Policies to Address the problem of U.S. oil dependency - Research Paper Example

Policies to Address the problem of U.S. oil dependency Background More than 150 years after the beginning of U.S. petroleum industry (since 1859), oil still is considered as the most strategic commodity. Given the limited capacity of oil reserves in the world and ever increasing global demand for it, in recent decades oil has played a significant role in foreign policies of nations, especially those of great powers. Not surprisingly, oil has been an important factor in shaping bloody and costly conflicts, particularly since the World War II. During the last decades of the 19th century and the beginning of the 20th century, America was able to meet the country’s basic needs in the energy sector primarily by using its own oil reserves (figure 1). However, by the end of the 1940s, “the United States began to rely on foreign oil to satisfy rising energy demand, and the proportion of imports has been rising more or less steadily ever since” [Kla05]. Today, according to U.S. Energy Information Administration (EIA), the United States is the largest oil consumer and consumes near 22% of the total production of oil in the world. That is equivalent to something about 18,771,000 barrels per day, of which about 9.7 million barrels (51%) are imported (on a net basis) from foreign countries. However, this dependency to oil is very costly and also is tightly linked to our national security due to both potential economic and political threats related to it. In fact, any abrupt disruption in oil supply from overseas and surge in the world market price of oil would severely damage U.S. economy. These harmful changes in oil supply and price could happen in case of regional conflicts in oil-reach countries, most importantly in the Middle East, or “because of deliberate reduction in supply by major exporters” (Crane et al. xiii). Moreover, there is a potential threat from rough states (such as Iran and Venezuela) and terrorist groups (such as Al Qaeda). In fact, the increasing in the revenue of unfriendly oil exporter countries due to the global demand, in which America has the major share, may help these states to “finance activities contrary to U.S. interests” or to support terrorist groups (Ibid. 43). For these reasons, in recent years our U.S. leaders have called for a drastic decrease in the amount of imported oil. President Barak Obama in his recent speech on energy at Georgetown University set a goal of “reducing U.S. oil imports by one-third by 2025” (CBSNEWS March 30, 2011). To meet the President’s call for reduction in oil imports, there are three types of policies as I am going to discuss here: 1. Policies to increase domestic oil production 2. Policies to develop alternative sources of energy 3. Policies to reduce domestic consumption of oil Increasing Domestic Oil Production One sort of policies to address the problem of U.S. oil dependency is to reduce the amount of imported oil by increasing domestic oil production (which is generally backed by Republicans). Looking back, U.S. production of oil reached its peak in 1970 with 11.3 million barrels per day[Hol01] and ever since it has declined and now is almost 7.2 million barrels per day (EIA). There are, however, some practical ways to reverse this situation. First of all, Washington can conditionally allow drilling in Alaska at ANWR (the Arctic National Wildlife Refuge), which is an environmentally sensitive region. In its full capacity, it is estimated that ANWR could supply 1.5 to 2 million barrels per day and displace near “10 percent of projected U.S. oil imports” for about two decades (Holdren). Moreover, the Gulf of Mexico at least “could be producing another half million barrels per day” [Utl11]. After the disastrous last April’s oil spill, deep-water drillings and explorations currently are not allowed in the Gulf. However, that was an avoidable accident “came after thousands of successful and safe deep water wells have been drilled” (Ibid.). Another option is to use oil sands (a type of unconventional petroleum deposit), both in our domestic deposits and in Canada which hold extractible 32 and 173 billion barrels of oil respectively (Dammer 6; “Alberta’s Oil Sands” 2). This also could bring in half million or more barrels of oil per day. However, some technological developments are needed to reduce the costs of oil extraction. The above-mentioned options to increase domestic oil production could cut oil imports “roughly in half” and would produce hundreds of thousands of new jobs [Utl11]. However, they are opposed by environmental groups who point to unavoidable environmental damages (such as “wildlife habitat destruction, water and conventional air pollution, and carbon dioxide emissions”) related to the process of exploring and extracting oil (Crane et al. 83). Developing Alternative Sources of Energy Another kind of plausible policies to tackle the problem of oil dependency is to develop other sources of energy to replace oil. The first option is to expand using natural gas which unlike oil is abundant in the United States. In fact, according to EIA’s recent report on U.S. crude oil and natural gas reserves, America’s natural gas reserves “increased by 11 percent in 2009 to 284 trillion cubic feet” (this amount is even expected to rise) which equates to more than 100-year supply of natural gas. While near %70 of U.S. oil is used in the transportation sector, by switching vehicles’ fuel to natural gas within 10 years we can dramatically reduce American oil imports[Dav10]. Meanwhile, there would be enough time to develop more efficient electric cars as “the ultimate alternative to fossil fuels” (Ibid.). Another option is to use renewable fuels (biofuels). The most common type of renewable fuel is ethanol, which can be “produced from corn and blended into gasoline” (Crane et al. 84). However, while ethanol is better than gasoline in terms of greenhouse gases production, as a study at the University of Berkeley shows, “it takes more energy to grow the corn to make ethanol than we get out of ethanol when we burn it” (Sanders). Nevertheless, with the development of “new technologies and practices, such as sustainable agriculture and cellulosic ethanol production,” ethanol would become a really good fuel for the United States in the near future and “could play a key role in meeting the nation’s energy and environmental goals” (Farrell et al.). Reducing domestic consumption of oil The last sort of policies to reduce U.S. oil imports focus on reduction in domestic oil demand. This could be done even without introducing any alternative fuel. By a mix of encouraging and discouraging measures it is possible to gradually reduce oil consumption in a large scale. To this end, on the one hand the government should force car manufacturers to produce more fuel efficient vehicles. One practical way is to set a minimum standard each year, as already mandated by the Corporate Average Fuel Economy (CAFE) regulations, and to force automobile manufacturers to meet or exceed the standard in order to avoid fines (Crane et al. 86). On the other hand, individuals must be encouraged to reduce their oil consumption by driving less or using public transport whenever possible. This changing habit, however, needs a long term and costly educational program, and it should primarily target children. In addition, the government could raise fuel tax to discourage unnecessary consumption. A domestic tax on oil consumption “will result in higher prices for individual consumers but lower net import payments for the country as a whole, since the world oil price will be lower and the demand for imports should fall” (Ibid. 85). However, fuel tax is generally unpopular, and depending on how the tax revenues would be used, it could shape a political opposition to it. Concluding remarks As argued before, U.S. oil dependency is a serious problem that needs some carefully measured policies to tackle it. All the above-mentioned policies are helpful to reduce the harmful impacts of oil dependency on our economy and national security, and they need to be implemented in conjunction with each other (rather than in isolation). However, since world oil supplies are set to run out sooner or later, I recommend the President to especially back the policies of developing alternative renewable sources of energy while considering other options as well. In fact, turning to renewable fuels such as ethanol and developing electric cars are cost effective (particularly in the long term) and do not need substantial change in our economy and their environmental impacts can be reduced considerably by using new technologies. Works Cited Kla05: , (Klare 10), Hol01: , (Holdren), Utl11: , (Utley), Utl11: , (Utley), Dav10: , (Fessler), Read More