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Congressmen's Answer to Oil Risks: Let's Use More

January 31, 2005

The Organization of Petroleum Exporting Countries has taken a fancy to higher oil prices. In the past few months, cartel linchpin Saudi Arabia has endorsed a strategy to keep target prices closer to $40 per barrel.

What it all means is that the costs of our high dependence on oil are going up. High U.S. demand combined with high oil prices will worsen our trade deficit, giving the international financial community more cause to worry about the falling dollar.

Intangible costs are going up also – more money going out the door to support hostile regimes, less freedom of action in carrying out important foreign policy objectives in the Middle East. Scientists also are accumulating evidence that our appetite for oil and other fossil fuels is changing the climate.

So, what is the House of Representatives about to do? Pass legislation that would foster greater dependence on oil. Your taxpayer dollars at work.

Take Congressman Richard Pombo, the Resources Committee chairman pushing to open the Arctic National Wildlife Refuge to oil drilling. He claims that oil from the refuge would greatly loosen the hog ties lashing America to OPEC money-grubbers. He says production from the refuge could equal in volume all the oil we import today from Saudi Arabia.

Pombo's statistic may be technically true but it is utterly meaningless in the real world. Before we swallow his rancid morsel of misleading bait, we have to look at the larger context. Oil is bought and sold in a global market where the last barrel sold determines the price. Use a lot of oil and you’re tied to that market and all its risks – most of the world's reserves are in the unstable Middle East, rising global demand is bidding up prices and creating a sellers’ market.

Even if domestic oil could somehow be isolated from the global market, America holds only 3 percent of world oil reserves. Domestic supply cannot keep up with burgeoning demand -- which proponents of drilling the refuge never want to talk about. Doing nothing about oil demand forces continued dependence on the global oil market.

Today we use 20 million barrels of oil per day, and 58 percent is imported. By 2025, the Department of Energy projects we will be using 28 million barrels per day and 66 percent will be imported – even if the Arctic refuge were drilled and in full production.

Opening the refuge to drilling would simply feed a dependency that leaves our nation’ security, economy, and environment increasingly vulnerable.

It’s time to try something new. DC security hawks, including former CIA Director James Woolsey and former National Security Adviser Robert McFarlane, are touting a $12 billion proposal called “Set America Free.” The plan calls for using incentives to diversify into non-petroleum fuels and commercialize super-efficient automotive technologies that can use existing fuel distribution and retailing infrastructure.

One example the plan cites is the plug-in hybrid-electric vehicle. Like conventional hybrids, such vehicles would run on internal combustion engines supplemented by electric motors to improve efficiency. The plug-in feature would give drivers the option of topping up the battery overnight, so the vehicle could run for longer distances on the electric motor alone, yielding fuel economy approaching 100 miles per gallon.

The Electric Power Research Institute, a utility think tank, estimates that existing generating capacity could handle a 30 percent market penetration of plug-in hybrids capable of running 20 miles on the electric motor alone. That’s because nighttime, when plug-ins would be plugged in, is an off-peak time for power plants and they would have ample capacity to serve the load.

Another example is alcohol fuels – ethanol and methanol - produced from farm waste and/or domestic coal. Alcohol can be burned in “flexible-fuel” vehicles that can burn gasoline, alcohol, or any combination of the two. Since 1996, 4 million such vehicles have been produced. Most of them burn gasoline exclusively because alcohol pumps are currently hard to find and many drivers are unaware of the dual fuel capability.

Combining flexible-fuel capability with plug-in hybrid technology could yield dramatic reductions in gasoline demand. A plug-in hybrid burning 80 percent alcohol and 20 percent gasoline could achieve mileage numbers approaching 500 miles per gallon of gasoline.

The intriguing point the Set America Free plan makes is that the recommended changes would not depend on dramatic technological breakthroughs. They would just depend on a breakthrough in political will at both ends of Pennsylvania Avenue.

Contact: Jim DiPeso, (253) 740-2066

Feedback

Your 1/31 blog caught my eye recently as I had recently seen a letter to the editor from Rep. Pombo published in the San Jose Mercury News (in late January). He was responding to what I considered an excellent, rational editorial, in which the editors recommended that the best place to drill for new oil is under the hood of American vehicles.

His letter not only touted the need for new Alaskan drilling, but refuted the idea that improved fuel efficiency was a good thing, writing that it would lead to increased vehicle costs. This of course struck me as rather preposterous, one in that it simply seemed to tout auto industry resistance to change (besides by all accounts their biggest profits come from the lowest mileage vehicles), but most obviously in that better gas mileage saves consumers money in the long run, especially with $2/gallon prices (in CA) seemingly here to stay.

Kevin Gregory
Sunnyvale, California