American Energy Policy Basics

American Energy Policy Basics

The Congressional Research Service states that the main goals of U.S. energy policy are: “to assure a secure supply of energy, to keep energy costs low enough to meet the needs of a growing economy and to protect the environment while producing and consuming that energy.” The major themes behind America’s energy policy are energy conservation, securing fossil fuels, determining oil and gasoline prices and electricity generation.

Energy Conservation

The U.S. has focused on energy conservation since the 1970s when Arab members of the Organization of the Petroleum Exporting Countries (OPEC), an intergovernmental organization, imposed a ban on petroleum exports to the United States. This led gas prices to increase dramatically. Congress responded by passing the 1975 Energy Policy and Conservation Act, which entailed the president banning crude oils exports and setting fuel efficiency standards for passenger vehicles (beginning in model year 1978). Since then, standards for other products have also been set. These products include: home appliances, such as refrigerators, air conditioners, washing machines and light bulbs.

 

Securing Fossil Fuels

After the oil crisis in the 1970’s, policymakers begin to seek other ways to meet the growing demand for oil and gasoline. This initiated the domestic production of fossil fuels, particularly oil and natural gas. Since its humble origins, domestic oil and gasoline production has incited a lot of controversy. Proponents state that this domestic production leads to increased employment and labor income and a larger supply of energy, which would lower prices for consumers. Opponents, however, argue that oil and natural gas are finite resources and that their use produces pollution that could be avoided by using other means of producing energy, such as solar and wind power.

 

Determining Oil and Gasoline Prices

As consumers, we often just see the price change regarding gasoline prices, but determining oil prices is an incredibly complex social and political process that takes a lot into account, including: supply and demand, financial markets, international politics, environmental regulation, taxes and weather. Policymakers oversee these factors as well as analyzing advances in technology, changes in industry regulation, policy changes, political forces and other elements that influence gas prices. There is a lot of pressure to keep prices low and subsequently, there is a lot of thought given to this theme of american energy policy in particular.

 

Electricity Generation

Policymakers oversee and debate components of the U.S. electricity mix and its subsequent means of production, which includes: coal, oil, natural gas, wind, solar and nuclear power. Coal is of particular importance in the electricity debate, as it accounts for 16 percent of America’s energy expenditure, and 91 percent of that expenditure is used for electricity. Coal is also a hot topic, with proponents citing the U.S. Energy Information Administration, which stated in 2016 that the United States has the largest recoverable coal reserves worldwide. Opponents contest that coal causes carbon dioxide emissions linked to the even hotter topic of climate change. They argue that green energy, such as wind, solar and hydropower could be utilized to avoid the unwanted effect on global temperature. As with most debatable topics, it is up to policymakers to have American policy somehow appease both citizens and interest groups.

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