Energy Policy Act Fails to Address Peak Oil (11/05)

The following column by AGI/AIPG Geoscience & Public Policy Intern Anne Smart is reprinted from the November 2005 issue of The Professional Geologist, a publication of the American Institute of Professional Geologists . It is reprinted with permission.


On August 8, President George Bush signed the Energy Policy Act of 2005, ending four years of stalled attempts in Congress to produce a comprehensive plan for national energy use. During the months prior to this ceremonious event in Albuquerque, New Mexico, both chambers of Congress were busy debating bill language and proposed amendments in an attempt to produce a bipartisan compromise before the August recess. Members tended to argue in favor of the market interests of petroleum industries and the geographical interests of their varying local constituencies. Despite numerous heated debates focused on the United States’ dependence on foreign oil, Congress ultimately produced a bill that does little to alleviate the problem.

The full title of House Resolution 6 (H.R.6) is “To ensure jobs for our future with secure, affordable, and reliable energy.” Ideally, the comprehensive energy policy would effectively plan for decades of domestic energy use. The United States presently relies on a finite supply of fossil fuels for the majority of its energy needs. The use of fossil fuels is not sustainable because this finite supply cannot meet future demands.

Oil discovery in the continental United States peaked in the 1930s causing production to peak forty years later in the 1970s. At this point in time, the rate of conventional oil production reached a maximum extractable rate, with available technology restrained by economic cost. The decline in domestic oil discovery and production has led to a dependency on foreign oil supplies, the majority of which is controlled by non-democratic nations in the Middle East. The rate of new reserve discoveries worldwide peaked in 1960, leading many geophysicists and petroleum geologists to believe that a peak in production will occur during the first or second decade of this century.

While politicians may be aware of dwindling fossil fuel reserves, their long term outlook is blurred by short term market successes in the petroleum industry. Oil is still relatively cheap; in many countries, the price of oil is less than the price of bottled water. Investments in oil production infrastructure have already proven to be lucrative. The price per barrel of oil has risen significantly in recent years and major oil companies continue to report record profits as production edges towards the top of its curve.

The Energy Policy Act of 2005 provides more incentives for oil production with comparatively limited provisions to increase energy efficiency and conservation. The bill authorizes $2.6 billion for energy efficiency research and development and almost $2 billion for renewable energy research and development over the next three years. A proposal made by the Senate for a renewable portfolio standard to require electric utilities to produce 10% of their electricity from renewable sources by 2020 was not included in the final bill. Unfortunately, the Senate proposal to reduce oil consumption in the United States by 1 million barrels per day from 2015 levels was also not included in the final bill. Thus, the incentive to use renewable energy instead of petroleum is limited to small tax deductions and personal choice.

Congress is encouraging nuclear power as a cleaner alternative to fossil fuel derived electricity. The new national energy plan authorizes $1.6 billion for nuclear energy research, infrastructure, and facilities and an additional $1.25 billion for the Next Generation Nuclear Plant Project. Even though nuclear power emits little pollution at the site, the accumulation of nuclear waste will be a burden on future generations. It has been over twenty years since a nuclear power plant has been constructed and though technology has improved, safety risks, waste, and proliferation issues could still discourage new construction projects.

There are not any immediately viable alternative options for transportation fuels. H.R.6 requires a 7.5 billion gallon renewable fuels standard (RFS) for ethanol production by 2012. The production of ethanol uses approximately 29% more energy than it is able to produce, thus making this provision inefficient and in obvious favor to the agriculture industry, predominantly located in Midwestern states. The hydrogen-based economy envisioned as a transitional possibility remains a dim hope at best. Fossil fuels are still required to separate hydrogen from other molecules in large quantities. The final bill approves $3.7 billion through 2010 for hydrogen-related research programs but it is unlikely that four years of funding could solve the problem for the transportation sector.

Until these technologies are developed, policymakers need to focus on increasing conservation and efficiency by other means. The final bill calls on the Environmental Protection Agency to update fuel economy testing procedures. In the future, this update could influence increased Corporate Average Fuel Economy (CAFE) standards. Congress also has the power to allow oil prices to rise without instituting price caps or subsidies, forcing conservation as the resources become scarce and unaffordable.

Although supporters of the bill have praised Congress for producing a national energy policy, opponents of the provisions note inadequacy in providing a foreseeable escape from fossil fuel dependency. White House spokesman Scott McClellan reported, “It has been too long for us to have a comprehensive energy strategy, and this legislation will help us reduce our dependence on foreign sources of energy and help address the root causes that have led to high energy prices.” But after voting against H.R.6, Representative Wayne T. Gilchrest (R-MD) issued a statement calling the bill, “less of a blueprint for a comprehensive energy policy than a compilation of special interest favors which misses an opportunity to finally move our nation to true energy independence.”

The Energy Policy Act of 2005 is timid in attempts to promote petroleum independence and consequently there is little incentive for this country to move away from fossil fuels. The current policy does not even begin to create a substantial alternative fuel infrastructure for future generations of Americans. Those that penned this bill failed to make alternatives to declining oil resources a higher priority than geographical and industrial interests. Oil prices will continue to rise as extraction becomes more difficult and demand outpaces supply. Alternative energy options will not become economically viable unless more tax dollars are invested in research and development. Increased funding and stronger legislation is needed to ensure “secure, affordable, and reliable energy” as promised in the language of H.R.6.

Anne Smart returned to school after her internship as a junior at Miami University in Oxford, Ohio. While double-majoring in Environmental Studies and Public Administration, Anne has assessed energy conservation methods at her school for a provost report and plans to complete a thesis on the peak oil crisis. As a resident of Bel Air, Maryland, Anne has previously interned in the district office of Representative Wayne T. Gilchrest. As an intern, Anne gained insight on federal energy policy and peak oil that will inform her schoolwork and future career.


This article is reprinted with permission from The Professional Geologist, published by the American Institute of Professional Geologists. AGI gratefully acknowledges that permission.

Please send any comments or requests for information to the AGI Government Affairs Program.

Posted November 10, 2005


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