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player ready...If politics is the art of the possible, then things should be possible now that weren’t before Sept. 11. Or perhaps not. For three decades, Americans have only haphazardly tried to fortify themselves against a catastrophic cutoff of oil from the Middle East, which accounts for about a third of world production and two-thirds of known reserves. Little seems to have changed in the last month, although the terrorism highlighted our vulnerability. Oil is barely part of the discussion.
Over the past 30 years, we have suffered Middle East supply disruptions caused by the Yom Kippur War of 1973, the fall of the Shah of Iran in 1979 and Iraq’s invasion of Kuwait in 1990. We have fought one war for access to oil–the Persian Gulf War. How many times do we have to be hit before we pay attention?
Even if we avoid trouble now, the threat will remain. In 2000, the United States imported 53 percent of its oil; almost a quarter of that came from the Persian Gulf. Weaning ourselves from Middle Eastern oil would still leave us vulnerable, because much of the rest of the industrial world–Europe, Japan, Asia–needs it. Without it, the world economy would collapse. Of course, countries that have oil can’t benefit from it unless they sell it. The trouble is they can sell it on their terms, which might include a large measure of political or economic blackmail.
They, too, run a risk. Oil extortion might provoke a massive military response. It is precisely because the hazards are so acute and unpredictable for both sides that Persian Gulf suppliers have recently tried to separate politics from oil decisions. (Indeed, prices have dropped since the terrorist attacks.) But in the Middle East, logic is no defense against instability. We need to make it harder for them to use the oil weapon and take steps to protect ourselves if it is used.
The outlines of a program are clear:
– Raise CAFE (corporate average fuel economy) standards. America’s cars and light trucks–pickups, minivans and sport utility vehicles–consume a tenth of annual global oil production. Tempering oil demand requires lowering the thirst of U.S. cars. The current CAFE standards are 27.5 miles per gallon for cars and 20.7 mpg for light trucks. With existing technologies, fuel economy could be raised by 17 percent to 36 percent for cars and by 27 percent to 47 percent for light trucks without harming safety and performance, says the National Research Council. Changes would have to occur over a decade to give manufacturers time to convert.
– Impose a gasoline or energy tax. People won’t buy fuel-efficient vehicles unless it pays to do so. Cheap gasoline prices also cause people to drive more. An effective tax would be at least 35 cents to 50 cents a gallon. It ought to be introduced over two or three years beginning in 2003. (To impose the tax now would worsen the recession.)
– Relax restrictions against domestic drilling. The other way to dampen import dependence is to raise domestic production. It peaked in 1970 and since then has dropped about 28 percent. The easiest way to cushion the decline is to open up areas where drilling is now prohibited, including the Arctic National Wildlife Refuge and areas off both the Atlantic and Pacific coasts.
– Expand the Strategic Petroleum Reserve. Tapping the SPR is the only way to offset a huge oil loss until a military or diplomatic solution is reached. Created in 1975, the SPR was envisioned to reach 1 billion barrels. At the end of 2000, it had 541 million barrels, roughly where it was in 1992. The failure to increase the SPR in the Clinton years was shortsighted. When oil prices are low–as now–the SPR should be slowly expanded to at least 2 billion barrels. Other industrial countries should also raise their oil stocks.
What prevents a program like this is a failure of political imagination. There ought to be a natural coalition between environmentalists and defense groups. Environmentalists want to reduce air pollution and greenhouse gas emissions. Defense groups want to limit our vulnerability to oil cutoffs or blackmail. A common denominator is the need to control cars’ gasoline use.
The American way of life doesn’t depend on $1 or $1.50 gasoline. It does depend on reliable sources of energy. Unless vast reserves are discovered outside the Middle East, global dependence on Persian Gulf oil will grow. This is a long-term problem. But if we fail to act now, the neglect would be almost criminal.