How dependent are Americans on foreign oil Essay Example for Free

How dependent are Americans on foreign oil Essay 1.0 Introduction â€Å"We have a serious problem. America is addicted to oil.† George Bush made this assertion in his 2006 State of the Union address. By 2025 the United States will increase its daily consumption of oil to 28.3 million barrels per day. These estimates by the Energy Information Administration (EIA) show that by then, the US will depend on foreign countries for 70% of its oil needs. The United States of America (USA) depends on foreign nations for 66% of the oil it consumes. According to the EIA, currently the US consumes almost 21 million barrels of oil a day. Unfortunately, this amount of oil is not produced locally so the US has to depend on foreign nations for its consumption of oil. The dependence on oil by the US has a number of effects which include: impact on the nation’s economy; determines US foreign policy; shapes national security; and influences the relationship between the US and other nations (Ebe 2). The aforementioned effect which dependence on foreign oil has caused creates problems for the US. One of the major problems is the fact that the US is dependent on other nations for its energy supplies. Since the US is dependent on these nations for oil, the events in these oil producing nations determine to a large extent, what happens in the US. There is need for the US to resolve this energy situation, because dependence on other nations for oil rids the US of its sovereignty as an independent nation. 1.1 Statement of problem Oil is a very useful resource as it used by many industries. Many industrialized nations of the world, like the US, need large amounts of oil to keep their economies going. Over time, the US has become dependent on foreign nations for its oil needs- while local oil production has plummeted, demand is on the rise. Since the US is so dependent on foreign oil, what are the implications of this dependence? 1.2 Dependence on foreign oil: an effects analysis The dependence on foreign oil by the US has a lot of implications. The effect of this situation makes an impact on the economy, foreign policy, national security and international relations. These four perspectives are explored in further detail below. Effects on the US economy. Dependence on foreign oil supplies has had a profound effect on the US economy. One major evidence of this fact is the constant fluctuation of prices of gas due to changes in prices of oil. In other words, once the price of oil changes, then the price of gas in the US shifts accordingly. This has a profound effect on companies and other businesses that use gas. In the past year, oil prices have soared due to a number of factors in the world. Once these prices climb, it means that the consumer in the US has to pay more for goods and services that are related in one way or other to oil. Changes in the prices of oil in the world create shocks which are felt when prices of goods and services increase. However, the US economy would not have had to deal with these shocks if there wasn’t a high dependence on foreign oil. Furthermore, the constant increase in the price of crude oil in global markets leads to the transfer of huge amounts of money to other cou ntries in foreign trade. US foreign policy. Concerns about US dependence on oil have had an influence on its foreign policy. Various governments are aware of US dependence on foreign oil and have taken moves to protect the integrity of the US. Most people around the world believe that the US meddles in the affairs of other countries especially those in the Middle East because of the oil reserves in these places. If there is instability in the Middle East, it will drastically affect the supply of oil to the US. Thus, in order to protect it’s and ensure the constant flow of foreign oil (upon which the US is dependent), the US government takes measures to ensure peace and rule of law in these places. Haley (9-10) echoes the voice of critics who contend that the U is keen on maintaining stability in the Middle East because of the implication which crisis will cause the US since it relies so heavily on foreign oil. This is evident in the Gulf war and the recent invasion of Iraq. These actions by the US hav e created hatred in the hearts of people in the Middle East towards the US. Impact on national security. The dependence on foreign oil by the US has an impact on its national security as well. It can be argued that the dependence on foreign oil by the US has led it get involved in the affairs of other nations of the world. For example, the Middle East is a region which the US does not ignore and it is in this region that the largest reserves of crude oil abound. The US cannot afford to ignore this region because it needs the oil that is produced from these areas. Sadly, many of these countries are places where there is a lot of unrest and oppressive governments and the US gets a share of violent attacks because it relates with these nations. This situation has brewed hatred in the hearts of many and motivated attacks against the US both home and abroad. With the terror attacks on September 11 2001, the US is aware of the threat to national security and the lives of its citizens at home and abroad. Terrorist groups are aware that oil is the centre of the US e conomy and when they target this sector, they will inadvertently cripple the US economy and bring it to her knees. Relations with other nations. The relationship between the US and other nations is also affected to some extent by the dependence on foreign oil by the US. Apart from the US, other countries in the world have vested interests in oil because they too depend to a large extent on oil. With the collapse of the Soviet Union and other â€Å"iron curtain† countries, China has risen as an industrial giant. These industries are largely fuelled by oil and in order to achieve its aim and remain in the lead, China has improved relations with many oil producing countries and opposes restrictions imposed on these places by the US at the United Nations general assembly. These relationships between the US and other nations are founded upon dependence on oil. The dependence on foreign oil by the US has led to complex relationships between the US and other nations. At close observation, the root cause of these relationships is often not noticeable, but exploring deeper brings out the dependence on oil by the US. On the other hand it is important to look at this issue in another perspective. Most of the countries which produce oil are undemocratic. Infact, some of them have oppressive rulers and since the US depends on foreign oil, these governments become prominent. The fact that they are producers of oil propels them to lime light because the US needs this foreign oil so badly. 1.3 Relevant statistics Certain statistics are important in order to understand the dependence on foreign oil by the US. There was a time in the past when the US was the world’s largest producer of crude oil. But all that has changed now. According to the EIA, Saudi Arabia is the world’s largest exporter of crude oil and will remain so for a while because it holds 24% of the worlds oil reserves. Conversely, the Middle East holds 66% of the world’s oil reserve and supplies 30% of oil in the world. The dependence on foreign oil by the US has been worrisome to past administrations. According to Randall, President Richard Nixon established â€Å"Project Independence† to stop America’s dependence on foreign nations for oil. Furthermore, President Gerald Ford approved the regulation of petroleum prices, established the Strategic Petroleum Reserve and signed the Energy Policy and Conservation Act. On his part, President Jimmy Carter signed the national Energy Act to encourage the development of local sources of energy. 1.4 Probable solutions There is growing need to decrease America’s dependence on foreign oil due to the many problems which the phenomenon poses. It is imperative to develop alternate sources of energy in the US so that dependence on oil can gradually be lifted. Dependence on foreign oil may not be lifted totally but a gradual lifting of this dependence is important. Apart from oil, there are alternate sources of energy which should be explored in the US with the backing of the government and private sector so that these initiatives can be widely adopted. In the first place transportation is a major consumer of gasoline, so cars should be made to run on other sources of power such as electricity which is cleaner and will lower carbon emissions in to the atmosphere. Apart from electricity, wind energy too can be harnessed to power industries. Furthermore, dams built on rivers can generate vast amounts of electricity. Biological fuels too are important and these too need to be developed and used to lessen America’s dependence on oil. The current economic crisis in the world is an indicator to many people to cut costs. However, with the rising cost of crude oil, cost cutting will mean learning to do without crude oil and using other alternate sources of energy. Most of the alternate source of energy mentioned here are not harmful to the environment and the other benefit about them is that they are renewable as well. It does not matter how vast a country’s oil reserves are. There will come a time when these reserves will deplete. If the US continues to depend on foreign oil, what will be done when these countries no longer have oil to sell? The situation is best imagined. 1.5 Conclusion Obviously, the US needs to look else where to satisfy her energy needs. The switch from oil to alternative sources of energy may take a while but the journey of a thousand miles begins with a step. This switch has become all the more important considering the amount of hatred which is shown to everything American, especially by terrorists from the Middle East. Much of the world knows that the US economy is affected by oil supplies- cripple this and you bring the world greatest nation to its knees.