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Thus the immediate problem is caused not by dwindling reserves but by inadequate oil-refining capacity and man-made shortages of natural gas. These, in turn, are caused by complex and interrelated political, economic and social factors. By holding down the price of natural gas, the Federal Government has artificially increased demand for the fuel while providing no incentives for exploration for new reserves. Similarly, legislation that favors oil companies by sheltering domestic producers and permitting tax write-offs of exploration abroad has not worked to increase domestic supplies or to en courage the building of new refineries in the U.S.
The urge for a clean environment has complicated matters even further. Clean-air laws, for instance, forbid the burning of oil and coal with high sulfur content. As a result, much available domestic fuel cannot be used in many localities. Insisting on environmental safeguards, groups have delayed such projects as the Alaska pipeline and nuclear power plants, further limiting the development of domestic energy sources.
Increasing opposition by conservationists and state government officials to heedless strip-mining and offshore oil drilling has also sharply limited the future exploitation of U.S. fuel reserves. Sums up S. David Freeman, director of a Ford Foundation study of energy: "Environmental goals and energy demands are on a collision course."
At the same time, the U.S. until now has been understandably reluctant to relieve the domestic shortages by turning to easily available overseas sources of energy. Reason: the Government wanted to protect the high-cost domestic oil industry, arguing that the nation should not become dependent on foreign suppliers of oil and gas, especially when the major reserves are in nations not particularly friendly to the U.S. — the Arab states and Russia. Further more, the U.S. balance of payments problem would only be worsened by importing foreign oil and gas.
At a three-day energy conference sponsored by Time Inc. in April at Lyford Cay in Nassau (for list of participants see box page 48), top executives of U.S. energy companies offered suggestions for alleviating the shortages. Their strategy through 1985 would be to increase the domestic output of oil and natural gas, and to build new energy facilities (power plants, refineries, pipelines). But the bill for this expansion, according to experts at the conference, would be at least $500 billion, too high for industry to pay without fed eral help. The energy companies want the Government to allow the market place to set prices, to ease cumbersome environmental restrictions, and to open federal lands and offshore areas to exploration for oil and gas.
Thomas Kimball, head of the National Wildlife Federation, took a different tack. "What we need," he told the conference, "is a national energy policy—not a national energy sales policy." Most environmentalists and consumerists want assurances that those shortages will not cause the Federal Government either to reverse existing environment laws or to allow big hikes in the price of energy. If the price of interstate gas were allowed to climb by 30%, they say, the value of natural-gas reserves would climb by $300 billion.