The dramatic fall in global energy prices over the past several months provides the United States with a window of opportunity to push new solutions to several pressing domestic and foreign policy challenges—if Washington is focused and prepared to act quickly.
I proposed one such solution several weeks ago: a reverse-windfall tax to set a “price floor” on domestic energy consumption. Doing so would take advantage of falling prices at the pump to raise funds to sustain the infrastructure that has been constructed over the past decade in the North American nonconventional energy fields, without damaging the U.S. economic recovery. That in turn would protect the potential these new sources offer the U.S. for genuine energy self-sufficiency. Others have advocated using the revenue from such measures as a way to help reduce the deficit and make modest contributions to paying down the national debt, or as a way to jumpstart the rejuvenation of America’s ageing infrastructure. Although such an opportunity was lost with the passage of the so-called Cromnibus bill, which set U.S. government spending priorities through the end of 2015, some members of Congress are still holding out for consideration of such a proposal in the waning days of the current legislative session, with the hope that the idea might be revived in January.
The impact of the current global energy landscape creates opportunities for U.S. diplomacy as well. Falling energy prices are making investments into expensive projects less attractive to energy companies, even as the current glut of supply is lowering the pressure to find and open up conventional sources. This might be an opportune time, therefore, to try and convince all the powers that have overlapping and competing claims in the East and South China Seas to announce a moratorium on all exploration projects currently underway or planned in the near future in the disputed zones. A five-year ban on all drilling and prospecting activities could create the space needed for the countries involved to step back from pursuing maximalist claims and end the perception that there is a rush underway to create “facts on the water.”