A New Fuel Paradigm For America

Monday, November 11, 2013

The Institute for the Analysis of Global Security has released an important 52-page PDF document entitled, Fuel Choice For American Prosperity. The following is an excerpt from the introduction by the co-founders of the United States Energy Security Council, Robert C. McFarlane and R. James Woolsey:

Oil’s strategic importance stems from its virtual monopoly as a transportation fuel. Today, 97 percent of transportation fuel is petroleum based. During the past four decades since the Arab Oil Embargo the policy consensus has been that if we only increased our domestic production of oil and/or learned how to use less of it we would be energy secure. We have done both: America’s domestic crude production is at its highest since 1992 and our vehicles are more fuel efficient than ever. As a result America’s oil import dependency has dropped from 60 percent in 2005 to 36 percent today, and it may drop further still. But none of this seems to have affected the global price of crude or the price of gasoline Americans pay at the pump. On the contrary, while our import dependency slumped our foreign oil expenditures nearly doubled, the share of oil imports in the overall trade deficit grew from one third to nearly a half and American motorists pay in real terms more for fuel than ever before. Clearly something is wrong with the paradigm.

What is needed is a competitive transportation fuel market in which a variety of energy commodities can vie with petroleum for market share. As long as the vehicles rolling onto our roads can essentially run on nothing but oil based fuels, and consumers are thus thwarted from making an on-the-fly choice among different fuels, America will remain susceptible to oil price hikes emanating from the Middle East to the detriment of our economy and national security — no matter how little oil we import from that region.

Competition is a bedrock of our American way of life. It’s time to introduce it into our fuel market.

The paper examines the goal we've been pursuing since the first oil embargo, which could be summarized as: "Reduce foreign oil, especially oil from the Middle East." We have made great strides in accomplishing this goal but it has failed to give us "energy independence" because it was the wrong goal to begin with. The paper offers a revolutionary way to look at this issue: The problem with oil is not where it's from, it's the petroleum monopoly, which gives oil a strategic status it doesn't deserve (especially given the already-existing fuels that could successfully compete with petroleum if given a chance). The paper offers many practical recommendations to solve the real problem and create true energy security for America.

Read or download the document here: Fuel Choice For American Prosperity.


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