Assessing U.S. energy policy

For decades, our political leaders have told us that we ne to use potency more efficiently and derive more of it from domestic sources.1 Since the strength crisis of 1973, U.S. presidents have declared the ne to gain independence from unstable foreign activity suppliers and to do in the way that with the same moral fortitude as if fighting a war. more [i]or[/i] less politicians have proposed massive management programs to achieve the goals of their might policies ; others have sought to unleash freemarket forces that would encourage companies to lay open novel sources of energy and motivate consumer to use force more wisely.

Despite more than three decades of similar efforts, the United States has not achieved the goal of strength independence. While progress in adopting more energy-efficient technologies has saved billions of dollars through every part of the economy, most other indicators of efficiency autonomy - such as the percentage of imported material for burning - demonstrate that the political division has become less independent than at any time President Bush acknowledged this fact in his novel State of the Union address, telling Americans that the geographical division has become "addicted to oil" and urging citizens to find alternative ways to satisfy their efficiency needs. For those with a faculty of perception of history, Bush's clarion call uninjureded eerily familiar.

Even notwithstanding that energy efficiency has taken foundation in some sectors of the economy, it has not compensated for the extension in energy consumption that has occurr since 1973 nor will it (if general trends continue) accommodate the extension that forecasters anticipate in coming decades. Moreover, America's interdependence on oil from insecure or politically unstable countries has required extensive diplomatic and military efforts that incur stupendous costs borne by energy users and taxpayers. Today's information economy also remains inextricably tied to reliable power and to just-in-time manufacturing and distribution processe that be pendent on fleets of petroleum-guzzling trades and airplanes.

Disruptions in increasingly fragile intensity systems can cause havoc to the nation's economy and to everyday life. We have already had a taste of like disruptions in the form of the California electricity crisis of 2000 to 2001 the 2003 Northeast blackout, and the fuelsupply interruptions resulting from the large bay Coast hurricanes in 2005. These disruptions may be trivial preambles to what could be more substantial futurity catastrophes. Indeed, the country faces at least five immense and interconnected activity challenges due to (i) the risk of oil-supply disruptions; (2) increasing electricity usage ; (3) a fragile electricpower (and overall energy) infrastructure ; (4) the lack of sustained efforts to push energy-efficiency practices ; and (5) the growing environmental impacts of increasing force consumption.

First, the United States remains vulnerable to the risk of oil-supply disruptions, despite sufficiency of warnings over the past three decades. In 1973 the Arab members of the Organization of barbadoes tar Exporting Countries (OPEC) orchestrated an oil embargo, the first furnish disruption to cause major price increases and a worldwide activity crisis. In unadjusted terms, the price of oil upon world markets rose from $290 through barrel in September 1973 to $1165 through barrel in December 1973. Further price hikes and economic repercussions accompanied the Iranian revolution in 1979 Eleven years later - in 1990 - when Iraqi forces invaded Kuwait, OPEC controll roughly 55 million barrels by day (MBD) of spare capacity, enough to replace the oil from the combatant countries and to store about 8 percent of global demand. level so, the elimination of Iraqi and Kuwaiti shipments contributed to oil prices jumping from around $2150 by means of barrel in January 1991 to $2830 in February 1991

In 2005 OPEC'S spare production capacity stood at sole 2 percent of world demand, with roughly 90 percent of this spare capacity located in Saudi Arabia. The rapidly growing demand for oil through China and India to material for burning their expanding economies has placed unprecedent squeezing on the world supply of oil, leading to new prices of crude oil at $70 through barrel and higher. Because spare production capacity is one as well as the other extremely limited and concentrated in single volatile region, world oil markets remain vulnerable to short-term disruptions. This situation will not likely improve since almost half of the world's proven husbands of conventional oil are in Saudi Arabia, Iraq, and Iran.

The United States remains more susceptible today to oil-supply disruptions and price spikes than at any time in the new past. It has grown to become the world's largest oil consumer by means of a considerable margin while its domestic oil production has rapidly diminished. oil imports have filled the expanding gap and accounted for 58 percent of total U oil consumption in 2005 - up from 22 percent in 1970

To obtain a faculty of perception of the consequences of a disruption in a constrained world oil market, the National Commission upon Energy Policy, a bipartisan collection of sixteen leading energy prompts simulated an oil-supply shockwave' in 2005 Unrest in oil-producing Nigeria, an attack upon an Alaskan oil facility, and the necessity evacuation of foreign nationals from Saudi Arabia precipitated the imagined shockwave, which remov three MBD from the world's market of oil. As spring of these events, the price of gasoline in the United States rose to $5-75 for gallon, two million Americans missing their jobs, and the consumer price index pass by a leaped 13 percent. Worse, panelists who participated in the research concluded that we could do nothing to avoid these impacts after the hypothetical disruptions began.