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Posted on 12/16/2001, 3:59:20 PM by M.K. Borders

Following Terrorists Attacks Alternative Energy in Spotlight

November 19, 2001–-As oil prices continue their slide and new violence in the Middle East are serving to highlight the United States dependence on foreign oil for its energy needs. World oil prices have slumped 40 percent since mid-September, with U.S. benchmark West Texas Intermediate crude touching a new low of $17.15 per barrel since June 1999.

While the air strikes against Afghanistan last month have failed to trigger significant turmoil in Arab oil-producing countries, the events of the past two months have sparked a sense of deja vu among energy industry experts.

"If we can reduce our dependence on oil, and our need to go the extra mile in going along with some of the things that repressive regimes do, we would be a lot better off," James Woolsey, a former CIA director and now a Washington attorney, said recently.

The plan to reduce foreign-oil dependence has three main aspects: First, aggressive conservation measures; second, the development of alternative energy sources like wind, solar, bio-fuels and hydrogen; third, drilling of new domestic oil wells, notably in Alaska.

"Diversification is the key to energy security in this country, that is relying on different source of energy," said U.S. Department of Energy's spokeswoman Jill Shroeder. "The president has initiatives not only in solar, wind, biomass and geothermal but also in oil, by drilling in the Artic refuge in order to get more energy independence."

The United States has spent over $10 billion in the last 15 years on renewable energy, research and development, the official added.

In the period immediately after the oil shocks of the 1970s, the country began to initiate much tighter controls on energy use. But in the past four years, U.S. reliance on foreign supply has rocketed, rising by 11 percentage points to 60 percent of the 20 million barrels of oil it now guzzles a day after nearly a decade of robust economic growth.

There is growing concern over the country’s depending on Saudi Arabia for nearly 20 percent of its oil, along with an additional 8 percent from countries like Iraq and Kuwait.

Despite the political concerns, the global economic slowdown helped push down U.S. oil futures prices to near two-year lows this week – hardly a catalyst for Americans to give up oil-intensive lifestyles epitomized by the popularity of gas-guzzling sport utility vehicles.

If the possibility of a supply disruption from the Middle East is remote, it is nonetheless most likely to occur, if it ever does, in connection with Iraq. That country, run by U.S. nemesis Saddam Hussein, exports some 600,000 barrels daily to the United States – or about 6 percent of current U.S. needs.

Critics say that for it's long term policy, the Bush administration has focused mainly on increasing domestic energy drilling and opening up Alaska's Arctic National Wildlife Refuge. But it has not gone far enough to wean the United States off its oil habit.

"If it weren't for the three letter word – oil – we would be free in the Middle East, as we are elsewhere, to support human rights, democracy and so forth," Woolsey said."This is why waste and biomass is so important as a source for fuel," he said referring to organic fuels like ethanol that can be derived from plants like corn or from decomposed waste.

Leaders in the alternative energy world, like Amory Lovins, the head the Rocky Mountain Institute, said that real change is completely possible if the United States finds the political will to make it happen.

"What they (the Bush administration) don't yet have is a way to build a balanced portfolio of supply-side and demand-side measures to meet policy objectives at least cost," Lovins said.

Lovins said, for example, that by boosting light vehicle mileage requirements by 2.7 miles per gallon, the United States could wipe out the need for all of last year's Mideast oil imports.

Other specialists like Scott Sklar, president of Stella Group Ltd, a company that sells fuel cells, said that within 15 years, renewable fuels could provide 15 percent of U.S. energy, and conservation measures could cut oil demand by 20 percent.

Major oil firms like Royal Dutch/Shell and BP are starting to develop alternative energy and being careful to create environmentally friendly public images.

Shell has pledged to spend between $500 million and $1 billion in the next five years to develop new energy businesses, concentrating primarily on solar and wind energy. BP is also making a push toward solar energy, and is now the world's No. 3 photovoltaic maker after two Japanese firms, Sharp Corp. and Kyocera Corp.

The world's No. 1 oil firm, Exxon Mobil Corp., which remains opposed to the 1997 Kyoto protocol that mandates cuts in emissions of carbon gases, is focusing on energy efficiency. The huge oil company is meanwhile skipping on developing renewable energy sources, such as biomass, wind and solar.

Jitters over foreign supply have also spurred moves to increase the nation's Strategic Petroleum Reserve (SPR), created by Congress in the mid-1970s after the Arab oil embargo.

The SPR currently holds about 545 million barrels of crude at several sites in Texas and Louisiana ready to provide a 54-day supply in the event of a sudden cutoff in foreign oil imports. The U.S. government now plans fill the reserve to its capacity of 700 million barrels over three years.

But over the longer term, the United States could improve its standing on the Arab street if it could reduce its vulnerability to oil flows from the Middle East, analysts say. --------------------------------------------------------------------------------

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