Energy Independence

US energy independence relates to the goal of reducing the US imports of oil and other foreign sources of energy. If total energy is looked at, the US is over 70% self-sufficient. Energy independence is espoused by those who want to leave America unaffected by global energy supply disruptions, and to restrict a reliance upon politically unstable states for its energy purposes.

Energy independence is highly concerned with oil, being perhaps the most important imported energy sources for purposes of both transportation and electricity. The United States is the world’s third largest producer of oil, but it also relies on imported oil. More oil is imported from Canada than any other country. 19% of imported oil comes from the Middle East. Such resources are finite and decreasing, despite an increase in demand. World-wide demand for oil is projected to grow 60% over the next two decades.

The US currently produces about 40% of the oil that it consumes; its oil production peaked in 1970 and its imports have exceeded domestic production since the early 1990s. Greater energy self-sufficiency, it is claimed, would prevent major supply disruptions like the 1973 oil crisis and the 1979 energy crisis from recurring. Proponents argue that the potential for political unrest in major oil suppliers, such as Saudi Arabia (15% of domestic consumption), Venezuela (13%), and Nigeria (10%), is abundant, and often cause great fluctuations in crude oil prices (especially in the short-term), despite the risk-potential being factored into market prices.

Those who favor increasing domestic oil production often suggest removing many of the limitations on oil exploration in the Gulf of Mexico, the Arctic National Wildlife Refuge (ANWR), and the Outer Continental Shelf. Oil in ANWR was discovered in the 1970s, and the question of whether the national park should be opened up to oil exploration is a very controversial issue in American politics. ANWR has been reported as having the largest remaining oil reserve in North America. The US Department of Interior estimates range from 9 to 16 billion barrels of recoverable oil, which would increase the proven reserves in the U.S. by another 1.2 to 2.2 years at current consumption rates. Environmentalists have raised many concerns about the impact that drilling would have on wildlife, and point out that the expected oil production would only temporarily decrease, not eliminate, America’s dependence on foreign oil. Drilling proponents argue that drilling would create many jobs in Alaska, (250,000 to 735,000; Alaska’s current population is about 625,000) give America more time to develop alternative energy sources, and that by using modern technology, the environmental effects could be minimized.

More recently, proponents of U.S. energy independence are looking to the wider use of alternatives such as ethanol fuel, methanol, biodiesel, plug-in hybrids, and other alternative propulsion. The United States currently imposes an import tariff of 54 cents a gallon on ethanol fuel (there is no such import tariff on oil). In Brazil, ethanol is produced from sugarcane, which yields much more energy per acre than the corn used for ethanol production in the United States. In the United States, oil is primarily consumed as fuel for cars, buses, trucks, and airplanes (in the form of gasoline, diesel, and jet fuel). Two-thirds of US oil consumption is due to the transportation sector. A national strategy designed to shift all transportation to a combined use of alternative fuels and plug-in hybrids would free the US from dependence on petroleum (oil). If alternative fuels are desired at any cost, then the U.S. could also make Synthetic fuel from its abundant coal reserves. Methanol, synthetic diesel, and gasoline made from US coal can replace petroleum derived fuels for the next hundred years, which is long enough to develop sustainable domestic renewable fuels such as cellulosic ethanol or methanol.

Since Americans may primarily object to oil imports from certain regions rather than in general, sometimes it is proposed that all of North America as a unit should be energy independent, but that the US could still import energy from Canada and Mexico.

Though many American politicians have recently spoken out in favor of working toward energy independence, the discussion among proponents often overlooks the trade implications, focusing more on means and ends. It is rarely discussed whether the effort would be to make the United States into a net neutral/net exporter of energy, wherein the U.S. would produce and consume equivalent or less energy than it produces, or instead to make the United States completely self-feeding, wherein U.S. consumers would purchase energy solely from U.S. producers, enforced by wide embargos/autarkies or tariffs. The conversation among proponents also often disregards macroeconomic factors, such as incentives for American companies to produce in other nations, which offer access to the other three quarters of global demand and an estimated 97% of global fossil fuel reserves.

Opponents of U.S. Energy Independence argue that a major supply disruption has not occurred for more than two decades, and contend that the movement promotes isolationism and protectionism. Highlighting the difficulty of separating domestic and foreign oil sources, journalist Robert Bryce has stated that ‘the trends of energy interdependence are growing and are inexorable’ and branded the idea of being able choose where your oil came from as ‘hogwash.’ Critical perspectives of US energy independence argue that despite all popular political rhetoric, it is actually impossible and not beneficial to wean the country from all foreign energy sources. It may be best to rely on a broad and varied spectrum of global energy resources.

Opponents argue that energy independence will not decrease US involvement in the Middle East. Interests in the Persian Gulf, including the protection of worldwide energy security upon which the global economy is dependent, will remain a US priority. The oil reserves and the stake the US has claimed upon them by building up such a strong military presence in the region is an investment that will not quickly be abandoned for illusions of independence. Even if someday the country isn’t interested in Middle Eastern oil, the political and economic power that it wields by maintaining strong ties in the area is of sufficient size that abandoning the Gulf entirely would be unlikely. In addition, terrorism will not be reduced in the Middle East if the US ceases to buy oil, because terrorism is not directly funded by oil money. However, US military presence is the most contributing factor to terrorism in the Middle East. Although vast oil supplies are found in an unstable region which foster difficult games of geopolitics, these geopolitics will continue to be fueled by other large consumers of oil, such as China, whether or not the US achieves energy independence.

Furthermore, the US is unable to produce enough energy to fuel its growing economy and energy use, due to the unreliability of renewable resources and the limited supply of domestic energy reserves. Renewable energy sources can be extremely inefficient, as in the case of corn-based biofuels, which requires massive government subsidies and also enormous amounts of water and chemicals to grow, and causes significant air pollution when combusted. Other renewables, namely wind and solar power, are expensive and intermittent, and lack the infrastructure and technology needed to properly store the energy they harness from the environment. Energy-efficient electrical and electronic devices require rare earth elements which mostly come from Inner Mongolia, and lithium, which mostly comes from Bolivia. Natural gas is not a viable portion of US energy since we may have peaked in domestic reserves. In the absence of breeder reactors or fusion reactors, nuclear power plants aren’t a solution to energy independence either, since uranium must be imported (currently, 80% of US uranium is imported, mainly from Russia and Canada).

Lastly, although the US enjoys massive coal reserves able to power our country at current rates of energy consumption for 200 years, the hope that the country could use this resource as a liquid to fuel our transportation sector is unlikely. Although currently the US remains a net coal exporter of lower-quality coal, a large and increasing portion of coal is being imported due to the cheaper, high-quality, low-sulfur foreign coal needed by power plants coping with air-quality regulations.

Roger Howard has argued in the ‘Wall Street Journal’ that oil dependence has significant benefits for the US and other oil-importing nations. First, the world’s major oil exporters are highly dependent on their oil revenues, and fear rapid drops in the price of oil, such as occurred in late 2008. Second, this fear restrains destructive actions by exporters: Howard cites the example of Russia’s 2008 invasion of Georgia. Russia’s stock market plunged, and ‘within a week capital outflow reached a massive $16 billion, suddenly squeezing domestic credit while the ruble collapsed in value.’ He also gives the example of Libya, where Muammar al-Gaddafi gave up his Pakistani nuclear weapons in exchange for the US lifting its economic sanctions, which had prevented Libya from increasing its oil production.

Andy Grove argues that energy independence is a flawed and unfeasible objective, particularly in a network of integrated global exchange. He suggests instead that the objective should be energy resilience. Resilience goes hand in hand with adaptability, and it also is reflected in important market ideas like substitutability. In fact, resilience is one of the best features of market processes; the information transmission function of prices means that individual buyers and sellers can adapt to changes in supply and demand conditions in a decentralized way. His suggestion for how to increase the resilience of the U.S. energy economy is to shift use from petroleum to electricity (electrification), that is sticky and can be produced using multiple sources of energy, including renewables.

Former vice president Al Gore has challenged the United States to commit to producing all electricity from renewable sources (AERS) like solar and wind power in 10 years. Both the Center for Resource Solutions and current president Barack Obama have publicly stated they support Al Gore’s AERS goal.

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