Ottawa — The U.S. government needs to intervene massively in domestic energy markets to reduce the country's dangerous dependence on unstable foreign suppliers of crude oil, a high-powered panel says in a new report prepared for the influential Council on Foreign Relations.
The task force, co-chaired by former energy secretary James Schlesinger and former CIA director John Deutsch, warns that some oil-producing countries are using their growing wealth and power to the detriment of U.S. interests, while consuming countries like China and India are competing for increasingly scarce resources.
The CFR report argues the U.S. should encourage increases in oil supply from outside the volatile Persian Gulf region, though offers no suggestions as to how that might be done. It pointed to the proposed development of the Canadian oil sands, saying a rapid expansion of that supply “could help limit world oil price increases.”
But the authors slam American political leaders, saying politicians from both parties mislead the public by suggesting that the country can achieve both energy independence and lower prices for gasoline and heating oil. “The central task for the next two decades must be to manage the consequences of its dependence on oil, not to pretend the United States can eliminate it,” the report concluded.
In a foreword to the report, council president Richard Haass noted that there is growing concern about U.S. energy security, citing U.S. President George W. Bush's warning in this year's State of the Union address that the country has an unhealthy “addiction” to foreign oil supplies.
Mr. Bush reiterated his concern Thursday, saying the U.S. is “too dependent on oil.” He said the recent drop in oil prices is good for consumers but he worried the country could become complacent again and reduce its commitment to alternatives like ethanol.
But there is little consensus about how to address the problem. “The lack of sustained attention to energy issues is undercutting U.S. foreign policy and national security,” Mr. Haass said.
While Mr. Bush has focused on expanding domestic crude supplies, the task force called for greater effort to reduce oil consumption. It advocated the government greatly increase incentives and investments to boost fuel efficiency in automobiles, to substitute biomass and electricity for oil in transportation, to enhance production from existing oil wells, and to increase energy efficiency in industrial process. “Government spending is appropriate in this context because the market alone does not make as much effort as is warranted by national security and environmental considerations,” the task force concluded.
It also urged government to open up areas that are currently off limits to drilling, including the Alaska National Wildlife Reserve and coastal waters of Florida and California.
The CFR report rejects the suggestion that crude oil reserves are running out, or that production has peaked. But it notes that additional supplies will be increasingly expensive to find and develop, and that prices will remain high for the foreseeable future.
The report suggests the United States has been relying on market forces to drive energy policy, both domestically and internationally, while other countries have used the power of the state, either as producers or consumers.
Iran, Venezuela and Russia have all wielded their growing wealth and clout as oil exporters to pursue their strategic objectives in opposition to U.S. interests. China, meanwhile, is investing around the globe, particularly in Africa, to obtain secure access to supplies. “At best, these trends will challenge U.S. foreign policy; at worst, they will seriously strain relations between the United States and these countries,” the report concluded.
The task force suggests that energy security has not been a central focus of U.S. foreign policy, though it noted the widespread perception that the invasion of Iraq and other interventions in the Middle East have been driven by the desire to control that region's oil supplies.
The authors argue that the U.S. military would be deployed in the region even if the country were not so heavily dependent on Middle East oil, in order to stabilize the region, combat terrorism and make countries “more secure from hostile action by their neighbours.”
