Paul Sullivan

What should U.S. policy be on exporting fossil fuels such as natural gas, coal, and refined oil products?

Being an economist I find this question rather bemusing.

Why should we even think about controlling exports? It is an absurdity. Oil, gas and coal are not high-tech weapons or computer systems that could be used against us. There is no intellectual property content that could be pirated in a barrel of crude oil. We are also not in times of shortage or access stress to oil, gas and coal.

Our trade deficit is sometimes as much as half due to imports of oil. Please see the excellent report out of CRS called “U.S. Trade Deficit and the Impact of Changing Oil Prices” at: http://www.fas.org/sgp/crs/misc/RS22204.pdf/ If anyone doubts the importance of getting our oil trade deficit a bit more even than we can talk a bit about why this leaves us more vulnerable than we need to be given the resources we now know we have.

Why not try to even this drain on our wealth by not only producing more of it in the country and exporting it to countries wi

Who--or what--is to blame for high gasoline prices?

The premise that we have high gasoline prices is wrong. If we look worldwide we have some of the lowest gasoline prices of an industrialized and developed country. The price of gasoline in Istanbul is close to $10 per gallon. The Price for gasoline in Oslo is well over $9 per gallon. The prices for gasoline in Amsterdam, London, Rome, Monte Carlo, Copenhagen, Athens, Stockholm, and Brussels are all over $8 per gallon. The price of gasoline in Esmara, Eritrea is over $9.50 per gallon.

The price of gasoline at the stations near to where I live is around $4 per gallon. These are about the prices I faced in April 2011 during the depths of the Libya crisis when such questions were asked once again. Every time there is a rise in the price of gasoline the media goes a bit off the wire without much real analysis or historical memory. To get a better view of the recent history of gasoline prices go to: http://www.eia.gov/petroleum/gasdiesel/. To get a good sense

What factors should lawmakers consider in granting tax incentives to various energy sources?

There should be serious analyses of the potential first, second and third order effects of any subsidies to any energy source. Often the analyses start and stop at simple static, one-dimensional analyses presented by lobbyists and others who are trotted before Congress. Often subsidy issues are, like this overall question, focusing on one subsidy or other separately.

Proper analyses of energy subsidies will take into account the overall energy system and the distortions that will be created by increasing or decreasing present subsidies or creating new ones. Most people when they think of subsidies in economic terms they think in terms of shifting supply and demand curves and that ends it. However, the real economics of subsidies is far more complex than the Economics 101 versions that pass for full studies.

Subsidies have dynamic qualities and involve sometimes very complex feedback mechanisms. Take for example the pet subsidy idea now being bandied about in W

We really do not have high gasoline prices. In Istanbul, the price of gasoline is about $9.60 s per gallon. Here in Washington it is about $3.80 dollars. In Asmara, Eritrea, gasoline is over $9.50 per gallon. In Amsterdam, Brussels, Copenhagen, Oslo, Athens, Rome, and Tokyo it is over $8 per gallon.

Our gasoline tax is about 12 percent of our overall gas price. In Istanbul, the gasoline tax is 67 percent of the price of the gasoline. In the EU, the government takes in more as taxes when selling refined oil products than OPEC makes from selling the oil to the EU.

So, shall we stop kidding ourselves about our “high” gasoline taxes? Our gasoline prices comparatively low relative to almost every developed country. The only one that gets even close is Canada, our great friends to the north.

Our natural gas prices are much lower per MMBTU than in the EU and through most of developed Asia. We are experiencing a natural gas and oil revolution that could bring us as close to energy independence that any of us could ever believe would ever happen in only tw

Q: What are the "white spaces" where government investments in R&D can have the most impact?

A: These would be the areas having medium to long-term promise. These would be projects with risks and uncertainties that are likely too high for the private sector to take on. These would be the sorts of potential inventions and innovations that could focus on the applications of basic sciences -- or just a step or a few steps above basic sciences—that could be driven into technological and other applications in industry and so forth with the right leadership and creative thinking. One obvious example of this would be the many applications of nanotechnology to alternative energies and to energy efficiency applications. The nanotubes concept could be a real winner, but may take a long time to perfect and with great risk. Another possible would be the small-sized, but big ideas that could be applied to transportation engineering. One of the biggest sources of energy inefficiency is the way we move things and people. Clearly, the technologies w

As usual, I am speaking on my own:

The XL pipeline decision was driven by politics, and not very good politics at that. So a few environmental extremists drummed up some emotional arguments based on mostly data points that lack rigorous study. If the issue was the increase in CO2 produced by the oil sands, indeed that is the case: maybe another 15 percent more CO2 would be produced during the life cycle of the oil sands from extraction to the final burning of the petrol by the transportation vehicles or other end uses. So, if the worry were that increased CO2 that might add to global warming then how would stopping the pipeline change this? The oil may now most likely go to a country the will burn the refined products from this oil sands in a less efficient and less regulated way than in the US: China. In addition, China will move a lot faster in getting funding to help build a pipeline going across the northern route of Canada to a port or ports on Canada’s west coast. The Chinese and others have already invested heavily in the tar sands fields and in tar sands prod

Where is natural gas going?

That is a very wide ranging question at present and will entail wide ranging answers in the short, medium and long runs.

As an economist I see very large differences between the costs of gas in East Asia, one of the fastest growing places on the planet and in the US. There are also large differences in the price of gas here and in the EU, but the EU is not exactly growing quickly and it is not expected to for some years now.

We have massive reserves of shale gas, coal bed methane gas, and other unconventional gas reserves that are becoming profitable or are now profitable to explore and produce.

We would become a major exporter of natural gas to the world. The market I would focus on is East Asia. Its demand for gas is increasing rapidly. Its needs for gas may be increasing for “unusual reasons” as well, such as the reactions that may occur toward nuclear plants in Japan in the future. The only real alternative for Japan for electricity production on a very large scale and for base-load generation in the m

There is a great deal of short-term, medium-term and long-term uncertainty in oil markets.

The short -term uncertainty includes the increasing tensions with Iran, but also includes uncertainties in Nigeria, Iraq, Kazakhstan, and more. Iran is a focus of Washington these days, but there is a lot more happening out there.

For the medium term risks, one could focus on a lot of uncertainty in certain national, regional and global economies, which could affect oil prices. The most obvious economic uncertainty is with the EU. They need to pay off hundreds of billions in national debts in the coming weeks. If they do not get this right then not only the EU economies but also the global economy is at some degree of greater risk.

Then there is China. There is a housing bubble in process. The Chinese government is working hard to keep the situation in control, but as we know here in the US, housing bubbles can get a bit out of control. If either its own internal problems, oil shocks from the Gulf or West Africa whacks the Chinese economy, etc. then most of Asia an

What factors should the administration consider when deciding whether to give Shell final approval to search for oil in the Arctic?

Other than the obvious overall economic viability questions of projects in such severe environments the administration should also clearly consider the environmental and community impacts of the projects that might happen.

The environmental impact statement (EIS) from the State Department for the TransCanada Keystone XL Pipeline could be seen as a blueprint and a model for such EISs. This covered just about every possible outcome and risk. This EIS is an amazing set of documents.

However, I wonder how many of those in the debate have actually looked at the EIS from State? Probably very few given the arguments that they are using based on little data and a lot of emotion.

Moving into new and difficult environments for exploration and production should really require careful analyses of all angles of the environmental, economic and other aspects of what could happen.

The administration should ga

The best role for government in energy production may be in the R&D side in the national labs, universities, and so forth. But the choice of what to invest in should be done via a double blind review system by real experts in the relevant fields. The government might also think about developing energy research and application prizes, but these should also be as independent of the usual sordidness of real political economy as possible.

Most large government programs to subsidize new technologies for energy or whatever have the lobbyists hunting about for the big game of government largess. Solyndra was no different. They were in lobby overdrive and that should have been a give-away that something was not right in Solyndraville. It seems that they were losing money and that some people were aware of the weaknesses of the company even as more government money was sent their way. As an economist this makes little sense, especially given that prices for flat panels and other types of solar technologies were declining worldwide. Also, this makes little sense given the falli

What are Washington's biggest obstacles in moving the country toward a green economy?

Answer:

Washington is. The political elite as a whole is dysfunctional even if there are some very good people working hard to improve things. In this political environment, especially heading toward what could be the most contentious, emotional-laden, and, frankly, least thoughtful election cycle in a very long time it is quite doubtful that much will be done to help develop green energy. With the Tea Party and other groups within the political elite who think green energy is some sort of plot on the part of the dreaded scientists, academics and other assorted people who rely on the dreaded data and evidence then don’t expect much. They know how to throw the wrenches into the political works. So be it. The Chinese, the Indians, even the economically challenged Europeans are way ahead of us on these changes. Qatar and UAE are miles and miles ahead of us on these issues in many ways even though they are hydrocarbon states. At least their leadership have visions on these iss

That this Congress is dysfunctional is nothing new, but over the last week or so they may have proven themselves to be the most dysfunctional in the history of the country.

That certain groups within Congress would propose energy and environment legislation that many experts in this group would find baffling is hardly new. I really like the comment by Alan Rawsome that there will be an environment deficit to face as well if we don’t get our environmental policies right. That is right on target. I may not agree with him on other things, but this is clear. The subsidiary question is, of course, what is the right set of environmental legislation to develop? Also, even if they are developed will they pass?

There is so much dissent and so little compromise, vision, and real leadership that, frankly, I, and I am sure many others, are wondering how bad this is really going to get. It is appalling to think that this may not be the low point.

Are we are asking too much to have an argument over EPA and other legislation when we are in the midst of

I testified before the House Foreign Affairs Committee, Western Hemisphere Subcommittee, on March 31, 2011 on this: http://foreignaffairs.house.gov/112/sul033111.pdf

1. There is no basis to the argument that gasoline prices will go up due to the pipeline. Increrasing supply does not increase price.

2. There is no basis to the argument that this oil will go to refineries owned by Hugo Chavez and the Saudis in Texas. There are only two of these and one joint venture. A massive proportion of the refinery capacity in Texas is owned by US companies, such as Exxon, Conoco, Veloro etc. The refinery capacity of the "Chavez refineries" is tiny.

3. There is no basis to the argument that most of this oil would be refined and sent out of the country. About 90-95 percent would stay in the US, depending on the markets available outside, relative prices of the gas in different markets, etc. The US is the largest market for gasoline in the world. This oil sent to upgraed refineries in Texas, etc. would

Good evening Governor Granholm,

I will be brief and to the point this evening. We do not need a charging infrastructure. We need to get beyond that sort of linear thinking. What we need are charging networks, such as those developing through something like what “Better Place” is doing: http://www.betterplace.com/the-solution-switch-stations

We don’t need charging stations all over the place. Charging takes a long time. We need battery switching networks. These could be rather easily retrofitted into even gas stations, in restaurant islands on long distance highways, and the like.

Networks and systems within systems are the keys, not static stations.

You ask want is realistic. I remember watching the moon landing with my brothers and the neighborhood children on the roof of our cottage on an island off of New England when I was very young. (Who could forget that?) Now, who could have guessed in 1945 or even 1955 that this would have happened.

What we m

Here is an XCEL file of gasoline prices (including taxes, which are a lot higher in the EU) for Belgium, France, Germany, Italy, The Netherlands, the UK and the U.S.:” http://www.eia.doe.gov/emeu/international/gas1.xls .

As you can see our gasoline prices are certainly not high relative to these countries’ gas prices.

This gives you a sense of what determines gasoline prices in the US: http://www.eia.doe.gov/oog/info/gdu/gasdiesel.asp.

Please note the graphics of the gas pump showing how much of the price of gasoline is determined by the price of crude oil, refining, distribution, marketing and taxes. Our gasoline taxes are much smaller than those in the EU, for example.

If we were to look at the prices of gasoline in the EU without taxes we would see things are not so different from here recently: http://www.eia.gov/emeu/international/Gas0.xls

Good afternoon Governor Granholm,

I will take each paragraph separately and then make some general recommendations at the end

Statement:

With gasoline prices high, federal policymakers are actively debating how to protect consumers from climbing costs and reduce our dependence on foreign oil. The challenge is significant, as transportation accounts for 70 percent of the nation's petroleum use.

Reply:

Our gasoline prices are quite low compared with of the rest of the developed world, especially in the OECD. Federal policy makers can debate all they want, but oil prices are often determined by global events that are well beyond the control of Washington policy makers.

Transportation is indeed the key to reducing our dependence on oil entirely, and not just on imported oil, which mostly comes from the Western Hemisphere and our largest source of imported oil, is Canada. I want to clarify these two points because most people think that most of our imported oil comes from the Middle Eas

There are numerous economic, political, natural, geological, scientific, logistical and psychological factors that can be part of the explanation of oil prices. Many of these can be found in my recent article on oil prices and Libya in The National Review. http://www.tnr.com/article/world/88014/libya-saudi-arabia-opec-oil-gas-prices-summe.

The booming economies of East Asia, especially China, are driving a large part of demand increases worldwide for various types of oil. The recent disasters in Japan tend to mitigate that rising demand. But when Japan starts to rebuild oil demand could increase sharply -- and about the same time period as the driving season in the US. The sharp increase in the price of oil and gas has also cut into the demand for them in the short run. If these prices continue to rise then the long run demands could decline permanently. India's rise is also part of the increase in oil demand, but also the better economies in Latin America and the Middle East are driving increased oil demand. Russia has also had an increase in demand over the last few

Good Evening Senator Carper,

First off our largest source of imported oil is Canada. The last time I checked we and the Canadians were on good terms. We also import a lot from Mexico, although in declining amounts. I suppose you mean that we import a lot from the Persian Gulf, where "they don't like us". It is not that they don't like us they really don't like our foreign policies – and even that is not universal. I suggest you visit this part of the world and meet some of the folks.

I have traveled a lot in the Arab world and have never felt threatened or personally disliked for being an American. That is travel of nearly 20 years in the region. I suppose that says something. I have also found the people in that region to be quite hospitable toward guests.

They also do not dislike our freedoms. They want freedoms, and to be treated with dignity and respect, as recent events show. People are people and we need to do a lot on our end to improve our relations with the parts of the world where we may trade goods a lot, but do not trade idea

There will be no panacea for the energy problems of the United States. There will be no silver bullets. There will discoveries, inventions, investments, creative thinking, and strategic thinking.

We are fortunate to have such large reserves of shale gas, tight gas, and other unconventional gas resources in the US. We are also fortunate to have very good neighbors like Canada who have helped resolve some of the energy problems of some of our regions with gas, but more importantly with oil. We should also shout a big "Thank You" and "Merci Beaucoup" to the Canadians. They are our closest allies, biggest trading partners, most important energy sources from the outside, and just a fine bunch of people who work very well with us. Now if only Americans knew more about Canada and Canadians things might improve even more so.

Coming back to our own unconventional gas reserves, which may be called conventional in the coming decades, we need to carefully consider out how to use these and how to apply them for the overall betterment of the people of the c

The reversal will cause many oil and gas companies to think twice about where they might explore and drill for oil. There are many other places in the world they could do this where policies are more stable. Unstable policy decisions are not good for business. The oil industry is a business.

The Gulf oil spill was a disaster, but it is not representative of the industry’s unusually good track record on oil spills and other problems in the past, and especially since the 1990s. The facts do not track with the usual media hype about the industry. However, it takes just one of two huge errors, like the Gulf spill to overshadow the importance of offshore oil drilling in our overall energy security situation.

The greatest source for oil spilling into the ocean from human sources in the US has historically been from runoff from roadways, cities, and the like, not from oil and gas platforms or from oil tankers, especially since the 1990s. The largest sources of oil spillage into the ocean have often been natural oil seepages. There are volcanoes of asphalt from s

Cancun is a rather nice place to take a vacation, much like reality is taking a vacation as millions are spent in ineffective talk amongst the international bureaucrats and professional environmentalists, many of whom left their ideals way behind as they became "sophisticated" lobbyists, even though they may not even realize it.

In the main: the diplomats are there to represent their talking points; the businesses and lobbyists are there to represent the bottom line; and the academics are there to write the next required reading for their classes. The politicians are there to convince their publics that they "really care about the planet" as they do focus group meetings to see what their political consultants decide what issues they should take on next, and what words they should use. Many of the NGOs are there to say they were there to their funders. Their well-meaning staffs and interns will likely end up by the pool lamenting the failures once again.

Oh, yes, there are some good, decent and well meaning people there, but they will be over

For political and long term strategic reasons this is not the best time for pushing for tax credits for green energy. The main foci of the next Congress will be jobs, the national debt, and the overall economic situation. Green jobs are not the key to creating the 14 million jobs we need to get to 5.5% unemployment by 2020, which is a reasonable guess for when we will finally be out of the recession.

There is massive structural unemployment in the country and putting up wind mills and solar farms won’t solve this. However, training people and helping the development of skills toward future energy systems could help move things along with a far more long term perspective.

Pushing for short term advantage with the false argument that green jobs will help get a large chunk of Americans to work could end up tainting the green energy industry in a very bad way in the public eye.

We are also facing down a tsunami of debt based mostly on Medicare, Medicaid and social security, but with a lot of other things mixed in, like the DOD and other discretionary bud

Sorry for the slip in my previous intervention. I meant to say ethanol subsidy. However, my argument stands. It is in effect a corn subsidy and a subsidy to export ethanol.

They could get nothing fully accomplished in a regular session and it is very doubtful they could get anything fully accomplished in a lame duck.

The ethanol export tax is a subsidy to essentially export ethanol and keep corn prices up. Ethanol from corn is bad economics and bad energy technology, but the lobbyists have had sway on this. We need to invest in better technologies for our energy future.

Green jobs will not even be a small drop in the bucket compared to the 14 million jobs we need to get back to 5 percent unemployment. (And this could take well over a decade.)

Green jobs may produce a few hundred thousand jobs over the next 5 years or so if they are pushed hard, or more importantly, if investors see the benefit of green industry development. This will not even be a tiny blip on the unemployment screens.

We should stop dreaming about green jobs saving the economy. They will not. The structural and financial situation is just too vastly negative for a few hundred thousand jobs to make any difference.

Ethanol in the US is made mostly with corn. About 35% of our corn crop goes to this. This large use of corn and of the land and other inputs to grow this corn for the development of a subsidized and government supported fuel further distorts our already distorted agricultural markets. There are some studies pointing out that the use of corn to produce ethanol also tends to raise the price of other agricultural commodities, not just corn. This is mostly due to the displacement of land that could be used for wheat, barley and other grains toward corn growing for ethanol. Speculation and the changing uses of other resources towards corn can also add to price pressures on other crops.

Surely some farmers and agricultural communities have been helped, but at what cost to the overall consumer and the economy. One of the biggest sources of inflation in the future could be in food. We really don't need to push these costs up even further by focusing on ethanol produced from food or feed crops (corn is a feed crop for cattle and other livestock). Ethanol can be produced from oth

The quick and, unfortunately likely, answer to President Nasheed's follow up question is: not much, except a lot of political hot air, heated conversations going nowhere, and hot weather in a nice seaside resort.There still is nothing even near a consensus. It may be better to build a more sustainable future via bilateral agreements, regional agreements, Track II meetings away from the media amongst those who are having the most difficult time agreeing, and better, clearer and more effective communications of the complexities of the issues involved and their uncertainties to everyone from leadership to the common man and woman. Education is key, and at all levels. It will take possibly a very long time for effective negotiations to develop.

Cancun will be just one stop on a very long journey. Even so, the really hard part is what happens after the negotiations if any agreement is made in the future. The political leadership in the countries involved then have to sign off on the treaty obligations and other responsibilities that the negotiators signed off on at the meet

Good Morning President Nasheed,

What the US can do to move to a cleaner and more sustainable energy future is limited by our imaginations, technological inventiveness, the quality of our leadership, the financing and business leadership available, inertia in decision making, and the overall speed at which we can change our ways of transportation, electricity production, industrial processing, and agricultural systems management – to name just a few of the variables, issues and options we need to consider. Putting up solar panels on the White House is a good photo opportunity, but hardly a giant step forward in the race toward a better energy future. It is a bit too reminiscent of the failures of past Presidents to follow through with their promises for a better energy future.

Imagination:

There are thousands of technologies out there to choose from. Solar paneling is one of the most common and maybe most accepted by the general public. However, there are concentrated solar power stations, power towers (such as the one invented by Environmissi

Clean coal technology is not viable without carbon capture and carbon sequestration. Both of these could prove to be stumbling blocks toward a cleaner coal future. What we are dealing with now are mostly demonstration projects and other projects that some tout as major. But relative to the problems we face on CO2 they are miniscule.

Carbon sequestration is rife with technical and legal problems. One of the biggest legal problems is who will hold the liability, especially the long term liability that is potentially inherent in carbon sequestration fields. The carbon once captured and then sent into the ground could be there for pretty much forever. The places to store the carbon also have to be chosen very carefully. In the US and worldwide there are massive spaces underground that could be used to store the carbon. The best of these are deep enough that the carbon turns to liquid due to the pressures involved in such deep caverns.

The technology of carbon sequestration also seems to have some way to go. If the safety, economic and legal issues are resolved, and the

It would be a moment of energy security and national security folly to stop this pipeline from being built and operated. The Canadians are the most important and most reliable source of oil we have. They supply large quantities of electricity to us and import electricity from us as well. They are the largest source of our imported natural gas. We also have significant cross-border energy investments with the Canadians on hydrocarbon sources and technologies as well as in alternative energies. Our energy relations with the Canadians are very important. To see how important Canada is to US energy security, please see: http://www.eia.doe.gov/cabs/Canada/pdf.pdf .

The US and Canada have an important clean energy dialogue: http://events.energetics.com/USCanadaCleanEnergy2010/pdfs/US_Canada_Clean_Energy_Dialogue_2010_Conference_Summary_Report.pdf .

Both countries realize the impo

The private sector will mostly have to lead in the development of the US competitive edge in new energy technologies and in the research, development and diffusion of new technologies. The self-imposed political gridlock of Washington will likely not produce much legislation with the significance needed to push toward a greener and more sustainable future given that the political leadership cannot decide what that means or even whether it is important. The states have a much better chance of being change agents than the federal government. We can already see the changes happening in California, Washington (the state), Oregon, New York, New Jersey, Massachusetts, and many others. Local and municipal governments are taking on some leadership roles. Look at what San Francisco and Boston are doing on this. I may not agree with some of what they are doing, but at least they are thinking and acting on the issues.

Having recently been to the EU and Switzerland I can quiet confidently say that these countries, and many of their cities and communities (or communes in Switzerland),

It may make more sense to try for an energy only bill given the political clout of the BP oil spill and other things that are happening on the energy fronts. There seems to be a growing political will to do something on energy issues, but which energy provisions will pass the muster is still up to question. A combined energy and climate bill is not likely to find enough traction due to the continuing disagreements and dysfunctionality on these issues. Trying to push this combination through could end up causing much less getting done than if there were separate debates and discussions. Jobs and the continuing weak economy still remain at the forefront of worries of people in most of the country. It has been a hot summer, but politically there are still many doubters on climate change its causes. Energy, however, seems to be gaining more traction in the public. However, I have serious doubts there is time to move things forward enough in the dysfuntional political atmosphere on The Hill. I wish our more forward thinking leaders well, but they are definitely pushing a heavy rock up

The vast mistakes that BP and others have made in this nightmarish situation in the Gulf of Mexico should not override the importance of oil and gas drilling offshore and even deep water drilling. Deep water drilling is vital for US energy supplies. The US has over 1,800 deep water well with most in the Gulf of Mexico. 10% of all oil produced in the world is from deep water wells. 28% of all non-OPEC produced oil is from deep water wells.

Until we can seriously move from our massive demand for oil then we need to live with oil exploration and production. However, we do not need to live with the cutting of corners and incompetence that leads to serious environmental problems, injuries and death. We need to tighten the regulations and monitoring of offshore drilling, and especially deep water drilling, but we need to do this rationally and realistically. These better regulations and enforcements need to be done jointly with the industry and need to be vetted by oil and gas experts, most importantly the engineers and others who can judge what makes sense and whate does not.

Having just recently returned from a trip to the EU, which included visits to regulators, government offices, energy companies and more I am beginning to see things in a bit of a different way. The climate debate seems to be pretty much over in the places I visited. The connections between carbon and climate change seem rather clear to the regulators, the business people and others. I met some energy company people who are looking at carbon charges as business propositions. It seems that they were seeing them as such from almost the get go.

We visited a carbon capture site in one country. The energy company we were visiting wanted to build a gas fired generating plant. The government told them that if they wanted to do this they would need to do something about CO2 and climate change. The major energy companies we visited all take carbon charges for granted as thing that will be with them for many years to come. There is a huge interest in CCS in the EU.

Climate change concerns seem to be a significant part of European culture now.

When we returned to the

There is no doubt that this massive oil spill will have long term impacts on the energy industry. It is symbolic in many ways. One of the most important is as a symbol that those who claimed peak oil was not a problem are just plain wrong. A major part of their argument has been that we can always go into deeper water and into more difficult places to find the next oil finds. Well, it seems that this argument is becoming a lot weaker. The deeper we go the riskier oil exploration and production can get.

The same holds for moving into more difficult places to find and produce oil, such as the Arctic. I was up in the Arctic a few days ago. It is cold, but it also has a beauty that is really to marvel at. Just south of the area in Norway where I was visiting an energy facility is one of the biggest codfish grounds in the world. Now imagine the impact of having an oil spill like this in the Arctic or Norway and having it move southward to the fishing grounds. It would bring fisherman and others to tears, like those being shed in the Gulf of Mexico these days.

Howev

It seems clear that the oil spill in the Gulf will change many things. However, it is important to remember how important Gulf oil is for the present energy security of the country. I say present, because this spill and what seems to be the catastrophic results of it, may finally push this country to take renewable energy, nuclear and other alternative energies more seriously. It may also force us as a nation to finally consider the full costs of focusing so much on hydrocarbons and oil. The externality cost of a million barrels of oil is now seen in the bays, estuaries, and shorelines of the region and may be seen far beyond that.

Oil is an important part of our energy mix. It will likely be for some time. However, as we head into deeper water and as we head into more complex reserves and technologies for extracting the oil means and methods may contain risks that we are not considering fully.

Should there be a moratorium? What will be the alternative sources of energy that we will produce as this moratorium works its way through? Will we import more oil? Will w