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There are three ways to reduce our vulnerability to oil price volatility and source disruptions. Fully implementing any of these options to improve oil security will take many years. Once an oil supply crisis occurs, there are few good short-term solutions. Therefore, it is essential that the President, Congress, and the business community quickly develop and enact a long-term strategy for reducing America's oil dependence.
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Fuel economy can cost-effectively cut oil consumption. Using this method, the U.S. doubled the efficiency of vehicles between the mid-1970s and mid-1980s. However, in recent years fuel economy has actually gotten worse in the absence of new standards. |
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Currently available technologies such as hybrid gasoline-electric cars have significant ability to increase efficiency and horsepower. In short, highly fuel efficient cars do not require consumers to sacrifice performance or safety. It is critical to make sure that advances in engine technology are applied to efficiency gains, not just horsepower or vehicle weight. Legislators could consider making standards more flexible, with incentives to promote hybrid manufacturing in the U.S. |
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Biofuels such as corn ethanol could displace 5% of U.S. gasoline use by 2015, but ultimately the potential impact of ethanol may be limited. Cellulosic ethanol (made from plant material and crop waste) could displace more than 25% of U.S. gasoline. There are between one and two million flex fuel vehicles that could run on a mixture of 85% ethanol and 15% gasoline are already on the road in the U.S. |
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Hydrogen Fuel Cells present difficult technical challenges, but the US should continue with a long-term program of research in this area. It is estimated that it could take decades for fuel cells to have any substantial impact due to major technological breakthroughs needed in fuel cells, hydrogen storage, production, distribution, and safety. |
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Plug-in hybrids with a battery that can be charged from the electric grid could dramatically increase the fuel economy of our vehicle fleet. These cars would run all-electric for an initial 20-to-60 miles before reverting to regular hybrids. Most Americans commute under 40 miles per day, and could keep their cars charged at work and at home, using a regular 120-Volt outlet. A plug-in hybrid that was aslo a flexible fuel vehicle capable of running on a mixture of 85% ethanol and 15% gasoline could go 300-to-500 miles per gallon of gasoline. |
There are options to diversify and secure more oil at home and abroad, but increasing supply alone will not eliminate or reduce U.S. vulnerability to oil price shocks. Strategies to expand oil supply fall into two categories:
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Conventional oil production is in decline domestically, and possessing only 3% of world reserves, the option for increasing U.S. conventional oil supplies are limited.
Although domestic oil production is important to the U.S. economy and reduces financial transfers to foreign nations, America's exposure to world oil price shocks is a function of the amount of oil it consumes and is not significantly affected by the ratio of domestic to imported products. It is also true, however, that increases in domestic supply would serve to relieve pressure on an increasingly tight global oil market, providing an extra margin of error that might help reduce the price effects of seemingly small disruptions in flow of oil.
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Unconventional oil, which is produced from sources other than the standard deposits retrieved through common drilling, becomes more feasible as the price of conventional oil rises. Significant quantities of unconventional oil are located in the tar sands of Canada, the heavy oil in Venezuela, and shale oil in the U.S. If this oil could be recovered economically, it could shift the Western Hemisphere's share of world oil reserves from 13 percent to 36 percent. The potential environmental impact of unconventional oil production has raised a number of concerns. |
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Typically only 10% of the oil in a reservoir flows "naturally" to the surface, but enhanced oil recovery (EOR) allows for recovery of a further 20% to 40% of a site's oil. EOR can take many forms, but CO2 flooding has attracted considerable attention because of its potential to simultaneously sequester carbon and increase oil supply. Advanced EOR using CO2 will require major infrastructure investments, but it could push U.S. reservoir recovery rates from 30% to 60% in a generation."
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"America's dependence on oil makes vulnerable the country's economic and military security and our nation must finally address this fundamental risk. As co-Chair of the Energy Security Leadership Council, I am completely committed to actively working with this diverse group of fellow business leaders to make the case for an aggressive, comprehensive policy to improve energy security."
Frederick W. Smith, Chairman, President and CEO, FedEx Corp. (co-Chair) |
