National Security and Imported Oil

By: Mark Crawford
Jan/Feb 2010

 
America’s continued dependence on foreign oil has long been viewed as a threat to our national security because we don’t have a guaranteed, protected supply of this precious resource that drives our economy and way of life. Nearly 60 percent of our oil comes from foreign countries, some of which are unstable or even hostile to the United States. Energy-rich nations aren’t afraid to use the threat of suspended oil or gas shipments as leverage to pursue their strategic and political objectives; for example, Russia cut off natural gas supplies to much of Europe last winter to force the Ukraine to make certain concessions.


America’s continued dependence on foreign oil has long been viewed as a threat to our national security.

 
“Because of their oil wealth, these and other producer countries are free to ignore U.S. policies and to pursue interests inimical to our national security,” writes the Council on Foreign Relations in its 2006 report entitled, “National Security Consequences of U.S. Oil Dependency.” This dependence on foreign oil also puts the United States into competition with other major importing countries, notably China and India.
 
“Oil markets are world markets,” states Paul Sullivan, professor of economics at the National Defense University. “Our national security is potentially affected by the energy import structures of our allies and those with whom we have tensions, not just the import structures of our own energy systems. For example, many EU nations rely heavily on gas and oil from Russia, Iran and Saudi Arabia. EU policies toward these energy exporters are sometimes constrained due to their energy vulnerabilities. Japan, China and South Korea rely much on Middle Eastern oil. Our policy options toward Iran, the Sudan and other oil-exporting states, including Russia, are sometimes constrained due to the constraints imposed on our allies and potential allies.”
 
According to Sullivan (and contrary to claims by many that the U.S. buys oil from its enemies), most of our oil is imported from non-Muslim states. About 80 percent of our imported oil comes from Canada (1.9 million BOPD), Mexico (1.2 million BOPD), Saudi Arabia (1 million BOPD), Venezuela (960,000 BOPD), Angola (671,000 BOPD), Iraq (550,000 BOPD), Nigeria (500,000 BOPD), Brazil (360,000 BOPD), and Kuwait (250,000 BOPD).
 
Further, close to 60 percent of all known conventional oil reserves are found in the Persian Gulf, which will likely be the last area to peak. “Many of the other American suppliers will peak a lot sooner than some would hope — and some such as Mexico have already peaked given the knowledge that we have now,” adds Sullivan. “As oil runs out for the smaller suppliers such as Nigeria, Brazil and Angola, the more important the Persian Gulf will become.” Tensions in the region may well spark different scenarios in the future that impact U.S. national security.
 
“In fact,” writes the Center for American Progress in its August 2009 study entitled Securing America’s Future: Enhancing Our National Security by Reducing Oil Dependence and Environmental Damage, “the U.S. may be forced to choose between maintaining an effective foreign policy or a consistent energy supply as U.S. consumers face higher energy prices. Our enormous appetite for oil — America burns a full quarter of the world’s oil — feeds the global demand that sustains corrupt and undemocratic regimes around the globe. American petrodollars fund regimes and economic investments that do not serve U.S. interests.”
 
Regardless of whether it comes from friend or foe, “spending hundreds of billions of dollars every year on foreign oil to fuel our cars and trucks has weakened our economy, our environment, and our national security,” stresses Aubrey K. McClendon, CEO for Chesapeake Energy Corporation, the largest producer of natural gas in the U.S. “After decades of debate about how our reliance on foreign oil has damaged our economy and weakened our national security, we’ve only grown more dependent. We are borrowing ourselves into national bankruptcy to the tune of $700 billion a year for imported oil. This is not sustainable.”
 
The frenzied cry to be free of foreign oil always seems to fade away when gas settles back down into the low prices to which we have become accustomed.
 
“Although oil prices have since declined, expectations that prices will rebound and once again be unstable raise concerns about oil security,” warns Stephen Brown, a fellow at Resources for the Future. “Past oil supply disruptions have resulted in sharply rising oil prices and reduced economic activity. Ten of the 11 post-WWII recessions — including the one we’re in now — immediately followed episodes of sharply rising oil prices.”
 
Rising U.S. oil imports reduces energy security by increasing the share of world oil supply that comes from those countries. Conversely, expanding domestic oil production enhances energy security by increasing the share of world oil supply that comes from stable suppliers.
 
A proactive approach
Reducing U.S. dependence on foreign oil depends on three key approaches: (1) reducing usage through conservation efforts, (2) developing alternative energy sources, and (3) tapping new domestic reserves. Although important, conservation simply delays the inevitable. Having an energy grid that is powered by clean, alternative energy is decades away. Until that happens the U.S. is still dependent on foreign sources to meet its oil and gas needs.
 
“Even as we work to develop alternatives, oil and natural gas will be required for many decades to fuel our economy and transition us to a greener energy mix,” says Marvin Odum, president of Shell Oil Company. “We currently import 58 percent of our energy needs, yet our country is energy rich with vast resources. We must take full advantage of our own largely untapped oil and gas resources, located predominantly in the Outer Continental Shelf. Oil and gas production technology, science and safety have improved dramatically over recent decades. Our technology allows us to produce more with an ever-smaller footprint and infrastructure, with appropriate environmental protections based on solid science. Developing these resources will create solid, long-term jobs and help provide energy security as we work toward a greener future.”
 
McClendon, CEO of Chesapeake Energy Corporation, advocates switching from gasoline and diesel to natural gas, for which the U.S. has plentiful reserves (100 years or more). Not only would this free the U.S. from the grip of foreign oil, “we could use one of America’s most plentiful resources to substantially reduce our energy costs while also improving the environment,” says McClendon. “If we converted just 10 percent of our vehicles to compressed natural gas we could lower our consumption of foreign oil by more than one million barrels per day, potentially saving nearly $50 billion each year.”
 
Carl Pope, president of the Sierra Club, agrees. “With natural gas we can produce far more hydrocarbons domestically, without invading pristine sensitive areas like the Arctic Wildlife Refuge and our coasts,” says Pope. “We have a domestic glut because power companies won’t use cheaper natural gas-fired power from independent producers because they like their monopoly. The auto industry, for reasons I don’t fully understand, is unwilling to do in this country what it already does in Argentina — power a lot of those cars with cheaper, cleaner domestic natural gas. When you start adding in wind (now cheaper than new coal), solar (coming down fast) and the ability to renovate and upgrade buildings to increase energy productivity, we can, with relative ease, start weaning ourselves from imported oil and start reaping enormous national security, economic and environmental benefits.”
 
Advanced technology that allows for the safe and economic recovery of natural gas from shale deposits “is a game-changer in the producer world,” comments Skip Horvath, president of the Natural Gas Supply Association. “Shale gas, in combination with the gas that comes from more conventional geologic formations, is the basis for the 100+ years of supply that is frequently quoted. But that’s just the tip of the iceberg. Hydrate deposits consist of frozen methane molecules and, while they are not economic now to produce, neither was shale gas a few years ago. When hydrates become economic they will add hundreds of years more to the 100+ figure.”
 
Finally, from a physical security viewpoint, many oil pipelines and facilities in the world are highly vulnerable to terrorism and natural disasters. For example, the ABOT terminal in southern Iraq ships about 85 percent of Iraq’s exports and is poorly protected, as are major pipelines coming out of Russia.
 
“The Port of Houston is not exactly a bastion of security either, and we import almost one-third of our crude through that port,” says Sullivan. “The LOOP off of Louisiana is a target and also a large source of our crude imports. These and other sites are real oil-based national security threat zones. A less centralized and less geographically dense energy system would be a lot less risky. The supply chains for oil for the U.S., and for the rest of the world, which are often in limited geographical bands, are ripe for targeting by any non-state group with a bad idea. The sooner we move away from oil and such a non-robust supply chain system, the more secure our energy and economic systems will be.”