Thursday, July 7, 2011

Is Energy Independence Impossible For America?

Energy independence is a dangerous delusion or even a lie some experts insist. America consumes nearly 25 per cent of global energy but has just 3 per cent of world oil reserves. We import close to 70 per cent of the oil we consume. How can we be energy independent?

Simply put, America is energy independent, with the important exception of oil. We now have seas of American natural gas, plenty of coal, more than enough wind, solar, hydro potential energy to supply America. But not enough oil.

Reducing oil consumption by 70 per cent would end our dependence on foreign oil and make us energy independent once again. Let us remember America was energy independent for our entire history until about 1960.

Today oil provides 90 per cent of our transportation fuel with American ethanol, biodiesel, and natural gas the remainder.

And today substitutes for oil--natural gas vehicles, electricity vehicles, biofuels--are more viable than ever in our history. Oil at $100 per barrel or more makes a lot of substitutes economic, putting aside the huge national security costs to all Americans that will never be fully priced into the price of oil.

But the immense national security costs that amount to trillions of dollars must be included and not put aside.

In addition to the oil substitutes, America has two more big resources that must be deployed to end  foreign oil dependence and make us energy independent.

First is American oil. We can produce 6 to 8 billion barrels per day or about 30 to 35 per cent of our current oil consumption.

The second immense resource is energy efficiency. At $4 or higher gasoline prices many efficiency measures to reduce oil consumption become economic and even imperative.

One hundred plus dollar oil changes everything. Oil substitutes are economic, more US oil production is economic, and energy efficiency is a bargain. For example high mileage vehicles--more than 40 mpg--now command a premium in the used car market.

The USA is now energy independent except for oil. Oil substitutes, American oil production, and high mileage vehicles and other energy efficiency can cut US oil consumption by 70 per cent within 20 years and make the USA energy independent once more.


  1. We import 70%?

    This EIA page indicates it was more like 49% in 2010, while we produced about 9% of global crude, just behind Saudia Arabia and Russia.

    Increasing production will only do so much (it seems like the more we produce, the more environmental and infrastructure challenges we will have-note recent pipeline issues and well blowouts); at some point we have to address consumption with actions such as improved CAFE standards, efficient public transit, programs that encourage Americans to walk more/drive less and better planned development and travel systems.

    I've visited at least a dozen countries-we have to be one of the laziest, consumption-oriented countries in the world as far as I can tell. Additionally when the price of a good is linked to the price of oil due to cost of transportation and packaging, the higher the price of oil, the more all these goods costs, and the less money Americans have to spend on other things.

    For this reason, I also advocate localized production of goods, as localized production is usually less energy intensive, and that money that would have gone to transportation fuel stays in the local economy.

  2. Very nice emphasis on the unaccounted subsidy of oil in terms of security. Domestic natural gas doesn't now nor ever will carry the cost of US efforts in the Middle East in diplomacy.

  3. Depends on what calculation one uses. The US consumes about 19 million barrels per day of "oil." The US imports about 12 million barrels (11.8 in the EIA 2010 numbers).

    EIA did a "net import calculation." The US produces 5.5 million barrels per day of oil but we actually export over 2 million barrels of it.

    EIA therefore concluded that our net imports were 9 million barrels and therefore 49%.

    I think the US should eliminate the 12 million barrels per day of oil imports (that is closer to 70%).

  4. Thanks for the explanation, John.
    Homer Simpson once said, "I don't believe in facts; they can be used to prove anything."

    Understanding the source and logic behind a statistic often improves comprehension of the subject area described.