutrition director has had to raise school lunch prices 50 cents per meal to compensate for the rise in gas and food prices, but they will still lose money this year. She worries about the future of her business there.

Abbie Byrom, of Johnson City -- that is in the eastern part of our State -- is a third-year medical student at East Tennessee State University. She lives on loans through the school system. But, she says, cost-of-living loans do not cover expenses on traveling to all the area hospitals and medical centers. She says most of her fellow students are living by maxing out their credit cards.

So, given the extraordinary impact of $4 a gallon gasoline on the people of Tennessee and the people of this country, they are looking to us in the Senate and the Congress to do something about this.

I noticed there are some interesting new professors of economics on the Democratic side of the aisle who seem to be trying to repeal the law of supply and demand. I have been studying this strange development, and I am trying to trace the source of it.

It would appear that maybe the source of it is the young new chairman of the department of economics on that side of the aisle, because The New York Times reports this morning that Senator Obama opposes drilling in Alaska, and says he is "not a proponent," in his words, of nuclear power, which provides 20 percent of our electricity today and 70 percent of our clean carbon-free electricity. He would consider banning new coal plants without clean coal technology. Coal produces 45 percent of our electricity today.

In 2006, he voted against further exploration in the Gulf of Mexico for oil and gas, in a portion of the Gulf known as Lease 181. More than 70 Senators from both sides of the aisle voted for it, which, so far as I can tell, leaves Senator Obama with not much more than a national windmill policy, as opposed to a national energy policy, for this great United States of America, which consumes every year 25 percent of the energy in the world.

Of course, it leaves these new professors of economics with the demand part of the supply-and-demand equation.

Now, we Republicans also believe in demand. We are for green buildings. We believe most of the new buildings ought to be green buildings. That is probably the easiest way to save electricity. Japan has discovered over the last several years that most of its failure to reach the Kyoto standards it was trying to achieve came from the inefficiency of buildings.

Half of us on the Republican side voted for the fuel efficiency standards in December. That has to do with the demand side of the equation -- using less oil, less energy. The Oak Ridge National Laboratory scientists told me that the single most important thing we could do as a Congress would be to increase the fuel efficiency standards by 40 percent. That means the cars and trucks in America should average 35 miles per gallon by the year 2020. We voted to do that in a bipartisan way here. So we agree on that part of demand as well.

Then we Republicans, as well as many Democrats, I am sure, are ready to give strong support to the idea of plug-in electric cars and trucks.

So there are a number of policy changes we on the Republican side of the aisle are ready to make to lower gas prices and to honor the law of supply and demand.

But the problem is the new professors of economics on that side of the aisle, led by Senator Obama, are trying to take the word "supply" out of the law of supply and demand. If we are going to drive plug-in electric cars and trucks, we are going to need a supply of electricity, so we need to be building five or six nuclear power plants a year. But the professors on that side say they are not proponents of that; they don't think it's part of the solution. Well, it has to be a part of the solution in a country that uses 25 percent of all of the electricity in the world.

We also need to take the ill-advised moratorium off oil shale. We have plenty of oil shale in the ground and new environmentally sound ways to get it out of the ground. That is a part of supply as well. Most of that is in our Western states.

We also need to give other states the opportunity to do what Texas, Louisiana, Alabama and Mississippi already do, which is to explore 50 miles offshore for oil and gas. We have plenty of that.

We could be producing an extra million barrels a day of oil and gas from offshore exploration, and by adding to the supply we'd be reducing the price of gasoline and bringing it down below $4. We need to change the law and do that. Senator McCain says we need to do it.

I believe, as do many others on our side of the aisle, that we should also be exploring in Alaska. Jay Leno said the other night that the Democrats objected to that because they said it wouldn't produce any oil for 10 years. Well, as Jay Leno said, that is what the Democrats said 10 years ago.

Presidents and senators are supposed to look ahead, to look down the road. If we can add a million barrels of oil a day from Alaska; if we can add a million barrels of oil a day from offshore exploration; if we can add 2 million barrels of oil a day from oil shale, which we can do; if we can build five or six nuclear plants a year and help us create carbon-free, clean energy so we can electrify our cars and trucks and reduce our demand for oil, then we will have lower gas prices because we will be honoring the immutable law of supply and demand which says find more and use less.

The difference between us is that on this side of the aisle we believe in the law of supply and demand: find more and use less. On that side of the aisle, they seem to believe in a different economics, which is use less. They want to repeal supply and only insist on demand. So there is a fundamental difference.

I am glad Senator McCain must have gone to a different college of economics than the one I think I sense on the other side of the aisle. He has suggested that we do both, that we increase our supply and we reduce our demand by finding more oil and using less oil. He has specifically supported offshore drilling if states want to do that. He has specifically said we should lift the moratorium on oil shale and proceed in an environmentally responsible way to explore for that. He has said as well that we need to move ahead with five or six nuclear power plants a year, and he has been a strong advocate for green buildings, for fuel efficiency, and for plug-in electric vehicles.

At the same time, he has said he believes we need to take steps to deal with climate change, emphasizing the importance of nuclear power because that provides 20 percent of all of our electricity but 70 percent of our carbon-free power.

So I look forward to the debate over the next few months. It is beginning to come into shape. Two different views of economics: an attractive young head of the department from that side of the aisle who wants to change the law of supply and demand to only include demand, which apparently would leave us with a national windmill policy; or a more grizzled Senator who apparently went to a different college of economics who believes in the old-fashioned law of supply and demand and would like to focus on both.

This will be a debate worthy of the Senate. It will be important to all of those Tennesseans who are writing me wanting that $4 per gallon price to go down. My recommendation to them is to vote for senators and vote for presidents who will both increase our supply and reduce our demand -- who will find more, use less, and not try to invent a new theory of economics which will leave us with our lights off and our gas prices high.

Thank you, Mr. President. I yield the floor.

U.S. Sen. Lamar Alexander delivered the preceding remarks Wednesday on the floor of the U.S. Senate.