The American Energy Security Study

KEY STRATEGIES

1. Identifying and articulating the magnitude of the energy challenge facing the U.S.

 

America now faces a crisis of historic proportion: a liquid transportation fuels crisis. Oil, the lifeblood of our economy, is in increasingly short supply and oil and derivative product prices have recently soared to record levels.

 

World oil demand is expected to increase by more than 50 per cent in the next two decades, raising a U.S. trade deficit that now exceeds $725 billion annually, and creating even greater risk of oil shortages and major world economic disruption.

 

America imports about 60% of the oil it consume. In 2005 U.S. oil imports totaled approximately $250 billion, or $680 million per day. That figure is fast approaching $1.0 billion per day.

 

Importing foreign oil costs the U.S. economy an estimated $300 billion per year in diversion of our financial resources, loss of jobs and investment, loss of tax revenues, in military expenditures tied to defending oil sources and transportation, and in other direct and indirect costs. That figure is also growing rapidly.

 

The study finds that the United States faces four serious oil-related risks:

 

Excessive dependence on the OPEC cartel and on other unstable foreign oil suppliers;

Conventional petroleum supplies are not meeting dramatic increases in world demand;

Rapidly increasing global competition for oil from China, India and other nations; and

Supply disruptions from natural disasters, political causes, and potential terrorism.

 

In addition, the U.S. military uses between 300,000 and 400,000 barrels of diesel and jet fuel each day defending our nation, and continued national dependence on foreign oil for transportation fuels threatens military readiness.

 

The economic threat of oil peaking – of production beginning to fail to meet world demand, and the associated dramatic price increases that can be expected – is staggering. Without an aggressive alternative fuel production program, the U.S. economy could lose $4.6 trillion in GDP and 40 million job years of employment over a decade if oil peaks in 2010. A peak in 2020, again without the development of alternatives, would more than double the impact over the subsequent decade.

 

 

2. Educating the public, media, industry, the financial community, and political leadership about (1) our vast domestic resources base, (2) technologies that are ready to meet the challenge, and (3) the many benefits to be realized from an aggressive, comprehensive development program.

 

When combined with transportation energy efficiency improvements and conservation efforts, the resources available within our borders are sufficient to achieve the goal of eliminating U.S. dependence on foreign oil:

 

America has the world’s largest alternative liquid fuels resource base of coal, biomass, and oil shale to substitute for conventional oil imports;

Exciting technologies are available to harness these resources in an environmentally respectful and economically rewarding manner; and

Capital is available in unprecedented quantities for good projects.

 

No single option can solve the challenge alone: we must deploy every resource and technology at our disposal to make liquid transportation fuels, including coal-to-liquids, biomass, oil shale, enhanced oil recovery using CO2 injection and sequestration, improved transportation efficiencies, and sensible conservation.

 

The study presents a plan for a long-term bridge to a sustainable, affordable, environmentally clean and secure energy future. One day it is likely that all of our energy needs will be met by renewable and sustainable resources. Fossil fuels, after all, are finite resources, and alternatives must ultimately be established. But this will take decades; for now, fossil fuels are the lifeblood of our economy, our civilian transportation systems, and our military.

 

Technologies available today offer great energy promise. Developing reliable, clean domestic sources of fuels using current state-of-the art technologies will ensure economic prosperity and an improving standard of living during the transition to a sustainable energy future.

 

Embarking on a national mission to achieve energy security and move toward liquid fuels independence will not only reduce risk and lower oil prices and oil price volatility, it also will:

 

Facilitate an industrial boom and enhance economic growth;

Create millions of jobs;

Foster new technology;

Establish a climate where U.S. industries are globally competitive;

Help to eliminate the trade and budget deficits;

Ensure affordable energy for citizens;

Guarantee strategic fuels for the military; and

Protect the environment, with the potential of substantially reducing total atmospheric emissions.

 

 

3. Encouraging the rapid deployment of Alternative Energy Farms (AEFs)

 

The study endorses an aggressive plan to develop Alternative Energy Farms, or AEF’s, as the fundamental U.S. energy facilities of the future. They will co-produce clean liquid fuels, natural gas substitutes, hydrogen, electric power, process heat, agricultural fertilizers and petrochemical feedstocks.

 

The hydrogen economy will need low-cost production facilities distributed across the country—AEFs can serve this purpose. Wind, solar, fuel cell and hydro AEF modules also are possible. Siting some AEFs beside oil refineries makes sense because AEF’s can supply refineries with competitively priced ultra-clean diesel and jet fuel, gasoline, and naphtha for blending and marketing, as well as electricity, process heat/steam, and hydrogen from near-zero emissions production facilities.

 

 

4. Safeguarding the environment

 

The Southern States Energy Board’s American Energy Security initiative requires increased transportation fuel efficiency and sensible energy conservation. The study also maintains a strong focus on the environmental quality questions raised by the increased use of coal, oil shale and biomass in this proposed national effort. By taking advantage of advanced technologies, the U.S. can use its abundant fossil fuel resources and still protect the environment.

 

The study recommends building near zero emission production facilities that can take the place of conventional refinery capacity. These facilities can capture carbon dioxide for productive use in enhanced oil and gas recovery, with safe sequestration. The study recommends that the U.S. pursue major increases in domestic enhanced oil recovery by injecting carbon dioxide into declining oil fields to release additional trapped oil, including sequestering the CO2 underground.

 

By producing environmentally superior transportation fuels from near-zero emissions plants, the United States can set an example for the world. Coal, biomass and oil shale derived liquid fuels produced from gasification and follow-up Fischer-Tropsch (FT) processing, for example, will produce ultra-clean, bio-degradable, essentially zero sulfur, low particulate and NOx emissions diesel and jet fuels, having performance characteristics superior to their conventional distillate counterparts. Near-zero sulfur gasoline also can be produced. Increased performance from these fuels translates to lower emissions per mile traveled (including CO2).

 

Large CO2 streams will soon be captured and made available at reasonable cost from new alternative liquid fuel production facilities. Many new applications are anticipated to be developed to utilize and sequester this "strategic gas." Advanced reforestation techniques and other responsible mining measures can mitigate the effect of increased mining, and increase natural CO2 sequestration. A portfolio of legislative initiatives, including incentives to capture, utilize and store CO2, are part of the American Energy Security plan

 

 

5. Implementing a legislative agenda that will guarantee American Energy Security

 

Some argue that the free markets will provide solutions to our liquid fuels crisis. Unfortunately, the oil markets are anything but free. They are controlled by a cartel of oil producing nations (many unfriendly to the U.S.) and by the multinational oil companies. Both groups are making record profits under current market conditions. Both have tremendous market and political influence, and are expected to use this influence to prevent competitive alternative oil and liquid fuels production from developing significant market share.

 

Government policies are clearly necessary to ensure against market manipulation and other predatory business practices by OPEC and the multinationals. These practices create a risky business environment, and will prevent alternative oil and liquid transportation fuel production from developing to any significant degree.

 

The SSEB recommends a series of legislative proposals at the federal, state, and local level to implement sustainable private capital formation policies, to encourage private sector commitments to build alternative liquid fuel plants and Alternative Energy Farms, to promote conservation and fuel efficiency, and to require appropriate environmental safeguards.

 

A full list of the legislative proposals can be found in the report, and in the Policy Recommendations document.

 

 

6. Insist on an aggressive timetable.

 

The SSEB American Energy Security initiative would:

 

Reduce 5 percent of foreign oil imports per year for 20 years, beginning in 2010; and

Eliminate foreign oil imports for liquid transportation fuels by 2030.