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NATIONAL SECURITY

Obviously national security has emerged as a central issue in the minds of all Americans in recent months. One of the ways we can help preserve our national security is to be more conscious of our energy security. The increased use of renewable fuels can help with this issue.

The U.S. Department of Energy's Energy Information Administration (EIA) projects U.S. oil imports could grow to nearly 60-70% of total U.S. oil consumption by the year 2010 if new policies are not adopted to reverse the current trends. According to EIA, the U.S. is currently dependent on foreign oil for 55% of its energy needs. Currently, 46.7% of the imports come from OPEC countries, with 19.1% originating from the Persian Gulf Region.

Historically, market prices have been the primary argument driving the dependence on cheap crude oil imports and the perceived aversion to renewable fuels. But, the market price of crude oil can be very misleading, because it excludes many external costs, such as environmental and military outlays associated with its use. The actual cost of oil, including external costs, is estimated to be over $100 per barrel or about $3-5 per gallon of gasoline, according to published U.S. Government reports.

Along with attacks from rogue nations and terrorism, the world's dependence on oil from the Middle East and the Caspian Basin is one of the three major threats to America's national security, according to R. James Woolsey, former director of the Central Intelligence Agency.

Because ethanol increases octane, it also increases gasoline production yields at the refinery. For every barrel of ethanol produced 1.2 barrels of petroleum is displaced. According to the General Accounting Office estimates, at the current level of ethanol production and with the growth the industry is expecting with the Renewable Fuels Standard, fuel ethanol and other renewable fuels could displace about 80,000 barrels per day of petroleum use by the year 2012, or about 4% of oil consumption.

Ethanol demand will receive a boost from the new national Renewable Fuel Standard, thus the amount of petroleum products displaced would increase significantly.

The Energy Security Issue Brief examines the implications of the U.S.’s growing dependence on imported oil, particularly in terms of its negative economic impact on the American economy.