Energy is Still a Piece of the Economic Puzzle

The rest of the world is wondering why no one in Washington appears to be the least bit concerned about the astonishing risks we continue to run by doing nothing about our dependence on foreign oil.
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The eyes and ears of everyone from the banking centers in North Carolina and New York, to the financial centers on each coast to the oil patch to the coal fields are focused on a small group of Congress Members and Senators in Washington, DC to see what the form of the $800 billion stimulus package will finally take.

Much of the rest of the world is wondering why, amid all the talk of trade-offs and add-ons, no one in Washington appears to be the least bit concerned about the astonishing risks we continue to run by doing nothing about our dependence on foreign oil.

In January we imported more than two-thirds of all the oil we used. Nearly 408 million barrels at a cost of about $17 billion. At $40 per barrel we have fallen into the familiar trap of ignoring the amount of oil we are importing and focusing on the per-barrel price.

Just over one month ago the Russians got into an argument with one of its former Republics, Ukraine, over the price of natural gas and the cost of transporting that gas from Russia through Ukraine to the rest of Europe.

According to Reuters, this "led to the most serious supply disruption in Europe for years." Reuters also pointed out that "Europe receives a fifth of all its gas" through the pipeline which was at issue.

Russia turned off the tap for 20 percent of the natural gas Europe uses and there was a huge impact economically and socially.

We are importing more than three times the percentage of oil and are at the mercy of countries, many of which, do not have our best interests at heart.

How long do you think it will be before countries like Iran, Angola, Nigeria and Venezuela take their cue from the Russians and decide to employ the oil they export to America as a political, economic and foreign policy weapon.

If you don't think Russia is such a bad role model, consider what the Washington Post's Fred Hiatt wrote over the weekend:

Over the past year, Russia has invaded the sovereign state of Georgia, parts of which it continues to occupy; cut off natural gas to parts of Europe during the depth of winter; sold weapons to Iran and Venezuela; and otherwise made itself disagreeable.

During the infamous Arab oil embargo of the early 1970s, those of us old enough can remember all too well the gas lines or the "no gas" signs, the rationing based on even or odd-numbered license plates or birth dates and all the other disturbances to our lives.

In 1973 we imported about the same percentage of oil as Europe does gas -- about 24 percent. Now we are importing over 66 percent and even a minor hiccup in supply -- during this time of extreme economic unease -- can have disastrous effects.

President Obama has pledged to completely cut imports from the Middle East, Africa and Venezuela in the next ten years. That accounts for about half of the oil we import today. In addition, Mexico's oil fields are becoming depleted so quickly that in the next few years Mexico will become a net importer of oil, instead of a net exporter.

After Canada and Saudi Arabia, Mexico is our next largest supplier of imported oil. We will have to replace that supply as well.

The only way to get there is to make better use of domestic supplies. Wind and solar are on everyone's lips because they use no natural resources, they produce no emissions and they are generally built on land which either has no other use, or can be used for other things -- like cattle grazing in the Great Plains wind corridor.

Those resources will help decrease the amount of coal used to generate electricity but 70 percent of the oil we import is used as a transportation fuel. About a third of that goes into making the diesel used to drive heavy trucks moving goods on America's highways. A battery powers a car or even a light truck for a limited distance, but it cannot power an 18-wheeler.

There are about six million 18-wheelers in the U.S. fleet. If, as those fleets are renewed in the normal course of business, 350,000 trucks are built to run on liquified natural gas, instead of diesel, we would immediately reduce our need for foreign oil by over 5 percent.

America has an abundance of natural gas. The shale deposits from Texas to Louisiana to Appalachia and through the Great Lakes contain enough natural gas to meet our needs for many decades to come -- certainly long enough to replace foreign oil until battery, hydrogen or some other technology comes on line to become the primary transportation fuel for all sizes of vehicles.

America should not be at the mercy of some of the most dangerous governments in some of the most unstable areas of the planet for so much of our energy needs. We should start, immediately, to begin the process of moving America's fleets from imported gasoline or diesel to domestic natural gas.

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