Oil dependence threatens the nation’s economic, environmental, and national security. The only long-term solution is electrification of transportation.

The ThreatThe Threat

The United States is the world’s largest oil consumer, accounting for more than 20 percent of global demand. Americans consume approximately 19 million barrels of oil each day. Since 2005, annual retail petroleum expenditures by U.S. families and businesses have averaged more than $700 billion—or about 5 percent of GDP.

American oil dependence poses a serious and ongoing threat to our national security. The vulnerability of global oil supply lines and infrastructure has driven the United States to accept the burden of securing the world’s oil supply. U.S. armed forces expend enormous resources patrolling oil transit routes and protecting chronically vulnerable infrastructure in hostile corners of the globe.

Oil dependence also constrains U.S. foreign policy. In far flung corners of the globe, American diplomacy is distorted by the need to minimize disruptions to the flow of oil. Too often, oil dependence requires us to accommodate hostile governments that share neither our values nor our goals, putting both the United States and its allies at risk.

In addition, our dependence creates substantial economic risks. Every American recession over the past four decades has been preceded by—or occurred concurrently with—an oil price spike, including the global recession that still is effecting every American. And that is to say nothing of our balance of trade. America now imports more than half of the oil it consumes.

In 2008, when oil prices last peaked, the United States sent $388 billion—56 percent of the total trade deficit—overseas to pay to import crude oil and petroleum products. In 2010, with oil prices averaging more than $70 per barrel, the U.S. trade deficit in crude oil and refined products returned to its pre-crisis level of more than $260 billion.

Department of Energy researchers have estimated that the economic costs of U.S. oil dependence were $500 billion in 2008 alone—and more than $5 trillion since 1970. Between 2001 and 2008, the average retail price of gasoline increased from $1.46 to $3.27, costing typical households $2,115 a year in increased fuel expenses.

The SolutionThe Solution

The key to any policy to end our dependence on petroleum is found in our transportation sector, which accounts for more than 70 percent of our oil consumption and is 94 percent reliant on oil-based fuels. What is most damaging during a price spike is that for our cars and trucks, there are no substitutes for oil in the short term. When prices go up, we have two choices: spend more or drive less. In other words, we have no defense when events beyond our control interrupt the flow of oil. This is a critical vulnerability to a nation whose dynamic economy depends upon mobility.

Therefore, the critical goal must be to de-link the transportation system from the global oil market.

Advances in battery technology for the first time truly make possible an electrified transportation sector that is powered by a wide variety of domestic sources: natural gas, nuclear, coal, hydroelectric, wind, solar, and geothermal. The electrical generation system in the United States uses virtually no oil.

Moreover, because an electrified transportation system is one that has the benefits of relying on a diverse set of fuels, no one fuel source—or producer—would be able to hold our transportation system and our economy hostage the way a single nation can disrupt the flow of petroleum today.  Electricity prices are far more stable than oil prices, there is substantial spare generation capacity, and the backbone of the infrastructure already largely exists. No other alternative has all of these advantages.

Featured Quote

“The electrification of our cars and trucks remains the best way to fundamentally deal with the dangers posed by oil dependence. If the United States electrified half of its cars and light trucks, we could reduce petroleum consumption by almost 5 million barrels a day — roughly equivalent to the entire amount we import from OPEC nations today.”

Robbie Diamond
President and CEO, Electrification Coalition
The Hill
July 27, 2010