The Little-Known 2007 Energy Law That May Have a Big Effect on Oil Consumption

By Patrick Morgan | March 25, 2011 10:46 am

What’s the News: In a much-ignored speech last week (not ignored by Grist), Sen. Jeff Bingaman (D-N.M.) argued that the U.S. could become less vulnerable to spiking oil prices if we used less of it (surprise!). The crux of the talk was a graph he showed of our country’s estimated petroleum imports, and specifically, the significant change inprojection between 2008 and 2011 (blue and red lines above). Our now-declining gas and oil imports are in part a result of the Energy Independence and Security Act of 2007.

How the Heck:

  • Our petroleum imports are projected to decline because the Energy Act included strategic changes to biofuel and fuel efficiency policies. For example, automakers are required to increase fleetwide gas mileage to 35 miles per gallon by 2020 and more money is being funneled into biofuel production.
  • As Bingaman said in his speech, the act will save the U.S. billions of oil barrels—more than the 23 billion that we now have in U.S. proven oil reserves.
  • The bottom line is that by including more biofuels into our gasoline and supporting alternative energies, we’ll require less petroleum and thereby rely less on the petrostates. The concept is simple, but it carries a wallop once you actually see the graph.

What’s the Context:

Not So Fast: Some green-tech writers think the EIA’s predictions are more fiction than fact. According to Chris Nelder at Green Chip Stocks, the EIA’s predictions often “present a picture of the future that looks like a continuation of the best parts of the past, with none of the bad parts.” The assumption that our oil imports will keep on declining hinges partly on technologies that haven’t been invented yet and the hope that all the policies included in the Energy Act come to fruition. The only thing you can’t argue against is that petroleum demands right now are much lower than we had expected, thanks in due part to the Energy Act. What’s more, the economy has largely sputtered since 2008, which tends to tamp down demand for energy. The graph might be more valuable if it showed oil consumption per unit of economic activity.

Image: EIA

CATEGORIZED UNDER: Environment
  • john harmsworth

    While this appears to be good news, it does not indicate the extent of reliance on ethanol derived from food crops. The agricultural subsidies pumped into turning food into fuel are at least as destructive to the economy of the U.S. as high oil prices and drive up the cost of food everywhere. Very short sighted.

  • Robert Berry

    Also, as more biofuel is utilized, more and more agricultural products will be diverted from the consumption-related sectors of the economy. As a result, less food will be in the system to be given to people who need to eat. Eventually, food prices will spike as the global food crisis worsens ever further.

    And, with the United States being the “Breadbasket of the World,” with less food to give to ourselves, there will be less food to give to others. This will exacerbate the problem by drastically increasing the global number of hungry adults and children, thereby worsening the global economy by worsening the states of the various developing nations.

    Of course, the United States could always save themselves by DECREASING the amount of food distributed to other nations, thus opening up large amounts for its own population. However, this in itself would still provide a negative result because that would still prevent many others in poorer nations to suffer. This, in turn, would likely eventually return to hit America with an economic sucker-punch by way of a global economic ripple-effect.

    Ripple-Effect Explanation:

    1. The United States decreases exports of agricultural products to developing nations in need.

    2. This frees up extra amounts of that product to assist in the increasing scarcity of agricultural foods caused by a high percentage of crops used in biofuel production.

    3. Resultant of this surge in availability of crop-based food is a temporary drop in the prices of these items.

    4. The decrease in crop-based food distribution to developing nations worsens those states’ economic statuses (ex. Foreign Policy’s Failed States List).

    5. This prevents them from working sufficiently – let alone efficiently – with allies, other nations, and/or corporate partners to tackle environmental issues such as desertification, water shortages, etc.

    6. This further degrades the environment itself, in turn increasing water-demands for developed nations.

    7. Resultantly, the United States faces a situation in which it struggles to find water for its crops, regardless of the intent for utilization towards biofuel or consumption.

    (This, of course, is in conjunction with the already present situation in which, due to these water-availability problems, cities purchase, and divert, water from farmers. Naturally, this merely damages the situation even more.)

    8. Due to the immense shortage of water within the United States (among other nations), the United States implements either 1) water-recycling technology such as that to be used by astronauts, or 2) desalination technology.

    The former may be used, as it is being utilized by Singapore at present anyway (see USA Today Thurday, 3 March 2011). However, Americans may or may not embrace it as easily since a) the government cannot as easily force it upon us due to our democratic political structure, and b) because of the so-called “ick” factor.

    As for the latter technology, desalination plants may be used. However, at present, it is not over-expensive to construct, yet highly expensive to maintain. Thus has been the cause of its current economic impracticality.

    If no steps are taken, then the entire agriculture industry and biofuel sector will surely feel the pinch, to say the VERY least. Either way, biofuel is NOT, and NEVER will be, a viable alternative to other fossil-fuel-based energy sources.

    P.S.
    Excuse the lengthiness of this “comment.” Frankly, I don’t think it can even be considered a comment by this point in time. :)

  • Robert Berry

    By the way, for more information regarding the global food crisis, global water crisis, environmental struggles, and past improvements and suggestions for solutions, read Plan B: 4.0, by Lester R. Brown. Trust me: it’s good and VERY informative. If you read it, you won’t regret it. If you don’t, trust me: you’ll WILL regret it. Get it and check it out.

    ***Also, there is currently a new book that has just recently been released. It is by Lester R. Brown as well, and it is called, “World on the Edge: How to Prevent Environmental and Economic Collapse.” Also, although I haven’t read it yet, (although I would like to…), if Plan B: 4.0 is any indication, then this book should certainly be a great read. No doubt in my mind.

  • http://jinchi.blogspot.com Jinchi

    The crux of the talk was a graph he showed of our country’s estimated petroleum imports, and specifically, the significant change inprojection between 2008 and 2011 (blue and red lines above). Our now-declining gas and oil imports are in part a result of the Energy Independence and Security Act of 2007.

    My first guess would be that the drop in imports from 2008-2011 is the result of the global economic collapse, which happened at the same time.

  • John Lerch

    Although the global economic collapse is important, one would expect that imports to the US would have increased (or at least stayed the same) since we have been hurt less than most of the rest of the world and hence prices would have been lower (and indeed they have been lower).

  • http://jinchi.blogspot.com Jinchi

    one would expect that imports to the US would have increased (or at least stayed the same) since we have been hurt less than most of the rest of the world

    US imports decreased because we didn’t use as much gas once millions of jobs had been lost and industries were shuttered. Trucks that don’t leave the warehouse don’t need fuel.

    If you truly wanted to test whether U.S. policy reduced our net petroleum imports, the first thing you’d do is check whether every other country that suffered had seen a similar drop since the economic collapse. My guess is that they did, which would mean U.S. policy had nothing to do with it.

    But more to the point, how does requiring automakers “to increase fleetwide gas mileage to 35 miles per gallon by 2020″ with a law passed in 2007 produce an immediate and dramatic drop in oil imports in 2008?

    This is the type of ‘evidence’ that makes me immediately suspicious of everything else that a person has to say.

  • d brown

    Jimmy Carter said this was coming. He made laws and rules to get ready for it. the GOP beat him bloody and made using ever more everything the American way. The same people are still running things and making money off our fall.

  • Julian Alien

    I talked to people who knew private oil wells in Ok. and Cal.,and they said the companies were paying them more to not produce than to pump.That was the last major spike.Turn the spicket on,turn the spicket off,that has been the standard policy since day one.This is what the new control of the middle east is about: Control.

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