Anne Korin’s work is a great antidote to all the energy independence talk swirling around Washington.
She’s co-director of the Institute for the Analysis of Global Security and author of Turning Oil into Salt: Energy Independence through Fuel Choice.
First the good news: US net petroleum imports have dropped a lot in absolute and relative terms in recent years. They fell from 12.5 million b/d in 2005 to 8.5 million b/d last year, and from 60% of domestic demand in 2005 to an expected 42% this year. The Energy Information Administration sees foreign oil falling to 36% of US consumption by 2035.
“What we’ve always been told is if we only reduce our imports of oil, then we’re going to be spending less, our economy’s going to improve, the countries that sit on the bulk of world oil reserves will weaken,” Korin told the Renewable Energy Technology Conference in Washington last week.
Now the bad news.
“Yet what we are seeing is we are spending more on oil, spending more on these imports, not just per barrel but overall,” she said. “We’re importing less oil but we’re sending more money overseas for oil.”
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Funny how both President Barack Obama and Republican contender Mitt Romney left out that last part when they heralded surging US oil production during last week’s debate.
Same with Congress. Korin said the right thinks “drill, baby, drill” will save us from imported oil, while the left says we just need to reduce demand through vehicle efficiency.
“There’s certainly nothing wrong with domestic drilling and a lot of good things to say about efficiency,” she said. “But it should be very clear to us that merely by reducing imports, we’re applying a solution to the wrong problem. Our problem is not volume when it comes to oil, our problem is price.”
So what’s the solution to apply to the price problem?
World demand for oil isn’t going down, with China and India wanting more and more of it to fuel their economies. Korin said the only option is to break the monopoly oil holds over transportation.
“It’s the ability to essentially play the market onboard your car, to make an on-the-fly choice what to put in your car, how to fuel your car depending on the comparative price of fuels made from a variety of diff resources,” Korin said.
When there’s true competition at the pump, she said, prices will settle at an equilibrium point per mile and drag down oil to $45 to $50 per barrel.
Korin said alternatives will have to run the gamut of technologies and feedstocks to include plant-based fuels, alcohol fuels, electricity and others. And because every commodity is volatile, the best choice will vary.
“May the best fuel at any given time win and it will be different fuels at different times, in different parts of the country,” she said. “And that’s just fine.”