More decisive action is needed to reduce US reliance on imported crude oil, which pushed the foreign trade deficit past $500 billion in 2011 to unsustainable levels, Securing America’s Future Energy (SAFE) said in the first study by its new Diplomatic Council on Energy Security.
“Although the prospects of rising US oil production are substantially more positive than just a few years ago, and net oil import volumes are forecast to decline as a consequence, projected expenditures on these imports are nevertheless projected to increase in real terms due to higher average oil prices,” it said.
Transportation remains the primary demand reduction focal point, with new policies needed in vehicle efficiency, alternative fuels, and infrastructure, according to the study, “Oil and the Trade Deficit: Rising Energy Expenditures and US Energy Security.”
It said, “Widespread and growing road congestion across the United States will continue to undermine the potential gains attributable to increase vehicle efficiency and the expanded use of alternative fuels. Policies to create more stable road speed conditions are a crucial facilitator of lower sectoral oil consumption. Oil use must become a key metric by which transportation infrastructure program and project-level decisions are made.”
Successfully addressing the growing US trade deficit’s challenges will be a difficult and critical undertaking with reducing foreign oil dependence an important element, the study said. “In addition to helping make a meaningful improvement in the nation’s trade deficit, success in this area will more broadly strengthen US energy security,” it noted. “The nation must accelerate its efforts.”
Diplomatic perspective
SAFE released the study as it formally launched DCES, which it formed to highlight foreign policy constraints caused by US dependence on foreign crude. The council’s 24 ambassadors bring a diplomatic perspective to SAFE’s mission to improve US energy security by reducing US reliance on foreign oil which also is promoted through the business and retired military leaders on its Energy Security Leadership Council.
Heavy dependence on foreign crude has made the US deploy armed forces to protect supply lines and forced the country to make alliances with politically unstable governments, observed Alfred Hoffman Jr., the 2005-07 US ambassador to Portugal and DCES’s co-chair. “There is no question that recent geopolitical tensions in the Middle East have affected the cost of oil,” he said at an event to launch the council and release its first report.
Elizabeth Frawley Bagley, 1994-97 US ambassador to Portugal and DCES’s other co-chair, noted that as recently as 2002, the annual US trade deficit in petroleum was less than $100 billion and its contribution to the total foreign trade deficit was less than 25%. When crude prices peaked at $145/bbl in July 2008, oil’s share of the total US foreign trade deficit had reached 45%, she continued.
“Progressively higher oil prices have, in fact, increased the total cost of the net US oil import burden in recent years, even as import volumes have declined,” Bagley said. “As a result, the United States has run an aggregate deficit in petroleum of more than $1.5 trillion since 2007.”
Other former US diplomats also warned that excessive reliance on imported crude can skew US foreign policy. C. Boyden Gray, 2005-06 ambassador to the European Union, also served as special envoy to the EU for EurAsian energy affairs and worked to encourage construction of a crude oil pipeline from Azerbaijan to the Mediterranean Sea as an alternative to Russian routes. “Europe’s energy security problem is Russia,” he said. “Ours is [the Organization of Petroleum Exporting Countries].”
Failure to differentiate
Gray said one major US energy policymaking problem is a failure to differentiate between electricity and transportation alternatives. “The wind turbines and solar collectors we build are great for addressing climate change, but have absolutely no impact on transportation, which is where the real problem with imported oil lies,” he observed.
“America’s economic security is at stake,” maintained Christopher Burnham, 2005-06 United Nations under secretary general. “As things continue to unravel in the Middle East, there will be a dramatic rise in oil costs…. Our foreign policy is held hostage to our need to protect oil supply lines. If we’re going to lead with moral authority, we’re going to have to change this. The shale energy revolution could help.”
Timothy A. Chorba, 1994-97 ambassador to Singapore, said tremendous economic growth in Asia and the emergence of a new middle class has created an energy demand surge. This year, more cars will be manufactured and sold in China than in the US, he indicated.
Countries are staking overlapping territorial claims to potential resources beneath the South China Sea, ironically creating the greatest regional tension over resources which haven’t been explored, he continued. Disputes have erupted involving China, Vietnam, Malaysia, Indonesia, Taiwan, and the Philippines, with Indian having recently entered the picture with plans to work with Vietnam to drill a well, much to China’s consternation, Chorba said.
“The reason there has never been a comprehensive solution is that democracies act in political, predictable ways,” said Thomas L. Siebert, 1994-98 ambassador to Sweden. “It’s very tough to break away from oil’s protected position in the US House and Senate. Yet we need to reduce the extraordinary cost to our foreign and economic security in having to protect overseas oil supplies. Shale oil discoveries in this country hold significant promise. So does growing gas production from the Marcellus and other shales.”
“This won’t be easy,” said Hoffman. “We’re talking about years, if not a generation, to solve this problem.”
Contact Nick Snow at [email protected].