American Petroleum Institute : Bush Urged to Help U.S. Cut Reliance on OPEC Oil

The American Petroleum Institute is trying to persuade President-elect George Bush to curb a growing U.S. dependence on foreign oil yet avoid additional energy taxes, the president of the trade group said Tuesday.

API President Charles DiBona said Americans have become indifferent about future energy supply because of the current worldwide glut and low prices.

“The real question is, ‘Can we hold our dependency down?’ The government can take steps to make things better or worse,” he said.

The United States imports about 42% of its daily oil needs, but that could rise to 60% or more because, under current conditions, it is more expensive to drill and explore than import foreign oil, he said.

Although economists say an oil import tax would move toward reducing dependence on foreign oil, the API is opposed to such an action. DiBona urged instead that the government open up federal lands for drilling.

In a study released Tuesday, the API said the government could help increase the domestic oil supply by more than 2 million barrels per day by the end of the 1990s. That amount would be three times as large as the shortfall that hit the United States during the Arab oil embargo 15 years ago.

Depends on OPEC

The study said that while the actions of foreign oil-producing nations can have serious effects, what the U.S. government does will also make a big difference.

“What we cannot predict is . . . what direction OPEC will take,” it said. “If OPEC increases its physical capacity, low oil prices could continue for an extended period and this will induce increased consumption,” he said.

In the longer term, dependency on imported oil could increase to about 60% or 70% of total consumption and would assuredly lead to a crisis, DiBona said. “But that’s a hard thing to explain to someone who is enjoying low oil prices.”

The Organization of Petroleum Exporting Countries is producing considerably below its current capacity, estimated at about 28 million barrels daily, DiBona said. According to the latest OPEC production survey, the group was producing 21.7 million barrels per day in October.

The API study said U.S. demand for oil has been growing and, at the same time, domestic oil production has fallen nearly 1 million barrels per day. This, combined with a decline in energy conservation and development of other energy sources, has increased dependence on imports.

Assure Adequate Supply

These trends mean that decisions made by the Bush Administration and Congress will profoundly affect the nation’s energy and economic security in the decades ahead.