99 Percent: Is the economy purely about oil, mostly foreign?
The biggest threat to the 99 percent?
Even without a strike on Iran, is OPEC dependence already crushing the US economy?
How much does US foreign oil dependence cost? According to the latest estimates, simply protecting US oil shipping lanes — to import foreign oil — costs the US at least $80 billion per year. But that’s not even the worst of it, President Bush’s income tax cuts, as well as President Obama’s payroll tax cuts — both meant to stimulate the economy — were wiped out by the rising costs of oil to the tune of $212 billion.
$80 billion lost every year on oil lanes, $212 billion lost on economic stimulation efforts, extra military costs, plus just spending hundreds of billions every year on foreign oil. Is there really anything more important to the economy than oil? And is there anything more dangerous to the 99 percent of America struggling to get by than OPEC dependence?
That’s the latest idea put forth by ex-GM Vice Chairmen — and co-daddy of the Chevy Volt — along with a few members of the Securing America’s Future Energy’s (SAFE) Energy Security Leadership Council. So, what’s their answer?
More drilling, of course, but the two biggest opportunities: natural gas for heavy duty trucks and electrification.
Obviously, this is the same basic idea that I’ve been calling for in the Soultek Plan for Energy Independence, but I haven’t been able to cite numbers like $212 billion on top of this idea, until now. Likewise, I’ve only assumed that protecting oil shipping lanes was a $10 or $20 billion a year — wanting to remain conservative. But these new numbers shed light on just how destructive foreign oil dependence IS, rather how dangerous it is becoming. Yet, far greater foreign oil dependence dangers are lurking.
In my opinion, the facts prove almost without a doubt that the US cannot move to electrification fast enough and electrification; therefore, cannot be THE solution. The assembly lines and supply chains just aren’t yet in place. That doesn’t mean electrification is bad or wrong. It simply means electrification needs to be put into context. In the short term, more domestic drilling, better energy efficiency, and particularly natural gas, offer the best bridge to a viable, electric transportation system.
Fortunately, the opportunity to drastically change America is within reach, and from the polls I’ve seen most Americans would endorse such a plan. Unfortunately, the powerful and hardcore left and right won’t let their respective parties take action. The right wants free markets. Free markets? In a world where National Oil Companies (NOCs) own 90 percent of known oil reserves? Please. Similarly, the left only wants solar powered electric cars. Long term, that’s a noble goal, but short term, it’s asinine if you simply factor the legacy effect of the US fleet into the energy policy conversation. No matter what, it will take decades to roll out electrification. We absolutely need bridges.
Thus, both sides need to get real. Ironically, both the hardcore left and right can ultimately have their way long term, if they’re willing to work together, for the benefit of the people, the 99 percent. A short term focus on increased domestic production and, more important, switching heavy duty trucks to natural gas, can pay for themselves via things like jobs, fuel cost savings and not having to spend $80 billion on maintaining foreign oil shipping lanes. Eventually the savings will be so great that solar powered electrification will be worth the investment because we’ll realize that long term, it actually will be much cheaper. Electrification will be the long term, free market solution if we’re honest about the real world costs of non-free market advocating NOCs, for instance.
Sadly, however, it doesn’t really seem to be ‘the people’ that really drives the true power brokers on either side of the aisle. It’s their power, not your benefit — the 99 percent — that drives them. And only the 99 percent can change that, together.
Larry,
Once again we have made a strong argument for higher fuel economy standards and more government subsidies for efficient vehicles.
The problem with oil is real and it is not going away. If the free market economy won’t fix it, then the gov’t will have to……
Americans will walk the walk if it becomes law……
Sometimes the gov’t has to step in. This is one of those times…..
re: ” It is not possible to drill for domestic oil and purchase it locally with local pricing.”
and that’s why I say all this talk about energy independence is just that – talk.
it’s never going to happen by being “self sufficient” and use only what we have.
again – all I’m looking for here is some clarity and reality as to what we really mean when we say “energy independent”.
doesn’t that phrase mean different thing to different people?
The average American uses twice as much electricity as most other industrialized countries.
The average American uses twice as much gasoline as most other industrialized countries.
We live in homes that are twice as large as the average home in most other industrialized countries.
We drive cars that are largely bigger than cars in other countries.
We _SAY_ we want to be energy independent but the reality is there is no way in hell unless we are willing to live in smaller homes and drive smaller cars and live closer to work and I just don’t see that happening even from the folks who _SAY_ they want us to be energy independent and have cleaner air/water.
They talk the talk but they won’t walk the walk.
so then we get down to what is essentially a sentiment about “making” people do it by increasing the price of electricity or fuel.
I can tell you.. No.. Obama can tell you…that this strategy will get you tossed out of office.
Until we have a majority of people who WILL walk-the-walk by living closer to work (or carpool or use transit), live in smaller homes that use less electricity and drive smaller cars that get better mileage and generate less pollution…
…. call me a skeptic…
we get a lot of blame game here in this blog but we seldom identify where the blame really resides and dear fellow commenters.. it is US.
POGO knows the truth!
People ARE frustrated but they are not yet ready to believe who the real culprits are.
Larry,
It is not possible to drill for domestic oil and purchase it locally with local pricing.
Oil is a globally traded commodity.
Even if you drill for oil in a West Texas oil field, refine it into gasoline in the refinery located in Midland Texas, and sell it at a local Texaco gas station in Midland Texas, that oil would still be sold on the world market with global pricing.
This is why “the use of oil as our primary fuel” puts our economy at risk from a global oil price spike….
This is also why our long term energy policy must involve replacing oil as our primary fuel. It can’t simply involve getting more domestic oil….
Tom,
You just described why I give the global warming and pollution folks the time of day, even though my primary motivation is energy independence.
Because the solutions for global warming and pollution are also the solutions for energy independence.
LarryG said in part: “so here’s another question. If we currently drill baby drill but we EXPORT that oil …since oil is a finite resource that once gone is gone – doesn’t selling our domestic oil on the world market…
Yes to first question and No you are not wrong.
LarryG said in part: “my last observation is that we seem to be not just after more energy independence but also after LESS POLLUTION/EMISSIONS AT THE SAME TIME.”[All Caps Added].
Tom G. responds. In my mind there is very little difference between “energy independence”, “energy efficiency”, “conservation”, “hybrid/electric vehicles”, “clean water”, “clean air” and “global warming” since they are all interrelated. You can’t achieve clean water without thinking about energy efficiency and conservation. You can’t have clean air without using less gas & diesel hence hybrids & Evs. You can’t achieve energy independence without promoting conservation and energy efficiency. You can’t reduce the effects of global warming without considering all of the above.
So when I talk about energy independence what I am really THINKING about is “all of the above” since they all effect the final outcome. David Henderson wrote this in 2008 about energy independence and it shows just how many different points of view their are.
“Before considering the costs and benefits of energy independence, I should define my terms. What is energy independence? Various advocates and analysts have proposed various definitions, but two come up again and again. The first is that a country is energy independent if it is self-sufficient—that is, if it imports no energy from any other country. The second is that a country is energy independent if changes in world energy markets have no effect on that country’s price of energy. The first definition is more commonly used.
thefreemanonline[DOT]org/features/lets-not-be-energy-independent/
If America wants to become more energy independent we need to start doing some of the things Denmark has been doing. But good luck with some of these actions since there are more oil lobbyist in Washington than members of Congress.
# Strict energy-efficiency standards were placed on all buildings.
# Gas and automobiles were heavily taxed (Today new cars are taxed at more than 105% of the cost of the car.)
# District heating systems were implemented throughout the country, reusing normally wasted heat produced by power plants by piping it directly into homes. Today more than 60% of Danish homes are heated this way.
[Note: our U.S. power plants WASTE between 50% & 70% of the heat energy we put into them].
#The government invested heavily in clean and renewable energy systems, especially wind power. Today 21% of Denmark’s energy production comes from wind farms. On top of that, they lead the world in wind-power technology – another product to export. The industry has created more than 20,000 jobs.
# Rebate campaigns helped people buy more energy-efficient – and therefore more expensive – home appliances. Today more than 95% of new appliances bought in Denmark have an “A” efficiency rating. (“A” is the best; “G” is the worst.)
# They started drilling for – and finding – more oil and natural gas within their own waters in the North Sea. (Showing that no plan is perfect, these efforts have long been opposed by environmentalists.)
# In 2005 the government committed $1 billion to develop and integrate better solar, tidal, and fuel-cell technology.
neatorama[DOT]com/2008/01/01/energy-independence-how-denmark-kicked-the-foreign-oil-habit/
Enjoy LarryG.
re: ” Well yes and no. Since we still import a lot of oil we are not at the point that doing something like that would do us any good. And yes it will cost us billions more in fuel costs.”
so here’s another question.
If we currently drill baby drill but we EXPORT that oil …since oil is a finite resource that once gone is gone – doesn’t selling our domestic oil on the world market – ultimately make us much more energy dependent in the future when our oil is gone and we have to buy more and more of it from other countries?
tell me how I got this wrong.
If we kept the oil we extract domestically, we’d be much less dependent on “foreign oil”.
right?
but we do not do that.
we actually export oil that we drill domestically because our use of it is down and the world demand for it is up.
Again… my dog in this hunt is to just simply recognize what we ARE doing verses what we SAY we should do.
Here’s another. On a per-capita basis, we use twice as much fuel as most any other country in the world save Canada. This has very little to do with hybrids and much more to do with how far we live from work compared to other countries people and how much we use (or not) transit compared to other countries people.
Right now it seems to me that our approach to this conundrum is to say/believe that we can “buy” our way to less energy use by buying hybrids or EVs.
Even supporters like Dach and Smurf acknowledge that this is not going to happen as long as hybrids and EVs cost substantially more than ICE.
my last observation is that we seem to be not just after more energy independence but also after less pollution/emissions at the same time.
So my question here is that could we ALSO meet these goals the same way that Europe and other countries do by buying more fuel efficient ICE and driving less by living closer to work and using transit?
why does that approach work for other countries but seems to be not even on the table in this country?
I tend to be a skeptical contrarian …challenge the status quo on these issues.
It’s not because I disagree… it’s because I think in order for us to move forward, we also need to be looking at real world factors at least as much as we wish for our best visions.
The fact that we do not even seem to agree on what the primary factors are in the conundrum yet – as a country is as much an impediment as any not-ready-for-primetime technology. No?
Finally a question: What other countries in the world have put Energy Independence as their primary goal?
why is this what we should be doing when virtually no other country is doing it?
see… I told you I was a contrarian.
Larry G. said in part: “If we outbid the rest of the world for our own oil and keep it we might be less dependent on foreign oil but it’s going to cost us a bunch”.
Well yes and no. Since we still import a lot of oil we are not at the point that doing something like that would do us any good. And yes it will cost us billions more in fuel costs.
The bottom line is that we just can’t continue to be a country that uses 25% of the worlds oil supply and only produces 2% of it. That is an unsustainable condition for any country.
“does that mean that when/if gas goes to 6, 7, 8 dollars in this country that people also will not flock to hybrids?”.
Don’t know the answer to that question LarryG. My GUESS would be that SOME people will change to hybrids and EV’s and some will just start buying small cheap two passenger high mileage ICE vehicles. There will also be some who just drive less, some will car pool, some will take transit systems where available and some will just pay the price since they can.
thanks for the link Tom. I think Australia has it right.
Here’s what is wrong: ” A recent poll showed that 89% of consumers favor expanding the number of energy projects in the U.S”
what exactly does that mean?
more drilling for oil – that will be exported to the highest bidder will not make us more energy independent nor will it make fuel cheaper.
If we outbid the rest of the world for our own oil and keep it…we might be less dependent on foreign oil but it’s going to cost us a bunch.
My only dog in this hunt is to try to understand the realities. I rely on no one source but a compendium of sources and I accept as real only the things the majority of those sources tend to agree on.
and as I said.. with reference to your article – Australia seems to be accepting the real world realities better than we are.
Part of that still makes me wonder if gasoline selling for 6, 7, 8 a gallon does not cause those countries to flock to hybrids… why not?
does that mean that when/if gas goes to 6, 7, 8 dollars in this country that people also will not flock to hybrids?
questions. questions.
Hi LarryG.
Here is some light reading for you if you can’t fall to sleep tonight. It is a story about how one of the countries you mentioned feels about ‘energy independence’. Here is just one small snippet from the story.
“Unlike the U.S., Australia has made a policy decision that energy security is not based on energy independence or self-sufficiency but instead on an interconnected globalized energy market. According to the White Paper, “Pursuing self sufficiency in energy resources such as liquid fuels can impose unnecessary higher costs on consumers without necessarily providing a material economic or strategic benefit.”
policymic[DOT]com/articles/4194/should-the-u-s-be-concerned-about-australia-s-energy-security-model
If domestically produced oil could ONLY be sold in the US – what would be the result?
do we produce enough oil domestically that if we did not export it – would we not be dependent on foreign oil?
What I try to do is to burrow through the politics and get down to the realities.
oil “independence” is as Tom surmises – a political deal that we could achieve fairly easily if we put a two dollar per gallon export tax on domestically-produced oil. We do this kind of thing already with ethanol and sugar. We also have a law that prohibits deriving ethanol from natural gas – it has to come from plants.
Is Europe or Japan or Australia “energy independent”?
I think the whole issue has become seriously polluted politically.
It’s become a proxy for our politics.
You know this when we argue about pipelines… that fully intend to transport oil to refineries in tax-free zones in Texas to be exported and sold at the highest price, and not used domestically, and we say at the same time that the pipeline is about “energy independence”.
politics or the truth? which do we believe?
It’s not OPEC dependence. It is simply “oil” dependence….
Domestic, Canadian, OPEC or otherwise, as long as the bulk of our transportation fuel comes from oil, our economy is at risk of one global price spike after another.
Bottom line is that we cannot control the global price of oil, no matter how much we “drill baby drill”, or suck the tar out of Canada. At “best” we can create a few jobs.
This year is a prime example as domestic oil production has increased over 10% but the price of oil continues to rise…
How many more global oil price spikes do we need to have before we learn this?????
I think its also inflation in general thats making prices look high.
I used to buy a whopper for 99 cents, now its 2.50.
Good posting but unless I am missing something, where do we talk about the over 12 million American workers who are out of work because of foreign oil? That is a staggering number of people living in or near the POVERTY level and you can see the result of our inaction as you drive down almost any street in America.
Did you know that in January of this year T. Boon Picken’s said that we spent about 500 billion dollars on foreign oil in 2011? If I take the average wage of an America worker which is about $43,000/year and divide it into that $500 billion, I get 10,465,000 jobs. Do you see any correlation between the 12 million unemployed and the 10,465,000 jobs? If you really want to get the unemployment rate down to about 3-4%, we need to stop using so much oil. If you want American jobs for American workers; just stop buying so much oil from Canada, Mexico, OPEC and others.
We are way past the time of drill-baby-drill. We need drill-baby-drill AND alternative energy AND more fuel efficient vehicles AND more efficient factories AND homes. We can drill-baby-drill until the cows come home and we will never become energy independent – oil is sold to the highest bidder. The term “Energy Independence” is a buzz word phrase used by politicians to get elected.
If you want to spend less on gas, buy a car that gets 50 mpg instead of 25 mpg because that is the same as buying gas at $2.00/gallon. And that is not a Democratic, Republican or Independent idea it’s just plain old simple math.