Energy Independence is a Sham

Have you ever wondered what “energy independence” even means?  Every year, more and more people – politicians, media pundits, oil companies, environmental groups, and T. Boone Pickens – call for it. 

 But what does energy independence mean? The answer depends on who you ask.  Some think we will be energy independent when don’t have to import oil from Venezuela and the Middle East.  All oil and natural gas should be made in the U.S.A. or imported from friendly countries, like Canada.  Others seem to imply that energy independence is independence from fossil fuels in general.  They promote the use of wind, solar, geothermal, and other forms of alternative energy.

For the most part, proponents of energy independence don’t spell out exactly what they mean by the term.  Like many concepts politicians bandy about (the War on Drugs and the War on Terror are two great examples), conditions for victory are either incoherent, impossible (“we will stop all illegal drug use,” “we will kill all the terrorists”), or more just not spelled out at all.

For most people, energy independence means ridding ourselves of dependence on foreign oil.  Being in favor of ending dependence on foreign oil is a politically safe position, allowing people of just about every political persuasion to hear what they want.  Its a very nationalist sentiment and has a strong foreign policy component, rooted in the psyche of older Americans by the original fuel shocks of 1973 and 1979.  John McCain succinctly summed this position up in a 2008 debate: “we are sending $700 billion a year overseas to countries that don't like us very much.”  (According to a report by FactCheck.org, “[Oil] Imports are running at about $536 billion this year, and a third of it comes from Canada, Mexico and the U.K.”  But he could have made the point just as well with the correct dollar figure.) 

Why is energy independence a sham? Now that we have a better idea of what people mean when they talk about energy independence, we are equipped to answer this question.

In 2007, the U.S. produced approximately 1/3 of the petroleum it consumed.  So, to rid ourselves of having to be dependent on foreign oil, we need to cut consumption by 2/3, increase production, or some combination of the above, right?

It’s not that simple.  The oil market is international, reacting to supply and demand on a world-wide basis.  It costs about $2 a barrel to ship oil to the other side of the world, meaning that in a free market, a price difference higher than this would be unlikely.   So, IF we could somehow become “self-sufficient” with oil, the price we pay for oil will still be sensitive to world-wide supply and demand.  This means that even if we embargoed oil from Saudi Arabia, Russia, the UAE, Iran, Kuwait, and Venezuela (the #1, 2, 3, 5, 6, and 7 largest oil exporters in the world), they would be able to just turn around and sell it to other oil importers at the same price they would have sold it to America. And they’d still be paid in dollars, the currency with which oil is priced.

How realistic is it cut oil consumption/increase production by?  Cutting consumption is definitely possible and something I think we should work toward, but it will take time.  We could double fuel efficiency for new cars and promote plug-in hybrids.  Barack Obama’s energy plan calls for putting 1 million plug-in hybrids on the road by 2015.  While would be a good start, but would make up only 0.7% of the total fleet.

But, while we wait for most Americans to go out and purchase a new, more efficient car (which would take at least 12 years, longer if we remain in a recession), our current oil production will very likely fall, as it has since 1970.

Increasing production will have very little effect.  Even if we open up ANWAR and all off-shore drilling areas, it will take years to get these sources online.  And they aren’t large enough to make up for the lost production from other sources.  The long and the short of it is that the United States will probably never produce more oil than it did in 2000, let alone at the peak in 1970.  And guess what – we still had to import oil back then too.

What about other plans? Ethanol has gotten a lot of attention over the past several years.  Corn-based ethanol is, and has always been, a terrible give away, part of America’s broken farm policy.  It would take an entire article to go into all the reasons, but here’s the bottom line: First, it takes almost as much energy/petroleum to grow and process the corn than we get from burning the ethanol.  The energy payback is between 1 to 1 (meaning we break even) and 1.2 to 1.  The only reason that the industry has been viable is due to government subsidies, which pay farmers to overproduce.  Second, if we converted every bushel of corn produced in the United States to ethanol, it would only fulfill 6% of our current needs.  By contrast, the 2007 law that will increase the fuel efficiency of cars in America from 25MPG to 35MPG will allow us to import less oil than converting every last bushel of corn into ethanol.

Another problem with ethanol is that it only replaces gasoline, but cannot replace other petroleum derivatives such as diesel and jet fuel.  Even if we find a replacement for gasoline such as ethanol, we would still have to import diesel.  T. Boone Pickens, the billionaire Texas oil man, has proposed that we replace our imported diesel with natural gas and power passenger cars with electricity.  The Pickens plan requires huge investments in infrastructure, including tens of thousands of new windmills, a new electric grid, new gas wells, pipes to transport the natural gas, natural gas fill-up stations, and new trucks that can be powered by natural gas.

From what I’ve seen so far, this probably represents the best plan for becoming as energy independent as possible.  I just think energy independence as the driving force for policy change is the best idea.  Save a World War 2 type spending spree by the federal government, its not going to be a solution any time soon.  If the federal government were to go such a spree, building a new grid and building more windmills are certainly on my list.  There are, however, more important things to do before we convert all our trucks to natural gas.  Where global warming is concerned, we need to reduce consumption and install hundreds of thousands of megawatts worth of renewable energy production so we can begin to take coal-fired plants offline.  When it comes to transit, a higher priority for me would be to build high speed train lines and dedicated bus routes in cities.

The bottom line: I remain unconvinced that energy independence is something worth attaining in and of itself. Maybe it has a future as a marketing tool for better policies?  But we shouldn’t let the nationalistic drive for energy independence drive our policy decisions.  If you think otherwise, please let me know why.

Further Reading:

1) The Myth of Energy Independence (U.S. News and World Report)
2) The Seven Myths of Energy Independence (Mother Jones)

(Image Credit = PA Department of Environmental Protection)