US Energy Dependency: An Old Dream or Existing Project?
Walid Khadduri Al-Hayat - 05/11/06//
At the annual conference of the National Council on US-Arab Relations (NCUSAR) that was held last week in Washington, representatives of Arab, as well as US, oil corporations criticized recurring statements in the US about its 'addiction' to foreign oil, and the need to provide domestic cheap energy resources.
This is not new in the US. It has been raised for quarter of a century, whenever oil prices rise and before election campaigns. However, the foundations and concepts that are being circulated are far different from that of the past, hence, the importance of the issue. Last month, the US Council on Foreign Relations (CFR) in New York put forward proposals based on a study it conducted in this respect to address the energy situation in the US and to make recommendations. The study, called the 'National Security Consequences of US Oil Dependency', was supervised by former Secretary of Defense and Energy, James R. Schlesinger, CIA chief and former Undersecretary of the Department of Energy, John M. Deutch, and former scientific expert, David Victor.
The study recognizes the current reality of energy in the US. The US people, 4.50% of the world's population, consumes about 25% of the world's oil (around 21 million barrels per day) and imports about 60% of its resources from abroad.
The study emphasizes that this high rate of oil consumption and the high degree of foreign oil dependency limit the US foreign policy options, given its heavy dependence on imports from countries that did not share its foreign policy (Russia), or antagonize it (Iran and Venezuela), thus flaring up competition between the US and other industrialized countries that face a similar energy situation, such as China and India.
The study also recognizes that there is some sort of dichotomy in the US foreign policy between 'energy security', which is supposed to provide the US market with fuel in a sustainable manner and for reasonable prices, and the US foreign policy that has left the matter so far to the market supply and demand. The report stresses that this dichotomy must change. The US needs not only co-ordination, but also organic connection between energy and its foreign policy.
The challenge that will face the US in the next two decades, according to the report, is the activation of this connection through the management of the global dependence on energy imports from international markets, on the one hand, and the commencement of a transitional period to reduce the economy's dependence on US oil, on the other. This obviously and directly criticizes the 'election' solutions released by electoral candidates, who call for the use of some domestic energy alternatives, which eventually lead to increasing, instead of reducing, dependency on imported oil, as well as the rise of domestic fuel prices.
It also points out that this phenomenon is not exclusive to the US; it is also shared by Europe, Japan, China and India. This phenomenon is getting worse at a time when hydrocarbon reserves are on the wane at the global level, and costs of exploration, development and maintenance are on the increase.
Where is the solution? How can the US get out of this 'ordeal'?
The new 'revolutionary' proposal put forth by the CFR lies in setting aside the market factors and freedom of supply and demand, because markets, according to the report, do not automatically provide optimal solutions. The argument of the report in this revolutionary economic thinking is that the national oil companies in the oil-producing countries give priority to politics and the interests of their respective countries when they sign commercial agreements. Also, some oil-producing countries use the oil growing revenues to adopt anti-US policies.
The report acknowledges that the alternatives are limited in reducing dependency on oil in the foreseeable future. However, it is optimistic about putting an end to the growth of consumption of oil derivatives. In this regard, it emphasizes the possibility of imposing taxes on fuel consumption and using such funds in supporting energy research and improving petrol performance in vehicles.
In fact, the other proposals reviewed by the report do not differ much from what is actually happening now, or what was suggested on previous occasions.
The CFR proposed opening new vistas for exploration and prospecting within the US, wider reliance on technical assistance during the transitional stage of the oil era, and continued and intensive encourage of the development of energy alternatives by reducing taxes and increasing aid research on hybrid cars, fuel cell batteries, and organic fuel. The CFR also suggested that US foreign policy should focus on persuading other nations to liberalize prices and markets, dialogue between producers and consumers, transparency, and fighting terrorism and attempts to sabotage oil installations.
In order to achieve and implement all these policies and directly link them to US foreign policy in the coming years, the CFR proposes to appoint a high-level official to co-ordinate this policy at the US administration level as a whole: the White House and the departments of State, Energy, Commerce, etc.
A realistic reading of this report indicates that it succeeded, to a large extent, to determine the US energy situation and challenges. However, there is nothing new about it. The same proposals have been reoccurring for decades. The only new thing aspect is the appointment of a co-ordinator for the US energy policy. But anyone who is familiar with US politics knows well that one of the most difficult things in Washington is to co-ordinate the supreme policies of the State, and that there are contradictions among State institutions, no matter how important the subject. Therefore, it is very difficult to imagine the success of this new-old policy. Matters are expected to continue as they are in the foreseeable future: the US' increasing reliance on imported oil, and its slow replacement of energy alternatives to constitute no more than 5 -10% of all energy sources after two or three decades.
*Dr. Walid Khadduri is an energy expert and director of Al-Hayat business desk.
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