Many Tennessee families are tightening their budget belts as gasoline prices set new highs this month. The cost of gas also affects the prices of many other goods as transportation costs increase. There is no one thing, no silver bullet, to quickly bring prices down. We need a broad strategy to help reduce prices, from increasing domestic energy production to developing alternative fuels and conservation.

Fifty-five percent of the price we pay for gasoline is dependent upon the market rate of crude oil. Because worldwide demand for oil continues to increase while supply remains largely stagnant, prices continue to escalate, driving up the price you pay at the pump. In a quest to fuel its rapidly expanding economy, China consumes greater amounts of oil each year. Experts believe that China’s demand for oil may exceed ours as early as 2020, further depleting world supplies. As we continue to compete with other countries for access to oil, we are also faced with reduced production by the Organization of Petroleum Exporting Countries (OPEC) and political instability in oil-producing regions in the Middle East. These factors demonstrate the urgency in becoming more energy independent. We must do more to increase our domestic supply from providing incentives for domestic oil production to allowing drilling on our coasts.

Sen. Lamar Alexander recently offered legislation with several wide-ranging approaches to help reduce the price of energy, including increasing domestic supplies of natural gas and oil by permitting the development of natural gas and oil resources beneath the waters of the Outer Continental Shelf (OCS). The National Association of Manufacturers says that the OCS has enough natural gas to heat 100 million homes for 60 years, and enough oil to drive 85 million cars for 35 years. This new production could provide temporary relief to our shrinking energy supply while renewable sources come online.

And hand-in-hand with increasing domestic supply, we need to increase our ability to process crude oil. The United States hasn’t built a new refinery in more than three decades, even as demand has increased. Not only have we not built new ones, many of the existing ones have been closed. Today, our country has only 149 operable oil refineries today, compared to 321 back in 1981. This means that twice the demand must be handled by only half of the capacity.

Another step to increasing our domestic capacity is through nuclear energy, which would allow the United States to reduce our fossil fuel consumption and emissions. The most productive and efficient-energy system in America is the nuclear program at the Tennessee Valley Authority (TVA), in terms of reliability. We have tremendous resources and skill sets in our Tennessee Valley region to help bring about a nuclear renaissance. TVA could demonstrate proliferation-resistant technology to recycle spent nuclear fuel and reduce waste.

When Congress passed the Energy Policy Act of 2005, I strongly supported a comprehensive solution to energy reform that included tax incentives for the use and development of renewable fuels and energy efficient technologies to make better use of our resources. Right here in Tennessee, our universities and our national laboratory, the Oak Ridge National Laboratory, are beginning to set the pace on developing the automotive technologies and alternative fuels like hydrogen and cellulosic ethanol that are so important to our future.

As a leader in this area, Tennessee will see economic benefits from the “entech,” or energy-technology sector. Not only would this lead to jobs and an increased manufacturing sector here at home, but it would strengthen our national security as we would no longer depend on foreign sources of oil. While some of these technologies are still years away from commercial production, there is a huge economic benefit to making them available to consumers around the world.

In the short term, conservation is important. Any sound energy policy must both increase production and reduce consumption. Consumers are already adapting by improving efficiency and conservation. But the Department of Energy estimates that maintaining U.S. economic growth through 2025, even with aggressive conservation efforts, will require a 36 percent increase in energy supply. Without increasing domestic capacity, and until new technologies are readily available to consumers, we will continue to slog through the adverse economic impacts of high energy costs.