Gas prices are in for a double whammy.
They could shoot up 20 cents or more a gallon over the next week if Hurricane Isaac packs a powerful punch and keeps oil production shut down for an extended period in the Gulf of Mexico, according to an energy expert who spoke Tuesday during a visit to Richmond.
Even it weren't for Isaac, gas prices would still rise a few cents like they always do during the last holiday travel weekend of the summer, said Bernard L. Weinstein, associate director of the Maguire Energy Institute at Southern Methodist University in Dallas.
Nearly 925,000 people from Virginia are expected to travel this Labor Day weekend, up 1.7 percent from last year, according to AAA Mid-Atlantic.
"In the worst-case scenario, the country could dip into the Strategic Petroleum Reserve," an emergency fuel storage maintained by the U.S. Department of Energy, Weinstein said before his presentation to The Rotary Club of Richmond at the Willow Oaks Country Club. About 75 people attended.
If there is even a perception of a crude oil shortage, particularly this close to the presidential elections, "you can be sure President Obama will authorize tapping into the Strategic Petroleum Reserve," Weinstein said.
The U.S. has the inventory. "What we don't have is a sensible energy policy," Weinstein said.
Still, about 30 percent of domestic oil production comes from the Gulf of Mexico, and the effects of Isaac are being felt.
Gas prices in the Richmond area rose 3 cents overnight to $3.61 Tuesday and are up 5 cents since Friday. Prices are up 26 cents from a month ago but still off from its peak of $4 a gallon four years ago, AAA Mid-Atlantic reported.
Clearly, Isaac is behind the most recent run-up in prices, Weinstein said.
Gas prices are affected by a lot of things: the economic crisis in Europe, saber-rattling in the Middle East, and the drought in the Midwest, which pushed up the cost of ethanol.
But prices don't have to be as volatile as they are, Weinstein said.
"Periodic spikes in gas prices are like a recurring bad dream," he said
"One of the reasons we see these swings in gas prices is because the country doesn't have a comprehensive energy strategy.
"We are an energy-rich country. We need to stop behaving as if we are energy-poor."
President Barack Obama's favorite energy source is renewable energy, Weinstein said. "I am not anti-renewable. But that has been oversold."
Oil consumption in the U.S. peaked in 2005 and has been falling ever since, he said. The U.S. has become more efficient in its use of oil, and it is substituting natural gas for oil.
"The only reason we have seen investments in renewable energy is because of tax credits," Weinstein said, noting that the credits went into effect long before Obama took office.
He said fossil fuels will remain the primary energy source and that they can be developed in environmentally responsible ways.
Weinstein, who said he is apolitical, said he favors an energy policy that would include:
* The removal of tax credits for renewable energy sources, so the sources can be put to a true market test.
* The removal of the federal ban on offshore drilling exploration on the outer continental shelf. The entire Atlantic seaboard is off limits. So is the West Coast, most of Alaska and most federal lands.
* Allow states to continue regulating hydraulic fracturing, a controversial technique for extracting shale gas and oil.
"Hydraulic fracturing has been regulated by the states without incident for 60 years," Weinstein said. But the Environmental Protection Agency wants to get involved. "Why do we need another layer of federal regulation?"
* Build the Keystone XL pipeline from Alberta, Canada, which has the third-largest oil reserves on the planet, to refineries along the Gulf Coast.
The pipeline has been studied for 10 years, Weinstein said, noting that the country already has 500,000 miles of pipelines to move oil, gasoline and natural gas.
Obama's moratorium on building the Keystone was a diplomatic slap on the face, he said. "Regardless of who wins the elections, I think the pipeline will be built."
* Remove restrictive policies on coal production.
Weinstein said he is not optimistic about the long-term prospects for coal. "No one likes it. It's nasty. It's dirty."
Yet, about 40 percent of electricity in the U.S. comes from coal. "Coal is not going away anytime in our lifetimes. You can't replace 40 percent of energy production overnight."
However, "if the proposed EPA regulations take effect, we could see up to 20 percent of the nation's coal-fired generation plants shuttered in the next five years."
While the U.S. is burning less coal, the rest of the world is turning to coal, Weinstein said.
Coal might be the dirtiest way to produce electricity. But it's the cheapest.
* Build more nuclear plants.
Nuclear is cheap -- and it's clean. But the last time a nuclear plant went online in the U.S. was more than 20 years ago, he said. The nation has one nuclear plant under construction, in Georgia. Another two units are on the drawing board in North Carolina.
By contrast, China has 27 nuclear plants under construction.
* Open more federal land for oil exploration or production.
About 28 percent of land, or 2.3 billion acres, in the U.S. is owned by the federal government. About 2 percent is available for oil exploration or production. Only 1 percent is being used for the purpose.
Weinstein noted that the country is seeing a shale gas revolution on private land. The industry has created nearly 700,000 jobs without government subsidies, Weinstein said.
"After four years of a recession and halting economic recovery, the country's employment is still 3 percent below where it was in 2008," Weinstein said. "But oil and gas jobs are up 15 percent."
The U.S. has an abundant supply of energy, and it needs to use that energy, Weinstein said.
