Policy Proposal for the American Economy - Research Paper Example

?Policy Proposal (school) Policy Proposal Introduction There are various issues and problems which most political systems face in their governance. These issues often determine the development and progress of nations, as well as the people which inhabit these nations. Policy-makers bear the weight of establishing clear and effective policies which are meant to address and resolve these issues and problems. This paper shall discuss a policy or a solution to a political problem, in particular on the United States’ dependence on foreign suppliers for oil. It shall discuss the oil supply issue and its impact on the American society and politics. It shall also describe specific solutions to this issue and how such solutions can contribute to the American economy in general. This paper is being conducted in order to establish a clear and comprehensive discussion on the subject matter. Discussion 1. What is the problem? According to the US Energy Information Administration (EIA), in 2010, the US consumed about 19 million barrels of petroleum products per day; such consumption makes the US consistently the largest petroleum consumer in the world. It was ranked third in terms of crude oil production; however, crude oil is not the sole source of US petroleum supplies (EIA). Much gain was seen with the increase in crude oil production because crude oil has been known to expand during the refining process. Liquid fuel has also been seen from natural gases, and other sources, including biofuels (EIA). These represent additional supplies in petroleum products for the US. Still, in 2010, the US had to import about 11.8 million barrels per day of crude oil and other petroleum products, including gasoline, diesel fuel, heating oil, jet fuel, chemical feedstocks, asphalt, and similar products (EIA). Based on the EIA report, about half (49%) of the US oil imports come from the Western hemisphere and about 18% of these imports come from the Persian Gulf, specifically the countries of Bahrain, Iraq, Kuwait, Saudi Arabia, United Arab Emirates, and Qatar. The largest source of crude oil and petroleum products are Canada, Nigeria, Venezuela, Mexico, and Saudi Arabia (EIA). The EIA also reports that since 2005, the US reliance on foreign sources of petroleum products have decreased. This decline is seemingly attributed to the economic crisis experienced by the US and the global community in general, as well as changes in consumer behavior, and increase in the use of domestic sources of oil like biofuels and natural gas plant liquids (EIA). In a discussion by Lefton and Weiss, they set forth that the increase in oil imports increased the gap between the US imports and exports. They pointed out that the US is allocating about $1 billion a day in its foreign oil investments; investments which could have been better spent on domestic sources. Moreover, burning oil has contributed to the exacerbation of global warming, representing more dire threats on our national security (Lefton and Weiss). Their analysis also sets forth that the US has relied on imported oil from countries which are on the State Department’s Travel Warning list, including Algeria, Chad, Colombia, Iraq, Nigeria, Pakistan, Syria, Saudi Arabia, among others (Lefton and Weiss). This is unfortunate because the country’s reliance on oil imports from these countries have serious implication on national security, economy, and environment (Lefton and Weiss). The US imports about 4 million barrels of oil per day from these unstable countries, incurring a cost of approximately $150 billion (Lefton and Weiss). Since the US is considered the highest consumer of oil, it contributes significantly to the worldwide overall demand for the product. In effect, its demand plays a major part on the oil prices in the market. This high demand makes the country vulnerable to the whims of oil-producing nations. Moreover, this high demand which impacts on oil process benefits oil-producing countries which do not sell oil to the US, as in the case of Iran which does not trade oil with the US, but is benefitting from the US impact in world oil prices. These rich oil producing countries also do not share revenues with the people, and this drives the wedge further between the rich and the poor people in these nations, causing political and violent outbreaks in these areas. These attacks have also often targeted American military personnel and civilians seen in these turbulent regions (Lefton and Weiss). The US oil dependence will also become harder to fill, and reliance on oil imports will not likely be easily reduced unless more resolve is placed on this issue. However, the US only “holds less than 2 percent of the world’s oil reserves” (Lefton and Weiss). Most of our oil sources are from Canada, Mexico, and Saudi Arabia, and the US cannot continue to solely rely on these ally nations for oil to fill in its great oil demand. For one, Canada’s oil is considered very dirty as it is found in tar sands and for another, and Mexico’s supply are set to be depleted within the next decade (Lefton and Weiss). As a whole, there is a need for the US to decrease its dependence on foreign oil as a whole because this dependence will force the US to consider the more dangerous and volatile countries which present a major threat to our national safety and security (Lefton and Weiss). Climate change is one of the major offshoots of oil use. The burning of oil is a major source of greenhouse gases which trap hot air in our atmosphere instead of bouncing it into space; this phenomena contributes in the increase of global temperature. This practice is mostly seen in dangerous and unstable countries and on average, these countries have been known to release about 640 million metric tons of carbon dioxide into the air (Lefton and Weiss). Lefton and Weiss point out that various studies have already lent support to the fact that climate change is a major threat not just to the environment, but to governments as well, as they intensify terrorist activities and displace civilians. Global warming can also cause the increased prevalence and intensity of natural disasters and weather disturbances which in turn, increase poverty, food shortages, water shortages, and communicable diseases (Lefton and Weiss). Destabilization within US territories would also rise with the increase of internal migration among developing states and immigration to the US. All in all, the above discussion sets forth how the US dependence on oil imports is not favorable to the US based on economic and political considerations. This reliance must therefore be reduced and if possible be eliminated. 2. What is your solution? My proposed solution to this issue is to shift the investments on foreign-based oil towards domestic sources of oil. Firstly, the Congress can allow drilling in the Alaska National Wildlife Reserve (ANWR) and in the shallow waters from fixed platforms or manmade islands (Utley). This is a decision which has serious environmental considerations for the ANWR, however, there are precautions which can be taken by the oil companies and by the government in order to reduce the impact of the drilling on the ANWR. The government must strictly monitor these drilling activities in order to ensure that no major harm will befall the wildlife reserve (Utley). Secondly, the Gulf of Mexico can produce half a million barrels of oil per day and the government must allow activity in the Gulf Coast to resume in order to add about half a million barrels a day more to the domestic supply of oil. With proper and monitored techniques of drilling, it is possible to still carry out drilling in the Gulf Coast without it resulting to the major disaster as seen in last year April (Utley). Thirdly, liquid natural gas (LNG) can be considered alternative fuel sources which can also serve to reduce US dependence on foreign oil. Utley discusses that “a thousand cubic feet of (compressed) gas equals the energy equivalent of seven gallons of diesel oil costing some four times as much”. Various municipal trucks and buses have already opted for natural gases, taxis can potentially also make the switch. With lesser cost to produce and refine petroleum, the government can help subsidize LNG engines in order to effectively implement the transition into LNG use. Fourth, adopting modern oil production which allows drilling horizontally can now produce better results for the country. The coastlines can be kept safe and these pipelines would not anymore present an eyesore (Utley). Permits for drilling in the Atlantic and Pacific coasts can potentially produce billions of barrels of oil and new methods of drilling can lead to more sources of oil from the unusable oil shale (Utley). The Keystone XL Pipeline from Canada’s tar sands can also produce half a million barrels of oil per day (Utley). With the application of these remedies, the domestic sources of oil can be increased and maximized, while also reducing environmental dangers and impact. 3. Who will benefit from this policy? The American people would generally benefit from this policy. With lesser dependence on foreign imported oil, the US would have more control on oil prices and not be as dependent in the dictates of the global oil trade market (Natural Resources Defense Council). The development of ANWR can potentially generate thousands of jobs for Americans; it can increase royalty, leasing, and tax payments for these explorations. The drilling can actually yield about $152 royalties and $237 billion in taxes (Stearns). Taxes are the lifeblood of the nation and with higher revenues, more development projects can be directed to the poorer citizens. The American economy can better flourish under these conditions. Better economy means more jobs and better lives for Americans in general. 4. What interest groups are likely to support this policy? Interest groups likely supporting this policy are the oil companies and manufacturing businesses highly reliant on petroleum oil (Gold). For one, oil companies would be carrying out their oil drilling activities in less dangerous and less unstable regions of the world. And their activities would be able to fill the US demand for oil to a significant degree (Lefton and Weiss). These oil companies would also be able to spend less on the transport of oil and incur less environmental impact with less burning oil used to serve US demands for oil. US-based manufacturing business would also be able to buy oil at a lower price since there is less production and transportation cost involved in availing of the oil (Clo, p. 130). These companies would be able to easily gain access to these oil products without having to consider environmental impact during oil transport of these petroleum products. In effect, these interest groups would benefit well from domestic sources of oil because it implies lesser production cost for them. 5. Who will this policy harm? This policy would likely harm the oil-producing countries because losing the business of the US would have a significant impact on their profit margins and on their control of the oil prices (Bartholomees, p. 244). Losing such control would impact on their profits and on their ability to influence policy in their region and in the global market. It would impact on their profit margin and on their economic stability. Losing the profitable oil trade with the US would likely cause them to consider alternate markets for their oil, but such markets would never be as stable and as sure as the market they have found in the US. There would also be harm on this policy to the Gulf Coast and the ANWR which would be potentially the primary sources of domestic oil. All the risks associated with oil drilling and transport shall be posed in these areas. Even with the proper precautions to prevent environmental disasters, there are still unforeseen incidents which may impact negatively on the environment (Simon, p. 55). 6. What interest groups are likely to oppose this policy? Interest groups who would likely oppose this policy are policy-makers opposed to oil exploration in the ANWR. This group would oppose this proposal because of their belief on the importance of the conservation of the wildlife reserve (VanderMey, p. 297). Their opposition would also be based on the argument that the wildlife reserve must be protected from activities which might endanger the wildlife and ecological balance of the region. There are major environmental risks to the acts of oil exploration in the region which government authorities and oil companies cannot adequately prevent with full certainty, even with precautions against oil leaks and environmental damage fully implemented in the region. 7. What are the best arguments opposing your policy? There are various arguments opposing this policy. One of the best arguments relate to the fact that the oil drilled in the ANWR “would only slightly reduce America’s dependence on imports and would lower oil prices by less than 50 cents a barrel” (Associated Press). This is based on a report by the Energy Information Administration of the EIA, further expressing that if Congress would allow the pumping of oil in the ANWR, about 876,000 barrels of oil a day can be pumped (Associated Press). However, even at this rate of production, the analysts claim, the US would still not be able to support its oil demands. Two-thirds of its oil needs would still have to be gained from foreign-based sources (MSNBC). Moreover, despite assurances of better oil drilling methods which are also safe to wildlife, the impact of the oil activities in the ANWR cannot be assuredly minimized by the oil companies and those who advocate the ANWR oil exploration. Environmentalists have valid points of discussion on oil exploration in the ANWR and they point out that the economic gains from such exploration seem to be dominating the discussion, with limited focus actually given on the impact of oil exploration in the region (ANWR). Various studies have already shown how oil drilling has significant negative effects on the environment with the emissions of carbon dioxide largely contributing to global warming. With this contribution to global warming, studies project that Alaska would experience an increase of 1.5 Celsius warmer temperature by 2040 and if this happens, potential habitats would be destroyed for at-risk species in the reserve (ANWR). Drilling in the region would also impact on marine species with acoustic disturbances on such species preventing communication between marine wildlife (ANWR). These roadblocks in their communication can cause harmful results with high acoustics causing them much stress and agitation. “For species such as the bowhead whale who are close to extinction, industrial sound such as drill ships, production platforms, semi-submersible rigs, supply ships, icebreaking ships, and low-flying aircrafts cause irrevocable damage when the whales are seeking their mate, detecting oncoming predators, and so on” (ANWR). Millions of wildlife in the ANWR would likely face the same risks, and the current proposal of proponents for ANWR oil-drilling has no clear safeguards against these risks. This is a major argument against my current policy. 8. Would this policy pass in the current political environment? Why or why not? In the current political environment, this policy would have a difficult time gaining passage because the government officials – legislators and the current administration are not in agreement on the use of domestic sources of oil, including the oil reserves in the ANWR. Many Democrat and some Republican legislators are firmly opposed to oil exploration in the ANWR, citing environmental reasons (Fox LA). The current administration has been keen on the increased use of domestic sources of oil, however, it has not been firm on his stand on oil exploration in Alaska (Thompson, p. 39). During his campaign, he has expressed his support of oil exploration in the ANWR, but during his term, he has been noncommittal about his stance on the matter (Shear). For the ANWR exploration plans to be fully explored, President Obama needs to make a definitive position on the matter and to act on such position (Nelson). With these considerations, there is major doubt on the passage of this policy in the current political environment. Another reason for the failure of passage for this policy is the fact that environmentalists’ position on oil exploration in Alaska has drawn in a major following among the general population (Wall Street Journal). This policy would likely undergo much scrutiny among the legislators and the general population before it can be considered for passage. It would polarize legislators to a great extent and this polarization would likely delay the implementation of this policy or even completely cancel its implementation. Conclusion The above discussion sets forth that one of the major issues in the US is its dependence on foreign sources of oil. This dependence is based on its limited domestic sources and its great demand for oil. In order to resolve this dependence, the US needs to explore and improve its domestic explorations of oil. This exploration would benefit the US as it can avail of cheaper sources of oil and its national security would not be put at risk to a significant degree. There are risks associated with this issue, including environmental disasters which can arise from oil drilling and exploration. The current political climate is also not ideal for the passage of this policy but with a strong political will from President Obama and our legislators, domestic oil exploration can be definitively sought. Works Cited ANWR Weebly. “Drilling In ANWR and Its Affect On Soil And Wildlife”. (n.d). 06 July 2011 from http://whyanwr.weebly.com/how-drilling-is-a-threat-to-anwrs-ecosystem.html Bartholomees, J. “U.S. Army war college guide to national security policy and strategy”. New York: Strategic Studies Institute. Clo, A. “Oil economics and policy”. 2000. New York: Springer Energy Investment Administration. How dependent are we on foreign oil? 2011. 06 July 2011 from http://www.eia.gov/energy_in_brief/foreign_oil_dependence.cfm FoxLA. “Top Democrat Supports Republican Push to Expand US Oil Drilling”. 2011. 06 July 2011 from http://www.myfoxla.com/dpps/news/politics/top-democrat-supports-republican-push-to-expand-us-oil-drilling-dpgonc-20110503-to_13038513 Lefton, R. & Weiss, D. “Oil Dependence Is a Dangerous Habit”. 2010. 06 July 2011 from http://www.americanprogress.org/issues/2010/01/oil_imports_security.html MSNBC. “Study: ANWR oil would have little impact”. MSNBC. 2004. 06 July 2011 from http://www.msnbc.msn.com/id/4542853/ns/us_news-environment/t/study-anwr-oil-would-have-little-impact/ National Resources Defense Council. “Safe, Strong and Secure: Reducing America's Oil Dependence”. 2004. 06 July 2011 from http://www.nrdc.org/air/transportation/aoilpolicy2.asp Nelson, R. “ANWR: Obama's missed opportunity on energy”. Baltimore Sun. 2010. 06 July 2011 from http://articles.baltimoresun.com/2010-02-17/news/bal-op.anwr0216_1_anwr-oil-fields-natural-world Shear, M. “Obama Rejects Republican Criticism on Energy”. New York Times. 2011. 06 July 2011 from http://thecaucus.blogs.nytimes.com/2011/03/11/in-news-conference-obama-rejects-republicans-criticism-on-energy/ Simon, A. “Energy Resources”. 2001. New York: Simon Publications LLC. Stearns, C. “Increase Domestic Oil Production”. (n.d). 06 July 2011 from http://stearns.house.gov/Energy/DomesticOil.htm Thompson, S. “Energy & green technology innovation & regulations under the Obama Administration.” Industrial Biotechnology, vol. 5(1), 06 July 2011 from http://www.buchalter.com/bt/images/stories/industrial%20biotechnology%20-%203.09.pdf Utley, J. “The Case for Increasing Domestic Oil Production”. Reason.com. 2011. 06 July 2011 from http://reason.com/archives/2011/03/30/the-case-for-increasing-domest VanderMey, R., Meyer, V., Rys, J., & Sebranek, P. “The College Writer: A Guide to Thinking, Writing, and Researching”. California: Cengage Learning. Wall Street Journal. “Exxon Find Rekindles Domestic Oil Hunt”. 2011. 06 July 2011 from http://online.wsj.com/article/SB10001424052702304778304576373922398928448.html Read More