Bringing It All Back Home: Want to Really Fix the Economy? Stop Spending $300 Billion a Year on Foreign Oil, and Invest It Instead in Ethanol and Other Homegrown Fuels

By Clark, Wesley K. | The Washington Monthly, November-December 2010 | Go to article overview

Bringing It All Back Home: Want to Really Fix the Economy? Stop Spending $300 Billion a Year on Foreign Oil, and Invest It Instead in Ethanol and Other Homegrown Fuels


Clark, Wesley K., The Washington Monthly


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America has a dirty secret, and a mortally dangerous problem. You will occasionally see it mentioned in the press, but almost no politician will give it more than a passing reference. Many despair of finding a solution; others fear offending powerful constituencies. Scholars now consider it so banal that they seldom study it. Most businessmen accept it as a sad, sorry fact of life, though it makes some of them very rich.

It's an $821-million-a-day addiction to foreign oil. That's $300 billion a year, or about $1,000 for every American--man, woman, and child. In June we sent $27 billion abroad; in July it was over $29 billion.

Our dependency on foreign oil costs more than the wars in Iraq and Afghanistan. It's about 60 percent of the total U.S. trade deficit. If we weren't sending the money away, it would be enough to repair America's woeful infrastructure in a few years. Enough to send every child in America to college, and fix public education to boot. At a time when we've lost 8 million jobs, it would be enough to hire 3 million Americans at $100,000 per year, or almost 8 million at about $40,000 per year.

If a foreign country came here and said, "Pay us this tax," we would consider it an act of war. Yet when a political party discusses trying to recapture $300 billion a year in taxes, it's political suicide. Americans pay billions of dollars per month to foreign countries--some of them incubators of terrorism, nearly all of them unstable dictatorships--and it isn't even a campaign issue.

But this tragic situation also presents us with the greatest opportunity in a decade to recharge America's economy and build a platform for renewed economic growth. I want to tell you how it can be done. And without a tax on gasoline or carbon.

I'm in the energy business. When I left the Democratic presidential race in 2004, I returned to investment banking and consulting. The opportunities were in energy and commodities. Climate change was emerging as yet another energy-related threat to our national security, and as a national security specialist I thought I could add value in this area. Over the last few years I have served on the boards (or sometimes the advisory boards) of an oil refinery, an oil exploration and production company, a shale gas company, an electric cable producer, a wind turbine manufacturer, an electric car company, two wind development companies, a solar energy developer, an ethanol producer, a biodiesel producer, and an ethanol advocacy group. Along the way, I have spoken at wind and solar conventions, biofuel meetings, and electric and hybrid automobile groups. My knowledge of the energy sector has also come from consulting with governments and foundations, and studying policy papers. But, fundamentally, I'm in business, and I'm focused on energy because it's the key to saving our economy from decline and creating the jobs America needs.

First, an analysis of the problem. The United States today is consuming almost three times as much crude oil as it produces. Fully 71 percent goes for transportation. During the second quarter of 2010 America consumed 9.2 million barrels per day of gasoline, plus 5.1 million barrels for other transportation, such as jet fuel and diesel for trucks and locomotives. Ninety-four percent of the energy used in transportation is derived from petroleum, according to the Energy Information Agency. So energy independence is largely about transportation--not about insulating our houses, turning down thermostats, or swapping out light bulbs.

We do have opportunities to produce more oil domestically. One big new example is the Bakken Shale formation in North Dakota and Montana, which could be producing almost a million barrels per day. More offshore drilling might bring in another million barrels a day (we are currently bringing in about 1.6 million barrels per day from the Gulf of Mexico). …

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