Energy independence. What does that mean? Since 1973, we have heard many differing opinions regarding the ending of America's dependency upon foreign oil. The severity of our situation today should give our economy the impetus to start to use alternative sources of energy. These sources include solar power, hydroelectric power, wind power and improved gasoline efficiencies for automobiles. Here we are 33 years later and what has happened? Energy costs continue to skyrocket. Depending upon which excuse you hear at any time, the most simplest interruption will cause a .15 cent a gallon increase in the pump price. Energy prices in my opinion are flexible upward and very inflexible downward. The drain that energy prices have on our economy is incredible. We are the largest importer of oil draining nearly $550 million dollars a day out of our economy and into our foreign trade deficit. We are eroding our standard of living and our children's standard of living because we can't curb this incredible appetite for energy.
Let us start by using less energy. Can we save electrical usage in our homes and businesses? Can we each use one less gallon of gasoline a week? Can we have a mass transportation system that actually moves people from one place to another rather than a bureaucratic nightmare that it seems to do.
There are simple solutions, however it is too bad that we can't see them and accept them. Energy independence-33 years later?
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A blog devoted to political and economic topics in today's society.
About Me
- Bob Swick
- I have been an educator for 43 years teaching over twenty courses in business and economics on a part time basis for several different colleges and universities. I have a Bachelors of Science in Journalism and a Masters of Science in Economics.
1 comment:
Either we just don’t get it or we just don't care. We have seen the stair case in energy prices continue for the last few years and we complain after each big spike and then just accept what has happened.
We can't help to feel this way since our government isn't trying to help. President has stated that the market needs to control the prices of oil, gasoline, home heating fuels etc. Government shouldn't interfere. Yet there is no problem subsidizing other products like sugar.
Oil is one of the biggest contributors to our National Debt. In November 2004, I submitted a paper for my Macroeconomics on the Impact of Oil on the National Debt. Here are some excerpts:
In 2003, the United States was the largest importer of oil yet we hold less than 3% of the worlds total oil reserves. The US was currently importing 11.5 million barrels of oil per day. This is costing the US $540.5 million/day and $197.2 billion/year. This equated to 33% of the trade deficit. The deficit with the Organization of Petroleum Exporting Countries (OPEC) grew 10 percent to a record 6.2 billion dollars. Where is most of OPEC from? Correct – the Middle East!
Nearly 64% of the crude oil is used for transportation.
• GASOLINE - Of all the crude oil refined for use in the United States, almost half (47%) becomes gasoline for automobiles, boats and other gasoline-driven motors.
• JET FUEL - Airplanes consume 10%, in the form of jet fuel.
• DIESEL FUEL AND HOME HEATING - Another 20% becomes distillate, two-thirds of which is diesel fuel for trucks, buses and other diesel engines, and one-third home heating oil.
• BOILER OIL - Boiler oil, or residual fuel oil, which makes up 7% of crude oil consumption, is used on ships, in industrial boilers and in power plants to produce electricity.
• ASPHALT AND ROAD OIL - Asphalt and road oil account for 3% of crude oil consumption.
• OTHER - Some of the crude oil, about 10%, is used as non-energy feed stocks for manufacturing products such as lubricants, wax, coke for steel making, and napthas that are used in the dry cleaning process.
Oil prices today are being driven by three factors:
1. Oil consumption has risen dramatically in the world since the first oil embargo in the U.S. in 1973. The U.S. has not only had a dramatic increase but countries like China and India are now becoming major consumers.
2. Politically unstable areas: The attacks of September 11th and now with the current conflict in Iraq have made the Middle East, where we import the majority of our oil from; have disrupted the oil flow from this area. Oil from Iraq has been disrupted and has not reached the output it had prior to the first Gulf War. There is also the political unrest in Venezuela, Nigeria, and Russia which furthers tightens the supply of oil.
3. Natural Disasters: The recent hurricanes in the Gulf of Mexico had forced the shutdown of some of the oil platforms and reduced the production by 20%. 10% of the platforms are still shut down.
Why do we need to address this? In FY04 the U. S. Government spent $322 Billion of your money on interest payments to the holders of the National Debt. Compare that to NASA at $15 Billion, Education at $61 Billion, and Department of Transportation at $56 Billion. Since we have been importing 11 million barrels a day and oil is priced at $49.63 (as of 11/29/04) it currently cost us: $545.9M per day, $16.3B per month, $196.5B per year.
Either we just don’t get it or we just don't care. We have seen the stair case in energy prices continue for the last few years and we complain after each big spike and then just accept what has happened.
We can't help to feel this way since our government isn't trying to help. President has stated that the market needs to control the prices of oil, gasoline, home heating fuels etc. Government shouldn't interfere. Yet there is no problem subsidizing other products like sugar.
Oil is one of the biggest contributors to our National Debt. In November 2004, I submitted a paper for my Macroeconomics on the Impact of Oil on the National Debt. Here are some excerpts:
In 2003, the United States was the largest importer of oil yet we hold less than 3% of the worlds total oil reserves. The US was currently importing 11.5 million barrels of oil per day. This is costing the US $540.5 million/day and $197.2 billion/year. This equated to 33% of the trade deficit. The deficit with the Organization of Petroleum Exporting Countries (OPEC) grew 10 percent to a record 6.2 billion dollars. Where is most of OPEC from? Correct – the Middle East!
Nearly 64% of the crude oil is used for transportation.
• GASOLINE - Of all the crude oil refined for use in the United States, almost half (47%) becomes gasoline for automobiles, boats and other gasoline-driven motors.
• JET FUEL - Airplanes consume 10%, in the form of jet fuel.
• DIESEL FUEL AND HOME HEATING - Another 20% becomes distillate, two-thirds of which is diesel fuel for trucks, buses and other diesel engines, and one-third home heating oil.
• BOILER OIL - Boiler oil, or residual fuel oil, which makes up 7% of crude oil consumption, is used on ships, in industrial boilers and in power plants to produce electricity.
• ASPHALT AND ROAD OIL - Asphalt and road oil account for 3% of crude oil consumption.
• OTHER - Some of the crude oil, about 10%, is used as non-energy feed stocks for manufacturing products such as lubricants, wax, coke for steel making, and napthas that are used in the dry cleaning process.
Oil prices today are being driven by three factors:
1. Oil consumption has risen dramatically in the world since the first oil embargo in the U.S. in 1973. The U.S. has not only had a dramatic increase but countries like China and India are now becoming major consumers.
2. Politically unstable areas: The attacks of September 11th and now with the current conflict in Iraq have made the Middle East, where we import the majority of our oil from; have disrupted the oil flow from this area. Oil from Iraq has been disrupted and has not reached the output it had prior to the first Gulf War. There is also the political unrest in Venezuela, Nigeria, and Russia which furthers tightens the supply of oil.
3. Natural Disasters: The recent hurricanes in the Gulf of Mexico had forced the shutdown of some of the oil platforms and reduced the production by 20%. 10% of the platforms are still shut down.
Why do we need to address this? In FY04 the U. S. Government spent $322 Billion of your money on interest payments to the holders of the National Debt. Compare that to NASA at $15 Billion, Education at $61 Billion, and Department of Transportation at $56 Billion. Since we have been importing 11 million barrels a day and oil is priced at $49.63 (as of 11/29/04) it currently cost us: $545.9M per day, $16.3B per month, $196.5B per year.
We were screaming when it was under $50 a barrel an now it averages between $60 & $70 a barrel.
Alternatives
The hybrid vehicle will produce lower emissions, less pollution and reduce the carbon monoxide that is affecting the ozone and global warming overall. The average US car currently gets around 19MPG. Replacing it with a hybrid could save the consumer about 550 gallons and $940 annually. In 2003 there were 204 million cars in the US. If we were all to convert to this hybrid car on January 1, 2005, we would save a little over 112 billion gallons of gasoline by the end of 2005. That would be 55.1 billion barrels of oil. If we were to only get a 50% benefit (since not everyone would convert or all cars would be use 100% of the time), and at the current cost of $49.63/barrel; we would save over $90 billion in that first year.
If we were to begin using the hybrid car along with fuel cells to power automobiles, fuel cells, wind and solar power for homes and business’, we would begin to reverse the dependence on foreign oil. Add to that solar and wind power along with fuel cells for residential power and heating, we could change the direction the way the world is headed. Complaints would be that we would cripple the economy because of the jobs that would be lost. We do seem to have withstood these changes in technology dating back to our independence. We have wasted 30 years since our first energy crisis; we can’t afford to waste any more time.
It’s very easy to end the war on terror, cut back on the oil imports and stop funding the Arab world, use that money to start paying back our national debt and reinvest back in education to make America strong again! By the way, how much are we spending in Iraq?
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