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Here is a good editorial from US News and World Report for all those interested. Take the time to read it, it may prove enlightening for some of you.
Getting Serious About Oil
By Mortimer B. Zuckerman
Posted Sunday, July 30, 2006
Related Links
* Browse through an archive of columns by Mortimer B. Zuckerman.
Here's a nasty thought. Every day you and I subsidize the propagators of terrorism. To import oil for our cars, homes, and workplaces, America now spends and borrows a staggering $1 billion every single day. In the past four years alone, oil producers' revenue has grown from $300 billion a year to $800 billion. When oil goes up by a dollar a barrel, it costs us an additional $7.4 billion! An increasing share of that money goes to countries in the Middle East, especially Saudi Arabia, and through them to extremist religious groups who support Islamist militancy throughout the Middle East and beyond, disseminating a message of hatred and violence against western influence and ideas. Small wonder, then, that the overwhelming judgment from a hundred foreign policy experts polled in Foreign Policy magazine is that the highest priority in fighting terrorism must be to reduce America's dependence on foreign oil.
Everyone knows that over the past three years the price we pay at the pump has doubled. The populist rant that this is the fault of "rapacious" oil companies is a glib and false response, and it's especially unattractive when it comes from Democrats, who have systematically blocked attempts to increase domestic oil production. Oil prices, in fact, are determined by a complex, and increasingly competitive, global market.
Action points. The roots of our predicament don't lie in the boardrooms of Big Oil but at our own back door. In the two decades after 1980, when gas was still cheap, Americans switched from cars to minivans and SUVs, and they moved from the cities to the suburbs and then to the exurbs. Now 3 out of every 4 Americans commute to work, many spending hours on the road each day. One in five European workers, by contrast, gets to work by rail and bus; only 5 percent of Americans rely on public transport.
Two thirds of our petroleum consumption is for transportation. We live in a car-driven culture, relying more and more on large, heavy vehicles for getting to work, running errands, and taking our kids to school. Consumers enjoy the size, power, and sense of security from their SUVs, which now account for roughly half of all cars in the United States, compared with just 7 percent in 1990. Every day 200 million cars in America guzzle about 11 percent of the world's daily oil output. We are the only industrialized country that is less energy efficient than it was two decades ago. It's going to cost us billions and billions more because the supply-demand equation is going to get worse, not better. Last year, for the first time ever, Asia consumed more oil than North America. China is already the second-largest importer of oil; yet, on average, a person in China uses only 10 percent of the primary energy that an American does and 20 percent of the energy of a Japanese, but still twice as much as the average Indian. Over the next 25 years, if China and India grow as much as South Korea has since 1980, those two countries alone will consume three times as much energy as the United States does today. As the Third World becomes the Second World and then the First World, energy demand will soar, and not surprisingly, so will energy prices.
What to do? We can't escape relying on our passenger cars, our airlines, and the vast trucking network that makes this economy so flexible and productive. Alternative energy sources will not give us anything like energy independence. Here are some action points, though, that would, over time, give us a fighting chance to control our own destiny:
*SUPPLY. There's simply no quick fix when oil is being consumed at twice the rate of the past decade, but we can ease the restraints on domestic exploration and drilling and the creation of new refineries. They have the potential over time to increase domestic production by over 2 million barrels a day.
*INCENTIVES. Offer greater tax credits for new energy-efficient technologies and reduce barriers to the creation of new nuclear power plants.
*CONSUMPTION. We must increase fuel efficiency and set reasonable targets now for the auto industry to replace gas guzzlers and gradually encourage the move by slowly raising gas taxes to European levels. If American cars were to average 40 miles per gallon, over time, consumption could be reduced by another 2 million to 3 million barrels a day, saving us at least $40 billion a year.
*MASS TRANSIT. Encourage more movement of people and bulk goods by rail. The reduced friction of steel wheels on steel rails makes rail 10 times as energy efficient as highway travel. A single locomotive with two men can haul the same amount of freight it would take 70 drivers and 70 semitractor-trailer rigs to move.
A straightforward, serious, and powerful package of measures to reduce our dependence on foreign oil could easily win public support. Energy is just one more big issue facing the nation--like health, immigration, global warming, and budget deficits--where our dysfunctional, irresponsible political system is failing us.
Getting Serious About Oil
By Mortimer B. Zuckerman
Posted Sunday, July 30, 2006
Related Links
* Browse through an archive of columns by Mortimer B. Zuckerman.
Here's a nasty thought. Every day you and I subsidize the propagators of terrorism. To import oil for our cars, homes, and workplaces, America now spends and borrows a staggering $1 billion every single day. In the past four years alone, oil producers' revenue has grown from $300 billion a year to $800 billion. When oil goes up by a dollar a barrel, it costs us an additional $7.4 billion! An increasing share of that money goes to countries in the Middle East, especially Saudi Arabia, and through them to extremist religious groups who support Islamist militancy throughout the Middle East and beyond, disseminating a message of hatred and violence against western influence and ideas. Small wonder, then, that the overwhelming judgment from a hundred foreign policy experts polled in Foreign Policy magazine is that the highest priority in fighting terrorism must be to reduce America's dependence on foreign oil.
Everyone knows that over the past three years the price we pay at the pump has doubled. The populist rant that this is the fault of "rapacious" oil companies is a glib and false response, and it's especially unattractive when it comes from Democrats, who have systematically blocked attempts to increase domestic oil production. Oil prices, in fact, are determined by a complex, and increasingly competitive, global market.
Action points. The roots of our predicament don't lie in the boardrooms of Big Oil but at our own back door. In the two decades after 1980, when gas was still cheap, Americans switched from cars to minivans and SUVs, and they moved from the cities to the suburbs and then to the exurbs. Now 3 out of every 4 Americans commute to work, many spending hours on the road each day. One in five European workers, by contrast, gets to work by rail and bus; only 5 percent of Americans rely on public transport.
Two thirds of our petroleum consumption is for transportation. We live in a car-driven culture, relying more and more on large, heavy vehicles for getting to work, running errands, and taking our kids to school. Consumers enjoy the size, power, and sense of security from their SUVs, which now account for roughly half of all cars in the United States, compared with just 7 percent in 1990. Every day 200 million cars in America guzzle about 11 percent of the world's daily oil output. We are the only industrialized country that is less energy efficient than it was two decades ago. It's going to cost us billions and billions more because the supply-demand equation is going to get worse, not better. Last year, for the first time ever, Asia consumed more oil than North America. China is already the second-largest importer of oil; yet, on average, a person in China uses only 10 percent of the primary energy that an American does and 20 percent of the energy of a Japanese, but still twice as much as the average Indian. Over the next 25 years, if China and India grow as much as South Korea has since 1980, those two countries alone will consume three times as much energy as the United States does today. As the Third World becomes the Second World and then the First World, energy demand will soar, and not surprisingly, so will energy prices.
What to do? We can't escape relying on our passenger cars, our airlines, and the vast trucking network that makes this economy so flexible and productive. Alternative energy sources will not give us anything like energy independence. Here are some action points, though, that would, over time, give us a fighting chance to control our own destiny:
*SUPPLY. There's simply no quick fix when oil is being consumed at twice the rate of the past decade, but we can ease the restraints on domestic exploration and drilling and the creation of new refineries. They have the potential over time to increase domestic production by over 2 million barrels a day.
*INCENTIVES. Offer greater tax credits for new energy-efficient technologies and reduce barriers to the creation of new nuclear power plants.
*CONSUMPTION. We must increase fuel efficiency and set reasonable targets now for the auto industry to replace gas guzzlers and gradually encourage the move by slowly raising gas taxes to European levels. If American cars were to average 40 miles per gallon, over time, consumption could be reduced by another 2 million to 3 million barrels a day, saving us at least $40 billion a year.
*MASS TRANSIT. Encourage more movement of people and bulk goods by rail. The reduced friction of steel wheels on steel rails makes rail 10 times as energy efficient as highway travel. A single locomotive with two men can haul the same amount of freight it would take 70 drivers and 70 semitractor-trailer rigs to move.
A straightforward, serious, and powerful package of measures to reduce our dependence on foreign oil could easily win public support. Energy is just one more big issue facing the nation--like health, immigration, global warming, and budget deficits--where our dysfunctional, irresponsible political system is failing us.
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