Thinking About Oil

Wednesday, 20 May 2009, 13:41 | Category : Politics
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President Obama has announced his new auto fuel economy initiatives, which would raise CAFE at the cost of about $1300 per car. I’m sure Rush and Glenn Beck and others will have a field day with this – I’m sure the word “tax” will figure prominently in their diatribes. But I’ve never understood their position on fuel economy. We import oil. We import it in large part because we like to drive enormous SUVs that get pathetic gas mileage. Everybody knows this. But I thought it might be helpful to look at it another way.

The United States consumes about 20 million barrels of oil a day (that’s almost a quarter of the total daily world production, by the way). We import about 60% of this, some 12 million barrels a day. And most of the oil we import comes from two sources – Canada (about 1.9 million barrels a day) and OPEC (about 5 million barrels a day). OPEC – featuring such countries as Saudi Arabia, Libya, and Venezuela. About 40% of our total oil imports comes from OPEC.

About 60% of the cost of each gallon of gas you purchase goes to the crude oil producer. So, at, say, $2.50 a gallon for gas, roughly $1.50 goes to the crude oil producer. And of the $1.50, on average, about 60 cents goes to an OPEC country. Now, Saudi Arabia may be our “friend”, but that government is perched perilously on a pedestal composed of some rather radical Islamic elements; and Venezuela makes no attempt to hide their anti-American bent. And yet, every time we buy a gallon of gas, we enrich these countries. It makes no sense to me. Conservatives, I would think, would be trying desperately to end our dependence on such. And they should, I would think, be smart enough to know that we can’t possibly drill our way to another 5 or 6 million barrels of oil a day, which would require us to double our current output. So why, exactly, is raising the efficiency of our cars such a terrible idea?