Commentary - Americans must start cutting back on oil

dependence on this vital commodity.

High oil prices are a symptom of tight supplies and have grown $20-30/barrel during 2000-2003 to over $90 now. The world’s spare oil pumping capacity has dwindled to almost nothing – less than 1.5 million barrels per day (mbd). Thus the supply/demand balance has changed dramatically and permanently for the worse.

Even though the United States has only 2.4 percent of the world’s oil reserves, it uses 24 percent of all oil consumed, importing over 60 percent of it. Americans no longer have much oil, but continue to use it extravagantly.

We’ve also been losing control over supplies. Our percentage of the world’s oil reserves has fallen from 25 percent in 1950 to 2.4 percent today. And oil companies now have less authority over the development of reserves in foreign countries where oil rights are generally owned by the state.

Historically, these states leased their oil lands to major oil companies – mostly American – with the technological expertise to find and develop the reserves. However, governments now realize how valuable these oil

rights are and have become much more restrictive about giving foreign oil companies control. Some have even reneged on previous contracts.

Oil is so convenient and economical that it fuels 97 percent of our transportation. Gasoline constitutes 45 percent of our daily oil usage. Substituting another fuel for transportation is inevitable over the

coming decades, but we do not have the luxury of moving from automobiles to mass transportation.

The infrastructure of homes, schools, and workplaces in most of this country was built around personal transportation. While we can afford to revamp cars and fueling stations as needed, we cannot

afford to move the entire population together enough for mass transit to work for everyone. We will have to solve the problem of powering vehicles with

something other than oil.

What actions can the U.S. take to use less oil to accomplish the same transportation task and stimulate development of alternatives? Conservation alone can provide large savings in oil consumption. For

decades, Europe has heavily taxed fuels with the result that their cars get much better mileage than ours. If our cars were as efficient as those in Europe, we would reduce oil imports by more than what we now buy from the Middle East.

We have been too timid in rolling out new technologies. For example, the “Set

America Free” blueprint states that America could reduce oil consumption in 2025 dramatically if all cars were hybrids and half of them were plug-in

Hybrids powered by virtually any source, including nuclear. Instead, we have wasted several precious years and spent considerable money on our experiment with corn-based ethanol, a process that dramatically raises the price of corn but does not have the potential to make a big impact on oil consumption.

Considerably higher fuel prices would stimulate both conservation and alternative fuels by harnessing the

ingenuity of private industry. Thousands of companies driven by the profit motive would take up the challenge to find the best technologies.

Higher prices could be caused by taxes of perhaps 20 cents per gallon over ten years, with the government returning the money by reducing other taxes. This steady increase would minimize any negative impact on the economy, while sending a clear message to encourage conservation. Other approaches, such as stiffer CAFÉ standards or other investment incentives, are more complicated, slower acting, and often produce unanticipated side effects:

To ensure its economic health, America should take steps now to halt the growth in oil consumption and accelerate the long process of developing new technologies. Given that we sent a man to the moon in ten years and completely converted our nation’s industry to a wartime footing in the six months after Pearl Harbor, we certainly have the capability to cut the growth rate in oil consumption to zero

by January 2010, and lower it annually by a half million barrels per day after that.

Tom Mast is the author of “Over a Barrel; A Simple Guide to the Oil Shortage.”