In Monday's Wall Street Journal there was an article entitled "A Declaration of Energy Independence" by Robert McFarlane. The article begins:
In the 30 years since the oil shocks of the 1970s, our original hopes to achieve energy independence have given way to the less ambitious goal of achieving energy security, defined as "secure access to adequate supplies of primary energy at affordable cost."
Recent expert analysis suggests, however, that we may have given up too soon and that while energy security may be the best we can hope for in the short term, within a generation we can be truly independent -- free of all reliance on foreign oil . Let's consider what will be required to get us through both periods successfully -- starting with the holy grail, energy independence .
Later he goes on to outline some of the specific proposals:
The report outlines the steps to get us from here to zero reliance on foreign oil : First, to retool automobile, truck and aircraft manufacturing to reap fuel efficiencies by using advanced composite and lightweight steel construction. Such a metamorphosis could eliminate as much as 52% of the oil we use today by 2030 with no loss in safety or performance. Second, we should exploit recent advances in technologies for converting cellulose to ethanol and thereby replace another 25% of the oil we consume today. In the process we could increase farm income by tens of billions of dollars and create 750,000 jobs.
and he concludes with:
Among the serious problems facing the new administration surely the long-term threat to our economy of $45/bbl oil and $6/mcf natural gas must be near the top. This threat is accentuated by the threat of disruption of deliveries from the Persian Gulf. It is becoming clear, however, that the means to achieving near-term energy security and ultimate independence from foreign oil are at hand. Courage and leadership are all that it takes to get us there.
One thing that is not clear is what is specifically meant by "ultimate independence from foreign oil". The price of oil is bound to fall as more efficient technologies are invented over the decades to come. Hybrid cars currently seen on the streets is but just one example. But even in McFarlane's layout we still will be using oil in the year 2030. Under this scenario, even if 100% of domestic consumption of the commodity can be produced within the U.S., it does not follow that we'll be "independent" from foreign oil.
In the 1970's the United Kingdom obtained 100% of it's oil from the North Sea, but the country was not immune to the price spikes of crude during the decade. This is because oil, via tanker or pipeline, can be transported to whoever is willing to pay the highest price. Therefore simply because a country produces more oil than it consumes does not mean it is no longer dependent on foreign oil... it's a world price. This is a point that is sometimes lost on Republicans in Congress who claim that drilling in ANWR will help to free us from dependence on oil from the Middle East.
McFarlane suggests that massive government subsidies are needed to get the U.S. off it's addiction to oil. I say the market will naturally take us in that direction and crude prices currently at their higher levels will only accelerate the process. One day in the not so distant future, we're going to wake up to read in the papers that 'Cold Fusion' has truly been discovered, mere gallons of water will be able to power Los Angeles pollution free, and all these worries will be a thing of the past. I can't wait.
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