Hazards of Imported Oil
When the Alaskan port of Valdez was shut down by the Coast Guard for a few days after last Friday’s oil-tanker spill, one-fourth of U.S. oil production was suddenly cut off from its major markets, and gasoline prices in California immediately rose. The limited reopening of Valdez has eased fears of an oil shortage on the West Coast. But the closure of the port, the southern terminus of the Alaska pipeline that runs nearly 800 miles from the North Slope, has provided the most chilling reminder in a decade of how vulnerable to interruption U.S. oil supplies are, and how much more costly this country’s swelling appetite for oil threatens to become.
The interruption in oil shipments came at a time of rising prices--a barrel of crude costs about 50% more today than it did six months ago--and of inexorably increasing imports. Last month, reports the American Petroleum Institute, imports totaled nearly 1 million barrels a day more than a year earlier, rising from 39.5% of demand to 44.8%. In the same period, oil purchases from the Persian Gulf expanded by one-third, to 23% of all imports. More than 60% of the world’s known oil reserves are in the gulf area. As U.S. demand rises, that volatile and often hostile region seems destined to provide and increasing share of imports.
The handwriting is on the wall, and it is as ineradicable as the oil slick that has smeared the islands and polluted the wildlife habitats of Prince William Sound.
In January, for the first time since 1978, the United States imported more oil than its domestic fields were able to produce. As U.S. production continues to slide, the result of old oil fields playing out and too little money being put into a search for new ones, overseas purchases will grow, adding to the trade deficit and to the economic and political risks that come from depending too heavily on foreign suppliers. Twice in the 1970s the United States suffered severe oil supply and price shocks. The 1990s could see that experience repeated.
Two increasingly urgent needs are apparent. Every encouragement, including tax breaks and other incentives, should be given to efforts to develop and safely produce new domestic energy supplies, both oil and alternative fuels. And oil consumption, which has steadily increased as oil prices have fallen, must be reduced through renewed emphasis on programs to achieve greater efficiencies and otherwise boost conservation. A stiff gasoline-tax boost, up to 50 cents a gallon, would the quickest and surest way to curb the growth in demand. Such a tax can no longer be seen as just a possibility. It has become an imperative, and it has become increasingly self-defeating to postpone it.