U.S. Energy Policy: First Face Reality

The U.S. only has about 3% of the world’s oil reserves, but demands 20% of current world production.

Richard T. Stuebi at Cleantech Blog, describes some solutions for the U.S. energy dilemma. Excerpts below.

Link: Cleantech Blog: When In A Hole, Stop Digging.

We complain about high energy prices, and ask the government to do something about it. When, in fact, there’s very little the government can do about energy prices. OPEC makes it abundantly clear that we are price-takers, not price-setters.

According to analysis by the U.S. Department of Energy, opening up new areas to drilling "would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.

Dr. Gal Luft, Executive Director of the Institute for the Analysis of Global Security, recommends moving to Fuel Flexible vehicles, so OPEC would lose its stranglehold on the U.S. economy. (Fuel Flexible vehicles: Gasoline powered vehicles able to run on a limitless variety of alcohol/petroleum blends with the addition of equipment that is about $100 per vehicle.)

Dr. Luft and other luminaries (e.g., James Woolsey, Robert "Bud" McFarlane) have formed the Set America Free Coalition to promote the Open Fuel Standard Act, which would require that 50% of all vehicles sold in the U.S. in 2010 must be fuel-flexible. According to Dr. Luft, the major automakers say this is doable.

The U.S. consumes about 25% of the world’s annual oil production, implying U.S. demand levels of about 21 million barrels/day (almost 8 billion barrels per year), but holds under its territory only about 2% of the world’s proven oil reserves of 1.2 trillion barrels. In contrast, the Oil Producing and Exporting Countries (OPEC) control almost 80% of the world’s oil reserves, yet produce only about 40% of annual oil supplies.