How to end US oil addiction

By Peter Goldmark

Newsday

While the eurozone gropes for a way out of its financial morass and the American president and the extremist Republican majority in the House of Representatives discuss fitfully how to restructure the federal budget and avert the market shock of default or near-default on Treasury securities, a less visible, secular change with long-term consequences is unfolding.

That change is the tightening of oil supplies around the globe. In the murky world of petroleum, it’s hard to tell in the short term what’s really going on. Among the variables shrouded in fog: the amount of proven reserves and new fields various oil-producers control, the “short” or “long” (sell or buy) positions various players in the oil markets hold, and the actual production capacities of various producers.

With billions of dollars at stake daily, the players go to great lengths to withhold, distort or otherwise manage such information for their own geostrategic or commercial advantage.

The ability of the Saudis to single-handedly dictate price and smooth global production has been eroded by the limits of their own reserves and by relentlessly increasing demand from fast-growing economies such as China and India. In the United States, we already see this price pressure at the gas pump. Short-term fluctuations are hard to predict, but the long-term direction is clear: steadily growing demand, a squeeze on supply and rising prices.

BROKEN PROMISES OVER DECADES

The challenge this presents to the United States is to make good on a promise that every American president since Richard M. Nixon has made but never delivered on: to break America’s addiction to imported oil. There are understandable reasons why past presidents didn’t get serious about this. It means big changes in American life and requires taking on some of the most powerful interests on the American political landscape, including the oil production and distribution lobbies.

But the clock has now run out, and there’s no choice unless we are ready to become a petro-colony that pays even more than the roughly $400 billion in tribute to oil that we now send overseas each year. What does a different policy look like?

THREE-PRONGED SOLUTION

First, it means conservation and efficiency on every possible front: hybrids and electric vehicles, more use of mass transportation, and sharply tougher efficiency standards for gasoline-driven vehicles.

Second, it means removing the present tax subsidies to petroleum products wherever those appear. To give tax breaks to those selling something that creates American dependence on other powers is lunacy. And while we will hear pious moaning from the oil folks about higher gas prices as a result, the real driver on prices isn’t internal American tax subsidies; it’s the global supply-and-demand equation.

Third, it means opening up the market and distribution channels to all substitutes for imported gasoline and diesel fuel. This includes natural-gas products, unsubsidized ethanol, methanol and anything else American ingenuity can come up with. Some of these will require modest adjustments to vehicle engines, but those adjustments have already been pre-installed in some models and can easily be fitted to the balance of the fleet as long-term policies are put in place. The transition will also need to include a carbon-emission limit, so that we don’t unwittingly get off imported oil but on increased emissions.

This will be a major shift in the American economy, in incentives that govern how we travel, and in the kinds of vehicles we use and the fuel that powers them. It will be interesting to see if anyone running for president next year has the foresight and the guts to raise this issue and outline the new policies that will be required.

And it will be interesting to see if we, the American public, are ready to listen.

Peter Goldmark, a former publisher of the International Herald Tribune, headed the climate program at the Environmental Defense Fund. He wrote this for Newsday. Distributed by McClatchy-Tribune Information Services.