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Oil Hypocrisy Exposed on Capitol Hill!

September 12, 2011

Almost every U.S. politician over the last 40 years pledged unwavering support to reduce our reliance on fossil fuels and imported oil for reasons ranging from national security and energy security to economic prosperity and environmental stewardship. With this entire banner waving, talk of renewable, clean and sustainable energy, and furor over foreign oil, what has actually been achieved?

The U.S. Energy Information Association (“EIA”) , Short-Term Outlook Report, September 7, 2011  concludes:

U.S. Liquid Fuels Consumption:
Total consumption of liquid fuels in 2010 grew 410 thousand bbl/d, or 2.2 percent, the highest rate of growth since 2004. In contrast, projected total U.S. liquid fuels consumption in 2011 falls by 170 thousand bbl/d (0.9 percent).  Motor gasoline consumption accounts for almost all the projected decline for the year.

EIA expects total liquid fuels consumption to increase by 80 thousand bbl/d (0.4 percent) to 19.1 million bbl/d in 2012, down from the 170 thousand bbl/d increase projected in the previous Outlook because of the downward revisions to the U.S. economic growth forecast.  Projected motor gasoline consumption rises by 40 thousand bbl/d (0.5 percent) as highway travel increases modestly, and distillate fuel consumption increases by 30 thousand bbl/d (0.9 percent) as growth in industrial activity and non-petroleum imports continues to slow as a result of continuing weak economic growth in 2012.

U.S. Liquid Fuels Supply and Imports:
Domestic crude oil production, which increased by 110 thousand bbl/d in 2010 to 5.5 million bbl/d, increases by a further 140 thousand bbl/d in 2011 and by 60 thousand bbl/d in 2012 (U.S. Crude Oil Production Chart), driven by increased oil-directed drilling activity, particularly in unconventional shale formations.

Liquid fuel net imports (including both crude oil and refined products) fell from 57 percent of total U.S. consumption in 2008 to 49 percent in 2010 because of rising domestic production and the decline in consumption during the economic downturn.  EIA forecasts that liquid fuel net imports’ share of total consumption will decline further to 47 percent in both 2011 and 2012.

In simple terms, the report states:
• U.S. consumption of crude oil jumped in 2010, may decline slightly in 2011 and should rise again in 2012 for a total net increase of 1.7%.
• Domestic production of crude oil is projected to show an increase from 2010 to 2012.
• The percent contribution of imported oil to domestic consumption is projected to continue to decline through 2012.

However, a review of “U.S. Annual Crude Oil Net Imports,” shows a horse of a different color. In fact, the decline in crude oil imports is not really a decline at all.  According to EIA data (see following graph):
• Oil imports increased 51% from 1992 to 2012 (projected).
• Oil imports shall remain relatively stable over the next few years.

 Source: U.S. Energy Information Administration

So if what we hear is not exactly true, then what is at play? The underpinnings of U.S.’s energy policy rests with The Department of Energy (“DoE”), which is mandated to ensure America’s security and prosperity by addressing its energy, environmental and nuclear challenges through transformative science and technology solutions.

In a dramatic demonstration of the difference between fact and perception, DoE’s FY2012 Budget stipulated that the request of $29.5 billion “reflects increases for priority areas such as clean energy, nuclear security, and research and development. Savings are achieved through cuts to inefficient fossil energy programs.” True, allocations towards renewable energy projects increased to 3.9% of DoE’s entire budget from 2.2% in their FY2000 budget. But to think a paltry $1.16 billion in renewable energy expenditures in 2012 will have a major impact on achieving energy security and independence is utterly unrealistic.

If the DoE is nothing more than a political subterfuge then what programs and initiatives, if any, are driving changes to free us from oil based economy. The answer obviously is- Nothing. In reality it’s not a clean energy economy or freedom from foreign oil our lawmakers are actually striving for.

The final test of our government’s interest in these lofty goals will be in what Congress does with the issue of tax subsidies to the oil industry. Reflected in the International Center for Technology Assessment’s (“CTA”) 2003 Progress Report, “What Gasoline Really Costs Us,” and New York Times’ July 2010 article “As Oil Industry Fights a Tax, It Reaps Subsidies,” “oil production is among the most heavily subsidized businesses.”

CTA cites the reason “the federal government provides the oil industry with numerous tax breaks is to ensure that domestic companies can compete with international producers and that gasoline remains cheap for American consumers.” In addition to direct tax subsidies to the oil industry, other federal handouts and hidden costs lie in Government Program Subsidies; Protection Costs Involved in Oil Shipment and Motor Vehicle Services; Environmental, Health, and Social Costs of Gasoline Usage; and Other Important Externalities of Motor Vehicle Use. In total, these programs keep the price of petroleum artificially low, encourage its use and discourage use of other forms of clean energy.

In closing, it’s hard not to deduce, that our elected officials on Capitol Hill are insincere in their efforts to adopt alternate sources of energy and reduce oil imports. If they are indeed sincere, then this is a supreme example of incompetency. If they are not inherently interested in getting us off oil, which seems to be the case, then deceit is the only remaining option.  Additionally, with all the economic uncertainties in our economy, it would seem to be a no brainer and a win-win situation, to remove these subsidies.

Seems our trusted lawmakers are playing a most dangerous game.

2 Comments leave one →
  1. September 14, 2011 7:52 PM

    Best article I have read on oil in 30 years.
    The whole truth and nothing but the truth.
    The American public thinks they are getting a deal with cheap gas but they are paying dearly on the back in in hidden taxes, poor economic growth and unemployment. Their is no such thing as a free ride and when will we wake up.

  2. September 14, 2011 8:44 PM

    I am truly humbled by your comment. You points are succinct and correct. Wish more could be done than words. Struggling with what can really be done. Don’t give up on me yet.

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