Nick Smith, June 23, 2002

The U.S. is increasingly dependent on foreign oil. The consequences of that dependence first became clear during the Arab oil crisis of the early 1970’s when I served on the Presidential Oil Policy Commission. Energy Secretary Spencer Abraham, in an International Relations Committee hearing on June 20, further elaborated on these consequences. We now import 59% of our oil, much of it from countries that are unstable, potentially hostile, or both. It leaves us vulnerable to shocks from disruptions in oil supplies and political blackmail. The tension in the Middle East this year has raised gas prices by thirty cents since January and further increases are expected this summer.

The U.S. now takes more than half of its oil imports from four countries - Canada (16%), Saudi Arabia (16%), Venezuela (14%), and Mexico (11%). We must watch all the exporting countries and be concerned about the petroleum market as a whole. A disruption in one country affects the entire market, whether or not that country is a major U.S. supplier. For example, an Iraqi oil production shutdown and strikes among Venezuelan oil workers led to brief price spikes earlier this year.

It will be difficult, if not impossible, for the U.S. to ever be self-sufficient in petroleum. (We are virtually self-sufficient in every other energy resource.) We have just 2% of the world's proven oil reserves, compared to the two-thirds of which are in the Middle East. Europe and Japan are in a similar position, importing 52% and 98% of their oil needs respectively. Thus, as long as petroleum continues to be a major energy source, the U.S. will have to work to promote stability and order in oil producing countries. This means fighting Islamic radicalism in the Arab world, and preventing instability in shaky countries like Iran, Venezuela, Nigeria and Algeria.

Conservation, which can reduce dependence, is important. Since 1970, American energy efficiency increased dramatically. Our GDP has risen 147% while energy consumption is up by only 42%. The energy bill will help us to do even better by promoting alternative fuel vehicles. Electricity conservation also received attention, with a focus on more efficient appliances, generation, and air conditioning.

Ultimately, the problem of energy dependence will require a technological solution. We need to find new sources of energy and new ways to harness them. The President's energy bill - which passed the House and Senate, and is now awaiting action in the conference committee - moves strongly in that direction. It encourages greater use of natural gas and clean coal, which we have substantial reserves of. It promotes research for non-petroleum energy sources including nuclear, hydro, geothermal, biofuels and renewable resources. Science and research get substantial increases from language I added to the bill, in order to develop and perfect emerging technologies, including fusion energy, neutron source power, hydrogen fuel cells, and improved clean coal technology.

Because the U.S. is affected by the economy in the rest of the world, we are likely to wrestle with the energy problems for decades to come. Shocks and problems will inevitably arise. Yet, with the passage of the energy bill, we will find ways to secure the energy that the American economy needs to grow and produce good-paying jobs for our kids and grandkids.

Congressman Nick Smith, a Republican, represents Michigan's Seventh Congressional District.