News

Beyond Gas Prices: Energy Independence

Warren Martin, Executive
Director K.O.G.R.F. — Kansas Strong

For most Americans, the oil and natural gas industry is directly tied to the price at the pump. This singular view of the industry is not only limited, but it undermines the very initiative that enables America to grow and prosper. The goal of energy independence is not simply to gain the ability to drive your vehicle where you want, when you want and at a reasonable cost. It is about enabling our country to compete on the world market in a manner most beneficial for humanity.

America’s fixation on the price at the pump greatly skews the impact and importance of the oil and natural gas industry in relation to gross domestic product (GDP) capacity. The reality is only 47% of crude oil in America goes towards gasoline production. That means 53% of crude oil goes to the creation of other products.

Those products are synthetic rubbers, synthetic fabrics, waxes used in candies and gums, medicines, carbon black, plastics, propane, diesel, cosmetics and over 6,000 other products. When we talk about energy independence we often forget about the industrial impact beyond the price at the pump. Often our manufacturers are limited by the excessive regulations placed on oil and natural gas producers which limit production and refining capabilities. While it is thought this simply limits how much fuel is being consumed in our cars and energy plants, the reality is quite to the contrary.

Take for example a basic product generated from refining crude oil — refinery asphalt. When the price of gasoline drops so does the price of asphalt. According to data from the US Producers Price Index (2008 to the present), we find that when the price of gas is $4.05per gallon the price of asphalt is $359.70 per ton. However, when the price of gas drops to $2.17 per gallon, the price of asphalt drops to $108.40 per ton. That is a $251 per ton drop in the price of asphalt when oil and gas production is sufficient. In other words, if you have a street project that would run you $3.3 million dollars in refinery asphalt when gas is $4.05 per gallon, that same project will only cost $1 million dollars when gas is $2.17 per gallon. Restricting and reducing oil and natural gas production does more than simply raise the price at the pump, it raises prices on products across the board — from the roads you drive on to the medications you depend on everyday. Increasing oil and natural gas production and refining capabilities to become energy independent is not just about the price at the pump. Its reducing the cost to heat your home and to be more competitive with manufacturing jobs. It is about supplying the necessary resources for us to generate the products and services that enable us to prosper not only as a nation, but also as humans in an ever changing world.

Improving our production capacity as a nation should not only be a priority, it should be a mandate. By almost any metric you consider humanity is flourishing in today’s world. Life expectancy is up. Infant deaths are down. Famine has been virtually eradicated. Climate related deaths are at historic lows. All due in major part to the products and resources created by the oil and natural gas industry.

In a recent article published by the U.S. News & World Report titled “America’s Days Are Numbered as the World’s Top Economy”, the author states unequivocally that American will fall to China as the world’s largest economy by 2030, and that India will surpass its competitors to take the third ranked position. What do both of these countries have in common? They are rampantly increasing their usage of fossil fuels.

China and India currently depend on 92% to 93% of their energy supply from fossil fuels and have increased fossil fuel usage by more than 1.25 Billion Metric Tons in the case of China alone. The US has reduced its reliance on fossil fuels to 86% percent and has cut carbon emission considerably. China and India on the other hand have increased the usage of fossil fuels with far less regulation than that found in the United States.

In other words, China and India are gaining an advantage over the United States through the usage of fossil fuels and are doing so producing far more emissions than the US. Increasing oil and natural gas production is not just about improving the price at the pump and giving the American consumer the ability to drive where they want. It is about improving the lives of American citizens. It is about providing cheaper, cleaner energy than what is produced in other countries. It is about providing the resources to manufacture medicines, fertilizers, rubber, plastics, synthetic fabrics and the multitude of resources needed for the US to build a vibrant manufacturing capability at competitive prices. Energy independence is about my children and grandchildren and their ability to prosper in the days to come. It is about enabling them to have access to the resources that will protect them, give them the tools they need to advance humanity, and all the while enjoying the environment in which man and nature coexist. The need for energy independence reaches far beyond improving the price at the pump. It is foundational for improving the day to day lives of every American citizen.