POLITICS

Curb Our Dependence

On Foreign Oil? Make a Wish!

By Stump Connolly

Fri, Sep 14 2007

You can’t run for public office these days without professing your commitment to curb our dependence on foreign oil.

Over the last five years, Congress has authorized over $12 billion to subsidize exploration of new oil fields, wind power, solar power, nuclear power, “clean” coal and bio-fuels made from everything from corn and switch grass to wood chips and cow dung. But if you add up all the progress we’ve made developing these alternatives (and there has been progress) it still hasn’t made a ding in the bumper of our gas hog of an economy.

Since President Bush announced his first national initiative to “curb our dependence on foreign oil” in 2002, the United States, in fact, has actually increased our oil consumption. Domestic production is down 650,000 barrels a day; domestic use is up 1,130,000 barrels a day; and we are making up the difference with a net increase of 1,860,000 more barrels of imported foreign oil a day than five years ago. Barring some unforeseen calamity, the natural growth of the American economy will leave the next president with the need to find and/or save at least a million more barrels of oil a day by the end of his first term in 2012 –– just to keep foreign oil imports at the current level.

All of the current candidates have a solution. Hillary Clinton wants to find “clean and homegrown” alternatives. Barack Obama wants to give the auto industry incentives to design more fuel-efficient cars. Mitt Romney wants to drill more wells in Alaska and offshore. Rudy Giuliani wants to build more nuclear energy plants. Dennis Kucinich wants to put more money into wind and solar power. But there’s one point on which they all agree: we should curb our dependence on foreign oil.

So maybe it’s time for a report card on what we can expect from all these alternatives. Let’s look at them one at a time:

Solar and Wind Power

Environmental purists will tell you there is nothing more eco-friendly than solar and wind power, and they are probably right. The problem is harnessing that power. In the last five years, with heavy subsidies from both state and federal sources, wind-generated power stations in the United States have increased their output of electricity 250 percent and solar-generated electricity has grown 3.5 percent. These are, on the surface, impressive gains until one realizes this constitutes less than 1 percent of our renewable resource power (i.e. not including coal and gas-generated electricity) –– and all of it goes into the electrical grid system.

But electricity remains an abundant resource in the United States. With the largest deposits of coal in the world, America generates just shy of 50 percent of our electricity from coal-fired power plants. Nineteen percent comes from nuclear plants; another 19 percent from natural gas, six percent from hydroelectric power dams and three percent from petroleum.

In the fight against global warming, wind and solar power are integral (although finding “clean” coal alternatives would have more impact.) But they have little to offer in the way of curbing our dependence on foreign oil.

Bio-fuels (ethanol from corn, switch grass and wood chips)

Ethanol is this year’s fuel of the future (at least until the Iowa primary is over.) But what kind of ethanol? For the last five years, the federal government has poured billions into underwriting development of ethanol gas additives from corn. In addition to generous construction grants, producers receive a 51-cent subsidy for every gallon of ethanol they produce (which last year came to 4.9 billion gallons, or four percent of the U.S. motor gasoline production.)

Federal subsidies have grown corn ethanol processing industry from 10 plants in 2000 to 110 today, with 76 more set to open in the next 12 months. These, in turn, will help meet Congress’s stated goal of producing 7.5 billion gallons of ethanol by 2012 and President’s Bush’s announced (but unapproved) goal of producing 35 billion gallons by 2017.

There are, however, two flies in the ethanol ointment.

First, it takes 1.3 gallons of fossil fuel (mostly oil) to produce that gallon of foreign oil replacement fluid.

Second, today’s ethanol plants are soaking up so much of the available corn crop that the price of corn has risen from an average of $2.40 a bushel over the last two decades to over $4 a bushel, and the price increase is rippling through the U.S. economy in higher feedstock prices for farmers, more expensive meat prices for consumers, and attendant price hikes in other corn by-products affecting everything from corn syrup to cardboard packaging.

Ethanol advocates claim the gas additive leads to a 30 percent savings in oil consumption. But two university professors –– David Pimentel of Cornell University and Tad Patzek of the University of California –– set out two years ago to follow the ethanol production chain to determine the net energy gain or loss.

Taking into account the diesel fuel that goes into planting the corn, fertilizing the field, reaping the harvest, trucking the product to the plant, and operating the distilling process, they concluded corn-based ethanol requires 29% more fossil energy to create than it yields. And other more nascent ethanol products fare worse. Switch grass requires 50 percent more fossil energy; wood biomass, 57 percent; and soybeans, 27 percent.

Only ethanol derived from sugar –– used successfully in Brazil to fill 50 percent of its auto gasoline needs –– has a positive energy balance yield. But Congress, in its wisdom, has put a 50-cent per pound tariff on imported sugar to protect American sugar farmers so we aren’t even considering that.

The impact of America’s rapid expansion of ethanol production, moreover, is also vastly over-rated. When the billions of gallons annually are measured like oil in millions of barrels a day, the projected domestic ethanol production in 2012 will fill less than 0.5% of America’s oil needs.

Hybrids and Hydrogen

Automobiles, airplanes and other transportation vehicles account for roughly two-thirds of our domestic oil consumption. So it goes to figure that more fuel-efficient cars will lead to lower gasoline consumption. This is the premise behind the hybrid automobiles that seamlessly shift between gas engines and rechargeable batteries to yield 50-60 miles per gallon versus the current American automobile average of 27.5.

Hybrids came into the American market in 1999 with the introduction of the Honda Insight, followed eight months later by the first Toyota Prius. Despite a promised 70 mpg, neither sold particularly well. They were pricey compared to other standard models; and when gas was selling at $1.29 a gallon, fuel-economy was not on anyone’s mind.

In 2003, about the same time gas prices were jumping up over $3.00, Toyota redesigned the Prius and launched it with a PR campaign that made it an eco-friendly status symbol in Hollywood. It didn’t hurt that Congress the next year gave hybrid car buyers a tax deduction worth $600. When Congress turned that deduction into a tax credit worth up to $3,100 in 2006, sales of hybrid cars took off.

This year, Toyota and Honda will sell nearly 250,000 hybrid cars; and every major auto manufacturer is jumping on the bandwagon with hybrid models of trucks, SUV’s and even light trucks. By 2015, Edmunds.com estimates that sales of new hybrids will reach 1.7 million a year.

Unfortunately, that is still less than 10 percent of the new vehicles made in America every year and, as efficient as hybrids are, they will be sharing the road with 100 million older legacy cars, trucks, semi-trailers and other vehicles tethered to the old gas-guzzling technology.

In Detroit, forward-thinking auto designers are looking beyond gas and electric-powered cars to vehicles that operate entirely on hydrogen. In his 2003 state of the union speech, President Bush dedicated $1.7 billion toward research aimed at developing a practical hydrogen car by the year 2020.

Hydrogen-powered cars are an alluring proposition. Not only do they replace gasoline as a power source but the tailpipe emissions after combustion have no greenhouse gases that increase global warming. The problem here is that hydrogen is an energy carrier not an energy source.

The power behind hydrogen cars must be created elsewhere (current experimental models use six sources, half of which require fossil fuels) and to become a viable means of transportation, someone has to invent a way to produce, store, transport and distribute hydrogen to all the vehicles on the road.

Multiple technical and financial breakthroughs will be needed before hydrogen cars become practical. The most optimistic guess is that we will have that technology in hand by 2030, but it won’t be until 2050 that a nationwide system of fuel stations to service these vehicles will be in place.
Will that curb our dependence on foreign oil?

Exploration vs. Conservation

There is a legitimate argument to be made that if the conservationists would take the clamps off the drilling in the Artic National Wildlife Refuge in Alaska, we might add another 600,000 to 1.6 million barrels of oil a day to our domestic production capacity. Before that can happen, however, we will need to find it and build a pipeline or other supply route to get it out.

In a best case scenario, if Congress acted tomorrow to allow ANWR drilling, the first trickle of that oil wouldn’t reach the United States until 2017 and it wouldn’t be until the year 2029 that production would reach full capacity, most likely around 900,000 barrels a day.

We also know there are pockets of oil still untapped in the deep waters of the Gulf of Mexico and closer in along the Florida coast (where conservationists have so far blocked development.) Congress authorized $2.8 billion in 2005 in tax incentives to oil companies to spur that exploration (not that anyone’s holding a tag day for them.) But record profits from current operations, complex technical issues reaching the oil, and second thoughts after the oil rig damage from Hurricane Katrina have combined to slow development.

Yet another prospect for finding new oil on this continent lies in northern Canada where various oil company consortiums are developing expensive, but promising new technologies to extract oil from tar sands. The Canadian National Energy Board recently upped its estimate of the potential yield to as much as 3 million barrels a day by 2015, in part because higher oil prices are making the expense more affordable, and planning is well underway for a pipeline to take this oil directly through Canada to the Chicago refineries.

Closer to home, the Bush administration won congressional approval in the 2005 energy bill to conduct an environmental impact study on using similar methods to extract oil from shale deposits in a Rocky Mountains region known as the Green River Formation.

The Green River runs through federal lands at the corner of Utah, Colorado and Wyoming. A thousand feet below the surface, the U.S. Energy Department estimates as much as two trillion barrels of oil lies trapped in the shale – eight times the oil reserves of Saudi Arabia. Mining that shale, processing the rock to extract the oil and disposing of the remnants would create a mountain of refuse five times higher than Aspen. But, hey, with the right contouring, wouldn’t that be a great ski hill?

Leaving aside the pesky fact that the exploration area cuts through both the Flaming Gorge and Dinosaur National Wildlife areas, the logistics of extracting the oil are daunting. Not only would we have to dig down 1,000 feet to reach the shale layer, but we would need to create a whole new industry devoted to shale oil processing in Wyoming. To Dick Cheney, who championed this lost cause, that’s an opportunity. Like remaking Iraq into a democracy of our own image. To the rest of us, it’s a nightmare.

The flipside of finding new oil is using less of it. The surest path to assuring less oil consumption is a federal mandate raising fuel efficiency standards for cars and small trucks. Congress first tried this in 1975 in response to the Arab oil boycott. Inside of ten years, American automobiles went from averaging 12 miles a gallon to 24 miles a gallon. The rising federal standard peaked in 1987 at 27.5 miles per gallon and, as pressure to conserve eased, that is where it remains today.

This fall, Congress will again consider raising the standard, with a consensus developing around a plan by Democratic candidates Barack Obama and Joe Biden (among others) to increase it four percent a year until it reaches 35 miles a gallon by the year 2020. When fully implemented, the higher standard will save 1.3 million barrels of oil a day, more than can be expected from Alaskan oil drilling, ethanol processing, hydrogen cars, solar or wind power. But is it enough?

The Reality

The reality is nothing underway or proposed will cut our dependence on foreign oil––it will only slow its growth.

Every day America uses 21 million barrels of oil, some 12.4 million of which comes from foreign sources. Former Energy Secretary James Schlesinger, now an oil company executive with Mitre Corp., says the idea of America achieving oil independence is a “flaw of perception” perpetrated by politicians to demonstrate they won’t be held hostage by hostile forces in the Middle East.

But the Middle East is where 70 percent of the world’s known oil reserves lie and the global price of energy is set. Maybe it’s time to embrace our friends in the region instead of fearing them –– while we still have a few left.

The irony of the last five years is that while Americans floundered about looking for alternatives to oil, Saudi Arabia has been quietly spending $25 billion to raise their oil output. It has retro-fitted drilling operations in the mammoth Gahwar oil fields and established mega-projects offshore in the Arabian Gulf and in the Rub al-Khali desert that, over the next five years, will pump out as much as 4 million more barrels of oil a day.

If our venture into Iraq doesn’t lead to Sunni-Shia strife that spills out through the region, that should stabilize world oil supplies long enough to allow our alternative energy programs in the United States to get a foothold.

But if you’re looking for the one sure way to curb our dependence on foreign oil, make Saudi Arabia our 51st state.

* Unless otherwise noted, figures used in this article are derived from reports by the Energy Information Agency of the U.S. Energy Department.