What is Energy Independence?

Wednesday, October 14, 2009

Over the next two months we will see the topic of energy independence discussed and dissected by candidates and commentators. In order to achieve a goal of energy independence, Americans and candidates first need to understand what the goal really means.

The place to begin is where we are today. According to the Energy Information Administration the United States used 101.563 quadrillion Btus of energy in 2007. Of that total, net imports of energy were 29.231 quadrillion Btus or 28.8% of consumption. Energy imports were 34.679 quadrillion Btus and exports were 5.448 quadrillion Btus. The imports were primarily crude oil and refined products (28.780 quadrillion Btus or 83.0% of total imports) and natural gas (4.717 quadrillion Btus or 13.6%). Our principal energy exports were crude oil and refined products (3.007 quadrillion Btus or 55.2% of total exports) and coal (1.507 quadrillion Btus or 27.7%).

Therefore the issue of energy independence is really an issue of oil and gas independence. In 2007 our imports of natural gas were 4,602 billion cubic feet (Bcf) of which 3,770 Bcf (81.9%) were from Canada and 451 Bcf (9.8%) were from Trinidad and Tobago. Natural gas imports from the Middle East were 18 Bcf from Qatar. These values indicate that natural gas imports should not be an area of concern.

This brings us to the real issue. Energy independence means we should focus on oil imports. In 2007, oil imports were 13,468 thousand barrels per day (MB/D). OPEC countries provided 5,980 MB/D (44.4%). The major sources of non-OPEC imports were Canada 2,455 MB/D (18.2%) and Mexico 1,532 MB/D (11.4%). I doubt that we need to worry too much of the security of supplies from our NAFTA partners Canada and Mexico.

So our real goal is not energy independence or oil independence, it is independence from unreliable oil imports. I would classify unreliable oil imports as those from areas/countries that may be subject to supply disruptions due to political turmoil and those countries where oil revenue may be diverted to support terrorist activities. This list would essentially include all of the OPEC countries and Russia. Now there are some who would challenge this broad brush approach, however in terms of goal setting this may be a convenient way to frame the target.

Saudi Arabia wants us to consider them a friend, but their actions during this past year have done little to indicate that they will do anything to help us. Oil supplies from Iraq and Kuwait are subject to political turmoil and should be viewed as strategically vulnerable. Many of the other OPEC members have large Moslem populations (Indonesian, Libya, Algeria, and Nigeria) which may cause some oil revenue, however small, to be funneled to terrorist activities. Russia’s attack on Georgia has provided a wake-up call that the former “evil empire” may be dormant but is far from dead. The amount of oil from these sources was 6,394 MB/D in 2007.

The strategies to eliminate these sources from our oil supply have been well-defined. In the short-term they must be focused on reducing oil consumption which means improving fuel economy in cars and light trucks and increasing the supply of oil through more drilling. Intermediate efforts should be directed toward removing oil use in areas where it can be replaced by renewable energy, natural gas and “clean” coal. This means the elimination of distillate fuel oil in the residential and commercial and industrial sectors (1,118 MB/D). The major area to improve is to reduce the use diesel fuel (3,038 MB/D) and motor gasoline (9,072 MB/D) in the transportation sector.

Doing the math reveals that we would have to eliminate distillate fuel use in the residential and commercial and industrial sectors and reduce diesel fuel and gasoline use by 43.6% to eliminate unreliable oil supplies. This would require an increase in fuel economy from 17.2 miles/gallon in 2006 to around 25 miles/gallon which seems like a reasonable goal.

Unfortunately, supply and demand will not stand still while we improve car efficiencies and drill for more oil. This means that we should seek solutions that increase our supply of oil from reliable sources both domestically and internationally and adopt tougher conservation measures immediately. We need to have targets set for four, six and eight years from now to measure the effectiveness of our elected officials in moving toward oil independence.

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