Based upon research aggregated at Georgia Tech, the following trends in oil security were realized between 2005 and 2007.
The U.S. continues to import oil at a near-historic rate, with almost 60% of U.S. oil consumption coming from other countries. Despite rapidly rising oil prices, the fuel economy of cars sold in this country has not improved. Ethanol fuels are gaining market share and will continue to expand to meet the new renewable fuels standard set by the Energy Independence and Security Act of 2007. But because most of today's ethanol is derived from corn, it will barely make a dent in the nation's oil dependence, while at the same time it is putting inflationary pressure on the nation's food supply. Corn ethanol is not a sustainable long-term solution. Rather, we need cellulosic ethanol to combat oil independence while not compromising food supplies or environmental quality. Unfortunately, cellulosic ethanol needs a vigorous R&D push to become cost-competitiveness, as is true of so many "solutions." How will these inventions occur when federal energy research budgets are less than half what they were in the late 1970's?
|Oil Imports as a % of oil consumption||58.40||60.30||Percent Decrease: 3.3%|
|Price of oil ($ per barrel)||68.04||53.30||Percent Increase: 27.7%|
|Ethanol Fuels (%)||1.95||1.21||Percent Increase: 61.2%|
|Average fuel economy of new passenger vehicles (mpg)||27||27||0%|
All financial metrics are in $2007.
Energy Insights from Policy Expert Marilyn Brown
Nationalism And Rising Demand Drive Up Oil Prices
At a recent Shell Oil meeting in Atlanta, John Hofmeister, U.S. president of Shell Oil Company, declared "The market for hydrocarbon energy is broken."
Approximately 80 countries produce and export oil, but there's only one country, Saudi Arabia, with surplus production capacity that can be quickly ramped up to meet growing petroleum demand. As many of the other countries nationalize their oil production, global oil companies are increasingly made marginal players. Exxon/Mobil, BP, Chevron, Conoco/Phillips, and Shell altogether own or control less than 5 percent of proven global oil reserves.
Following a cold snap in the United States and turmoil in Nigeria, the new year was "welcomed" by an all-time peak in oil prices on January 3, 2008, when the $100 per barrel threshold was surpassed. But weather and politics in Nigeria were not the real cause of the oil price spike: more fundamental problems are at work.
High oil prices are principally the result of escalating demand for oil and the slow growth of petroleum production due to nationalism and increasingly expensive extraction of finite reserves. U.S. oil imports grew by more than 2 million barrels/day (i.e., 10 percent) over the past five years, and this expansion was matched by an equivalent and simultaneous combined growth in oil demand by China and India. In addition, no new North American oil refineries have been licensed or brought online to make crude oil market ready in more than 30 years.
A range of $70-80 a barrel has been suggested by some analysts to be OPEC's goal. If prices continue to hover around $100, the U.S. economy will slow down and fewer barrels of oil will be purchased. This is exactly what happened in 1980, when oil experienced its previous price spike sending the nation, and later the global economy, into a recession.
As the trend of nationalism is unlikely to be reversed, western economies have no choice but to ramp up research and development to improve vehicle fuel economy, develop smart alternative energy sources, and design systems that require less driving. This is the only viable strategy for becoming less dependent on foreign oil and economies in regions of the world far outside of our influence or control.