U.S. should hike fuel taxes, expand offshore: IEA

WASHINGTON (Reuters) - The United States should consider new gasoline and diesel taxes and expand domestic oil and natural gas production to recently opened offshore areas to increase the nation’s energy security, an International Energy Agency official said on Thursday.

Fatih Birol, chief economist for the agency that advises 28 industrialized countries, said the U.S. government should consider taking advantage of falling oil prices by establishing taxes on fuel that would “lock in the efficiency gains that resulted from last year’s price surge.”

“Similarly, I believe efforts to maximize the production of the United States’ domestic oil and natural gas resources ... could form a crucial part of a comprehensive strategy to enhance the nation’s energy security,” Birol told lawmakers at a hearing before the House Subcommittee on Energy and Mineral Resources.

Birol also warned that along with falling demand, the economic slump could reduce energy investment too much and lead to another global spike in fuel prices in several years as the economy recovers.

Oil prices rose to record levels above $147 a barrel last summer pushing U.S. gasoline costs to more than $4 a gallon. Following this spike in energy costs, lawmakers allowed a long standing ban on drilling in most areas of the Outer Continental Shelf to expire.

Some lawmakers have called for the moratorium on offshore drilling to be reinstated or for additional restrictions to be placed on oil and natural gas production off the coasts of America.

The Energy Information Administration estimates that U.S. oil production with expanded offshore output would be 565,000 barrels per day higher at 2.7 million bpd in 2030 than under a restored moratorium.

In addition, U.S. natural gas production would be 4.1 trillion cubic feet in 2030 with a ban on most offshore drilling, compared with 4.9 tcf if the moratorium is not in place.

Acting EIA Administrator Howard Gruenspecht cautioned that although producers now have access to a significant volume of undiscovered recoverable oil and natural gas on the Outer Continental Shelf, much is still unknown about these resources.

“There is a great deal of uncertainty surrounding the resource estimates, as well as the timing and cost to explore and develop these resources,” Gruenspecht said at the hearing.

Reporting by Ayesha Rascoe; Editing by Marguerita Choy