Today, U.S. oil dependence constrains foreign policy, limits military options, and harms economic growth and fiscal stability. Successfully addressing the challenge requires a balanced approach that emphasizes both substantially decreasing oil consumption and expanding domestic energy production.
In December 2006, the Energy Security Leadership Council (“Council”) outlined such an approach in its inaugural report, Recommendations to the Nation on Reducing U.S. Oil Dependence. Improved and strengthened fuel-economy standards were a core element of that comprehensive plan. A year later, in December 2007, Congress and President George W. Bush joined together to enact significant increases in fuel-economy standards for the first time in a generation. Unfortunately, access to new areas for oil production was not included. The Council subsequently released A National Strategy for Energy Security in November 2008. The Senate Energy and Natural Resources Committee voted on a bipartisan basis for legislation echoing this report in June 2009.
While legislative consensus has since become increasingly difficult to find, we have nonetheless seen some positive developments in the marketplace that, to different extents, correspond with the Council’s aims including vehicle electrification and the increased domestic production of oil and natural gas. Public-private sector collaboration has also resulted in further strengthening of vehicle fuel-economy standards, which remains a Council priority. Further progress on these solutions offers a pathway towards job creation, improved fiscal strength, economic growth, and a reduced trade deficit.
The Council is encouraged by the combination of increased domestic oil production and decreased consumption, and recommends policies to further both trends. However, we caution that the situation has not fundamentally changed, and that it would be dangerous to allow a false sense of security to result in complacency and inaction. The Organization of Petroleum Exporting Countries (OPEC) cartel and national oil companies fully or partially controlled by foreign governments continue to exert substantial influence over global supply and prices. As long as our nation remains dependent on oil—and, therefore, on this captive market—it will remain at risk.
More can and must be done. Government policy should focus on highly-targeted programs and reforms and research and development initiatives to both maximize domestic production of cost-effective oil and natural gas resources and more rapidly shift the U.S. transportation system away from petroleum and toward a domestic, stable, affordable, and diverse set of fuels.
By harnessing abundant domestic energy resources and American innovation, the United States can meaningfully reduce its exposure to the dangers of the global oil market. This can only be achieved through a serious and sustained national effort.
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