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President Bush continues to amaze his core supporters by campaigning for ending our national "oil addiction" and reducing Middle East oil imports by 75 percent by 2025. Out goes advocacy of increased production--and in comes a paean to technology, ethanol and other alternative energy without anything like the budgetary resources needed to make these alternatives real. Inconveniently, the truth is that oil and gas will be essential to the economic growth of the U.S., our industrial partners, and rapidly developing China and India among many others.
Wind, solar, biomass and other alternative energy sources supply less than 7 percent of our requirements; even crash programs can be expected to do no more than double this in our generation. Whereas Americans import only 19 percent of their oil from the Middle East today, Europe and Asia import well over half from that region--and will need to for decades to come.
Since 1973, the nature of oil markets and the threats to U.S. energy security have changed dramatically. Energy dependence, price volatility and the threat of supply disruption characterize the current situation.
Whereas the United States imported about a third of its oil before 1973, it now imports more than half of its oil from abroad. Though less reliant on OPEC (which supplied 55 percent of global oil production in 1973, versus 38 percent today), the U.S. depends increasingly on a larger set of countries where economic and social instability are on the rise.
Katrina and Rita
The unpredictable nature of these suppliers creates uncertainty in the oil market and increases the volatility of oil prices. Price swings rather than supply shortages characterize the current market. Market speculation and the growth of futures trading have also increased price volatility and added a powerful, non-sovereign factor into oil disruption response. Crude oil and product inventories held by private companies, another factor in price volatility, have not kept pace with the increase in oil demand, a result of industry restructuring and cost-cutting measures. The result is a market incapable of dealing both with demand shocks, like the growth in China's consumption, and supply shocks as seen in the aftermath of Hurricanes Katrina and Rita.
Katrina and Rita have placed the longstanding vulnerabilities of the United States energy system into stark relief. The disruption of U.S. Gulf of Mexico oil and gas production, the lack of spare refining or global oil production capacity to replace these losses, and the absence of U.S. strategic product reserves to provide gasoline and jet fuel to U.S. consumers demonstrate how fragile we have let our energy security become.
The vulnerability of our domestic infrastructure is matched by the growing instability of the world's major oil and gas suppliers and volatility of the global oil market. The most resource rich countries are less and less open to foreign investment, U.S. military protection of Middle East supply and suppliers brings increased challenges to our national security, and underdevelopment and corruption in many major suppliers creates instability in key regions of the world. A program to restore U.S. energy security is overdue-for the sake of our economic and national security.
It will take years for new investment in U.S. energy security to cure our vulnerabilities. The United States and the global economy will depend …