Last month, oil prices topped $100 a barrel, setting alarm bells ringing in Western capitals still reeling from the last economic recession. We have been here before, of course: In 2008, oil prices started below $90 per barrel, spiked above $140 by midyear, and plummeted below $33 only six months later -- signaling both the economic bubble and its collapse. But unlike three years ago, the current rise in prices is not driven by surging oil demand and shrinking spare production capacity. Instead, widespread anxiety over unpredictable consequences of political upheaval in the Arab world reveals again the fragility of the global supply system for the one essential commodity of modern life.
COMMENTS (17)
More...
The United States should not need an international crisis to be alert to this critical vulnerability. In 2005, Hurricanes Katrina and Rita hit the Gulf Coast where U.S. oil and gas production and refineries are concentrated, causing major supply disruptions. Last year's Deepwater Horizon oil spill underscored the risks undertaken to explore in deeper waters and remoter areas under ever harsher operating conditions in order to satisfy America's thirst for oil. Yet that massive spill -- 200 million gallons of crude in all -- represented only six hours of U.S. daily petroleum consumption.
Nor were these the first alarms. The twin oil shocks of the 1970s awakened Washington to the United States' supply vulnerabilities, enough so that the government lifted its controls on oil and natural gas prices, leading to higher domestic production and greater energy-efficiency gains. Higher gasoline prices at the pump and introduction of Corporate Average Fuel Economy (CAFE) standards in 1975 led to a 30 percent improvement in the fuel efficiency of American passenger cars.
By the 1990s, however, lower world oil prices -- resulting from increased production from non-OPEC countries and higher exports from the former Soviet Union -- brought with them complacency over America's profligate oil consumption. The average fuel economy of cars sold in the United States actually peaked in model year 1987; CAFE standards have been left essentially unchanged since 1990, and automobile fuel-efficiency gains have been accordingly absent. This is decidedly not because automobile manufacturers failed to make technological advances -- rather, technical improvements went toward satisfying consumer desire for larger, heavier, and faster cars, not to enhance fuel economy. Sales of light trucks and sport utility vehicles surpassed those of passenger cars in recent years.
As a result, the United States -- with 4.5 percent of world population -- now consumes more than 40 percent of the global supply of gasoline. U.S. oil production, meanwhile, peaked in 1970, and the country became the world's leading importer of oil -- to the tune of more than $300 billion in 2010.
This is a manifestly unsustainable situation. Every U.S. president since Richard Nixon has called for "energy independence," but America's reliance on imported oil has mainly worsened -- along with a growing concern about fossil fuels' contribution to global warming. Yet the country is no closer to sustained policies for tackling either its oil import vulnerability or its carbon footprint.
U.S. politicians love to talk about energy policy, but they rarely deliver. The main reason is that the American energy system is so vast that it takes decades, not years, to shift it in any fundamental way. The car fleet, power plants, buildings, machinery, equipment, and manufacturing processes all take many years to turn over, even with the right market signals and policies. The scale of the problem is mind-boggling: President Barack Obama's promise in January's State of the Union address to put 1 million electric vehicles on American roads by 2015 may sound impressive at first -- until you consider that it would amount to less than half a percent of the more than 250 million vehicles currently registered in the United States. And where will the electricity to power even more electric vehicles come from? These are not the sort of challenges that can be easily resolved in an election cycle or two -- which explains why empty slogans such as "energy independence," "drill, baby, drill," and "green jobs" substitute for well-formulated long-term policy.
What would a serious public debate about energy -- a real discussion of the hard choices Americans face -- look like? To concentrate on the most important challenges, it would focus on the transportation and power sectors -- vehicles and electricity -- which together represent 72 percent of U.S. carbon emissions.
SUBJECTS:
(17)
HIDE COMMENTS LOGIN OR REGISTER REPORT ABUSE