There is an economic crisis looming in our nation’s dependence on imported oil. On February 2, 2011, the price of oil was $90.84 a barrel compared to the record high of $142.99 per barrel in June 2008 and an average of $25 per barrel from 2000-2003. Since 2003 the average price of a gallon of crude has been steadily rising. Petroleum dependence is a crisis that has been caused by the government’s history of laxity with regards to alternative energy source development, coupled with rewarding the private sector to keep abusing fossil fuels.
Energy Policy Before 1973
Prior to the oil embargo in 1973, the United States operated under the belief that the nation had unlimited access to a cheap supply of energy, as we had an abundant supply of fossil fuels. The private sector was left alone with few regulations, with the exception of price stabilization, and some anti-trust legislation. The policy was designed not to promote conservation, but rather consumption as a way of stimulating our economy. The government offered several incentives to private interests to encourage energy exploration and production, specifically those that exploited our fossil fuels. We never dreamed of needing an alternate source, because we foresaw no issues with the continued usage of fossil fuels. The Mineral Leasing Act of 1920 established the government’s role in subsidizing energy derived from fossil fuels. The government provided cheap leases to companies willing to explore the land for oil, coal, minerals or natural gas. This approach appeared to be working well. The economy and consumers fared well because of access to cheap energy, and the government fared well in the form of royalties collected on the profits. The government offered further incentives in an indirect form of subsidies to the energy corporations in the form of tax breaks. Everyone was making money and everyone was happy.