- The Washington Times - Wednesday, June 9, 2004

The United States must import a growing share of its energy needs to fuel a growing economy. For decades, the United States has been the world’s biggest oil consumer, soaking up every drop of oil it produces and a quarter of the oil produced worldwide.

“The United States currently produces about 8 million barrels of oil a day, ranking it the world’s third largest oil producer behind Saudi Arabia and Russia,” said Jay Bryson, economist at Wachovia Securities.

“However, the United States also consumes about 20 million barrels of oil a day, requiring imports of 12 million barrels per day to fill the gap,” he said. The gap is more than all the oil produced per day by Saudi Arabia and Iraq combined.

Lee Raymond, chairman and chief executive of Exxon Mobil Corp., the largest publicly traded oil company, says calls for “U.S. energy independence” are hollow and the need for energy from the Middle East will grow.

“We periodically hear calls for U.S. energy independence as if this were a real option,” Mr. Raymond, 65, said in a speech Monday night in Washington. “The fact is that the United States is part of the world energy market, and we must participate and compete in that market.”

The United States was the world’s largest oil producer a century ago, but output at many wells in the lower 48 states has topped out or is expected to do so in the next few years, the Energy Information Administration said.

Aided by new technologies and higher oil prices, production still is growing in the Gulf of Mexico, Alaska and a few other areas, but often the increase in output serves only to offset declines in production at older wells.

That leaves nearly six in 10 gallons of gasoline used by U.S. drivers coming from abroad. Thus, analysts say, even the most aggressive energy-development legislation would hardly put a dent in America’s growing need for imports of crude oil, refined gasoline and liquefied natural gas.

The most ambitious proposal, President Bush’s plan to open the Arctic National Wildlife Refuge for oil development, would increase U.S. production by 600,000 barrels a day for about 40 years, the president said.

But because demand is forecast to grow by 15 times that amount by 2025, the Alaskan oil would slow the growth of imports only slightly, the energy agency estimates.

Mr. Bush’s energy plan also would open development of areas of the Rocky Mountains and outer continental shelf, where smaller but significant reserves could be tapped.

But the president’s plan proved to be too aggressive for an environmentally conscious Congress. The House initially approved his oil-exploration proposals, then dropped them in the fall as part of a conference agreement with the Senate, where the environmental opposition was fierce.

Some small production incentives left in the bill, which fell prey in November to Democratic stalling tactics on the Senate floor, included tax credits for small domestic producers in the lower 48 states and subsidies to build a pipeline to carry natural gas out of Alaska.

The bill also contains an array of tax incentives to promote hydrogen-fueled cars, which many analysts think will replace gasoline-powered vehicles and make oil imports unnecessary. Also included are subsidies for alternative fuels including “clean coal” and nuclear and wind power.

Jerry Taylor, energy analyst with the libertarian Cato Institute, calls the energy bill “political tonic water” and a “dishonest symbol of action” for politicians who want to show they are trying to do something about high energy prices even if it produces feckless results. He urged lawmakers to abandon the legislation.

“This bill will not substantially increase energy supplies, will not reduce dependence on foreign oil and will not accelerate the development of viable new technologies,” Mr. Taylor said in an unusual joint statement with environmental activist Dan Becker of the Sierra Club.

Mr. Taylor said high energy prices are doing far more than anything in the legislation to encourage conservation while making it profitable for U.S. oil companies to increase production where they can at home.

Because of the bill’s $20 billion in tax breaks and subsidies for various energy producers and projects, he said, its main purpose appears to be “dispensing a stunning amount of pork for the well-connected at taxpayer expense.”



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