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THEMIS POLICY PAPER POSITION 6 04/19/2005

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An Oil-Free America

The U.S. runs on energy, and in this day and age oil is the cheapest source. Accomplishing “energy independence” in America will without a doubt affect every American citizen, and must be carefully orchestrated and meticulously planned.
The equation at hand, as complex and far reaching as it may be, boils down to a
simple, fundamental starting point: oil independency. “Winning the Oil Endgame”,
the “New Apollo Project”, and “Set America Free” are just a few plans recently
formulated to map the road toward oil independence. Alternate energy sources and reducing energy consumption all-together are necessary to accomplish oil and energy independence, and a plan that incorporates supportive government policies on federal and state levels, bold business and military leadership, and cohesive strategy based transformation is necessary.

Oil, once America’s key to freedom, has turned into a threat to economic prosperity, national security, and the environment. Our acquisition of oil not only soils America’s moral standing among nations; it also creates new, potentially dangerous,
rivalries. Concerns about scarce natural resources, pollution, and global warming resulting from burnt fossil fuels prompt the search for alternate energy sources. Reinvesting the ten billion dollars a month we spend on oil imports
into our own economy by gaining such independence only adds to the
attractiveness of such a plan ( Rocky Mountain Institute).

A strategy composed of five steps can quickly propel the United States into the world beyond oil. The key to the first two steps, improving oil efficiency and developing new industry, is the development of light weight materials, namely carbon-fiber composites. Roughly 70% of oil used today fuels our transportation, which includes cars and trucks, airplanes, and ships. PV cells, natural gas engines, and ultra-light vehicle design, which will improve safety and performance while nearly doubling efficiency, are well in sight and pave the way to safer, stronger, more energy efficient vehicles.
Light weight carbon composites can smoothly absorb up to twelve times as much crash energy as steel, and BMW is currently building such body parts (Clayton). Hybrid cars run on both gas and electrical power. Fuel cell powered cars whose environmental impact is negligible, convert hydrogen and oxygen into electricity and heat, with the only byproduct being water (CFR). The electric motor is capable of generating a surprising amount of electricity, “enough to support many more accessories than current cars have – in addition to things like global positioning systems, and DVD players… this car could power your whole house” (Ydstie). Factories that produce these practical and profitable cars would be both smaller and cheaper than current ones. Efficient vehicles are forecast to cut oil use by roughly 52%. The new industry accompanying light weight material development, production, and sale will not only create all sorts of new jobs, but will affect the construction and production of nearly all cars, factories, and buildings (Clayton).

Recent advances have given rise to the third step: biotechnology techniques that have doubled previous energy yield, allowing for biomaterials to replace petrochemicals. Cellulose to ethanol conversion allows for fossil fuel hydrocarbons to be replaced by plant-derived carbohydrates, boosting net farm income by tens of billions of dollars every year. The fourth and fifth steps involve other energy resources currently exploited by the United States and gaining popularity world wide: natural gas and renewable resources. Attempting to save natural gas will leave what is remaining more abundant, thus affordable, and part of the saved gas can be used later as a substitute for oil. Natural gas can also be converted to Hydrogen, a promising source of energy for the future. Using renewable energy sources, such as PV cells for cars, are on the rise but are still in more basic stages of development (Rocky Mountain Institute).

Exploiting alternate forms of energy will lead to a cleaner, safer, more prosperous America, but the transition will not necessarily come cheaply. Oil fuels our cars, airplanes, and ships, generates electricity, and runs residential and commercial heating. When determining the best method of improving efficiency, alternate power sources such as renewable resources, natural gas, and especially nuclear power should be considered. Renewabables such as solar, hydroelectric, and wind power are environmentally beneficial, but not as versatile as oil and therefore less appealing. Natural gas is currently the fastest growing form of energy. The factories are comparatively inexpensive and it is twice as efficient as other fossil fuels. Though far less perilous than those of oil, environmentally harmful toxic emissions from natural gas, primarily nitrogen oxide, make it undesirable. Most natural gas is found in the former Soviet Union and Middle East, which make it a difficult political move as well as contradictory to the goal of independence. There are currently one hundred and three nuclear power plants in the United States, and although they are expensive to construct, there are many advantages of nuclear power over natural gas. Abundant uranium sources are available and breeder reactors use fertile material to produce fissile material, essentially creating more fuel than originally present as it “burns”. Operating costs are stable and reasonably low: per kilowatt hour of power nuclear power is 3.5 cents/kW-h compared to natural gas’s 4.5 cents/kW-h, oil’s 4 cents/kW-h, and solar’s 20-30 cents/kW-h. Nuclear power plants operate to 90% of their capacity, compared to oil’s mere 30%, and can operate twenty four hours a day, seven days a week, so it can accommodate for spikes in electricity demand due to extreme weather and other disasters. Unfortunately, due to incidences like Chernobyl in 1986, and the long term environmental hazards of radioactive waste that remain dangerously reactive for hundreds of years, nuclear power general carries a negative connotation and lacks the generally public’s support. Nuclear power cannot be used to power cars and airplanes, but the potential of it’s electrical benefits far outweigh oil and other possible resources. Conserving energy all together must be made a priority in order to achieve energy independence. Energy efficient appliances, fluorescent lights, decreasing SUVs, increasing public transportation, requiring car manufacturers to make more energy efficient vehicles, and heavier gasoline taxes are necessary steps toward conservation (CFR).

Funding and incentives to automakers and consumers, grants for research and development, and the use of top government agencies (military) to quickly advance technology will propel our nation into a new “industrial revolution”—and the future is promising. Economic transition from oil dependence to independence will require heavy federal investment. Fees on inefficient vehicles and rebates on efficient ones can be used to shift consumer’s choices and help with fuel savings for customers. Cars that meet the efficiency requirements have to be made available and affordable to low-income Americans for the improvements to truly be far reaching and effective. Top research and development programs must be constructed, and considering we want to best and latest technology helping our military, the job should be turned over to them. In doing so, the pentagon assumes a leadership role in the development of key technology. In making these changes smoothly and as quickly as possible we must implement government procurement and technological acquisition. Incentives can be provided to accelerate manufacturer’s conversions and successes in the marketplace. Federal loan guarantees can be used to help provide initial “retooling” as well as for buying things like airplanes, etc. These investments would make the returns with major benefits (Rocky Mountain Institute).

As far as funding goes, the “Winning the Oil Endgame” plan proposes that investing $180 billion over the next ten years is forecast to save $130 billion gross- $70 billion net- every year by 2025. An estimated one million (plus) new job opportunities will arise, provided by advancing new industries (Rocky Mountain Institute). The “New Apollo Project” supported by labor and environmental groups suggests investing $300 billion dollars over ten years into three energy projects: hydrogen cars, factories, and high speed rails. The benefits from this plan estimate 3.3 million new jobs and $284 billion in savings from a 16% energy reduction. Another such strategy, “Set America Free” suggests dedicating $12 billion as incentives to automakers and consumers in order to create a new market for biofuel powered vehicles (Clayton).

With the approaching necessary energy industry reforms, America must be careful to avoid “creative destruction”, which can be regulated through government policy. Creative destruction, termed by Harvard Business School professor Clayton Christianson in his book The Innovator’s Dilemma, occurs when innovations destroy obsolete technologies only to be overthrown in turn by newer, ever more efficient rivals. In other words, focusing too much on today’s most profitable businesses and customers, a.k.a. “disruptive innovations”, may disillusion industry leaders, resulting in “technological gamechange” and ignoring the needs of the future (Rocky Mountain Institute).

As for now our nation, though it seems interested and certainly concerned, does
little to show interest in achieving such ends. Because of the U.S.’s strong relationship with Saudi Arabia, oil independence would amount to a huge hit to their economy (Clayton). The lack of political will to cut oil consumption is evident though our low oil taxes and minimal encouragement for cutting gasoline consumption. To many it seems that it is simply easier to keep using oil because already existing and operating pipelines and refineries (CRF).

Major oil companies including Shell and BP have already transformed from “oil” to “energy” companies that produce biofuels, helping us to gradually move toward a hydrogen economy conducive to the complete and permanent displacement of oil as a direct fuel (Ydstie). In the end, it will be cheaper not to have an oil problem. Reaching energy independence is synonymous with accomplishing energy security. The economy will benefit from an enormous energy tax break while shifting toward more competitive technologies.
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