Another U.S. strategy for increasing energy supply has been to step up imports of energy sources from other countries. According to the BP Statistical Review of World Energy 2006, more than 60 percent of the world's remaining oil reserves are located in the Middle East, a region whose relationship with the United States and other Western nations is rife with adverse ideological and political differences. Increasing energy imports from such regions, of course, is highly controversial. Many policymakers, researchers, and commentators have implicated U.S. dependency on oil imports in entangling the United States in too many political conflicts and economic instability.
Imports of oil, in general, are a hot-button issue. In January 2007 U.S. imports of crude oil and petroleum products were at higher levels than in any previous January. The EIA reported total imports of 14.3 million barrels per day for the week ending January 12, an increase of 4 million barrels per day above levels from five years earlier. In January 2007 imports supplied more than 65 percent of U.S. daily oil demand, 10 percent more than five years ear-lier.26 Canada, already a top supplier of oil to the United States, has become the focus of U.S. efforts to meet its growing domestic demand for natural gas. Overall the United States depends on natural gas for about 22 percent of its total primary energy requirements (oil accounts for around 41 percent and coal for 23 percent). More than 80 percent of U.S. natural gas imports are already from Canada, mainly from the western provinces of Alberta, British Columbia, and Saskatchewan. The United States has connected Canadian natural gas supplies to U.S. consumers through the construction of a pipeline from Canada to Chicago through the upper Midwest. This pipeline was put onstream in late 1999 and was further extended into Indiana in 2001. Two additional pipelines, running from Canada's Sable Island to New England, went onstream in January 2000, with further extensions into the Boston area completed in 2003. Another proposed pipeline would have run 3,500 miles from the North Slope into Alberta and on to markets in the U.S. Midwest.
Construction of this pipeline was estimated at $30 billion, so major energy companies in early 2007 were considering a scaled-down version of the project that would involve terminating the pipeline in Alberta. Overall, however, the United States in recent times has introduced more policies aimed at decreasing dependency on energy imports rather than facilitating it.
Another way of dealing with the energy shortage, one that has gained support among environmentalists and activists in the United States, is that of seeking energy from alternative and renewable sources. Initially the administration of President George W. Bush and supporters of his energy policies argued that the United States must increase its domestic supply of oil, natural gas, and coal and that incentives for fossil fuel exploration and the removal of environmental protection regulations are necessary to help accomplish this goal. In addition to promoting drilling in ANWR the administration's proposals have included instituting greater incentives for corporations to undertake fossil fuel exploration and repealing environmental protection rulings that prevent oil production in certain areas. President Bush's administration also phased out earlier statutes or laws that had helped to create more diversity in U.S. energy supply, such as the Public Utility Holding Company Act (PUHCA) of 1935, which was repealed with the enactment of the Energy Policy Act of 2005. The Energy Policy Act of 2005 also contained provisions to expand the use of nuclear energy for electricity and committed $2 billion over 10 years to support research into environmentally "cleaner" " ways of using coal to generate electricity.
Early 2006, however, marked what seemed to be a shift in the Bush administration's approach to the U.S. energy supply issue—at least in what was said about the issue. In his State of the Union address on January 31, 2006, President Bush, a former oil executive, stated, "America is addicted to oil, which is often imported from unstable parts of the world____I announce the Advanced Energy
Initiative—a 22 percent increase in clean energy research at the Department of Energy."27 Among the plans he introduced was a proposal for a greater U.S. investment in solar and wind energy technologies. At the same time, however, President Bush's Advanced Energy Initiative also called for greater investment in both coal-fired power plants (with reduced polluting capacity) and advanced nuclear energy designs focused on "clean and safe" technologies. During the president's address he also announced plans to increase research and development funding for the manufacture of batteries for hybrid and electric cars, pollution-free hydrogen-fueled cars, and ethanol fuels derived from corn, wood chips, stalks, or switch grass.28 Ethanol is a fuel usually made from biomass; it is an alcohol that can be used in internal combustion engines that have been modified to run on it. The president's January 23, 2007, State of the Union address reiterated many of the same themes; he called for a mandatory fuels standard requiring 35 billion gallons of renewable and alternative fuels by the year 2017.
Many of the president's proposals, including those outlined in the Advanced Energy Initiative and the policies in the Energy Policy Act of 2005, are criticized for including measures that act as incentives for the fossil fuels industry or that lack real appropriation of funds or concrete plans. For example, the Energy Policy Act includes forms of liquefied natural gas and derivatives of petroleum in its definition of "alternative fuels." Nonetheless, there was an increased emphasis on renewable energy technology in some of the U.S. energy initiatives introduced in 2005-07. The Energy Policy Act of 2005, for example, included a measure aimed at tripling, by 2012, the current required amount of biomass-derived fuel (or biofuel), such as ethanol, that must be mixed with gasoline sold in the United States. It also provided for a tax credit of up to $3,400 for owners of hybrid vehicles, cars that are powered by both an electric motor and a gasoline engine. Yet this tax credit is controversial because it is based on a formula that allows higher tax incentives for hybrid versions of models that are by nature fuel inefficient, such as sport utility vehicles (SUVs), in comparison with compact hybrids with the greatest fuel efficiency. In addition, some industry analysts have observed that tax incentives for hybrids have been shifting the focus on fuel conservation away from its most important task: continuing to demand and achieve greater standards in fuel efficiency among all vehicle models, hybrid or not. And the way to do this, they point out, is to continue to gradually increase the government's fuel economy standards for vehicles.
In 2005 the U.S. government also introduced a federal tax credit for solar and other energy-saving systems installed and operating on a home or a commercial building between January 1, 2006, and December 31, 2007. The tax credit (up to $2,000 per system) was made available to residential users of solar electricity, wind power, and solar water heating (excluding pool heating). A tax credit of up to 30 percent plus depreciation was made available to businesses for solar or wind power systems. In addition, some U.S. initiatives to encourage reliance on renewable energy sources have been instituted at the state level. These have included the following:
• the implementation of "green pricing," a program in which state utilities give consumers the option of paying more to have their electricity generated by renewable resources
• net metering, in which consumers and businesses can produce their own energy from renewable sources, such as solar, and then sell any excess power they produce back to their utility company
• state rebates given to consumers and business for installing solar electric systems or for purchasing gas-electric hybrid or ethanol-using cars
• state renewable energy credits (also known as SRECs, green tags, or green credits), financial credits granted by public utility commissions, which require that a certain percentage of energy be from renewable sources (a concept known as a "renewable portfolio standard"); the credits are granted to those who produce energy from renewable sources, and consumers and others who produce renewable energy can sell their renewable energy credits to entities who use more than their share of energy and do not currently produce enough renewable energy to meet the state's renewable portfolio standard
However, many commentators have noted that even with such programs, U.S. oil consumption continues to grow and does not appear to be slowing. Many say that it is obvious that not enough is being done to diversify the sources from which Americans get their energy. They also point out that the current presidential administration needs to improve continually upon the energy policies implemented by previous administrations—not repeal them altogether, as has been done, or allow them to become completely outdated.
One of the major problems that the United States faces in relation to energy is an inability to balance energy demand with energy supply. The nation will not get very far with its efforts to conserve fuel and improve energy efficiency as long as demand for energy continues to increase and even surpass energy supply. Energy demand is soaring, as personal computers, mobile phones, and various other electronic devices take on greater importance in daily American life and as the transportation sector continues to grow. The real problem with energy thus reaches beyond oil reserves, gasoline prices, fuel efficiency, and similar issues; it is a problem based in a way of life, one in which convenience, speed, and technology have driven American attitudes about energy and lifestyle. As many commentators note, short-term solutions instituted by the federal government, such as rebates or tax incentives, have had little effect on the growing problems with U.S. energy supply. Rather, they argue, more consumer education in the value of conservative energy use may help to influence American citizens to begin living in a less energy-intensive way.
CORPORATE AVERAGE FUEL ECONOMY An example of such a policy is the Corporate Average Fuel Economy (CAFE) program, which was established by the Energy Policy and Conservation Act of 1975. CAFE was part of this law's strategy for improving energy efficiency and conservation in the wake of the Arab oil embargo. CAFE sets minimum requirements for the number of miles per gallon (mpg) of gas that cars and light trucks should be able to achieve. Under the CAFE program automobile manufacturers are required to average a minimum specified mpg for each category of cars they make: The initial minimum for passenger cars was 18.0 mpg in the 1978 model year; this was later changed to a minimum of 27.5 mpg in 1985. Also in 1985, the minimum for light trucks was set at 19.5 mpg (a vast improvement over the 10.5 mpg that most light trucks averaged prior to CAFE's implementation). In 1996 the light trucks average was increased to 20.7 mpg. However, around the same time, notoriously gas-inefficient SUVs began to soar in popularity as passenger vehicles, yet they were classified by CAFE as light trucks and thus did not need to meet the mpg standard for passenger vehicles, which was their primary role. The largest SUVs classified as heavy trucks rather than as passenger vehicles, so they too were subject to a less stringent mpg requirement. So, as many commentators have pointed out, there are some defects in the CAFE system that need to be corrected in order to achieve true fuel efficiency across the board. In April 2003 the National Highway Traffic Safety Administration agreed to revise the CAFE standard upward by 1.56 mpg by 2007. As of this writing, a draft bill known as the Vehicle and Fuel Choices for American Security Act was under review in Congress; it proposed that loan guarantees and other incentives be given to U.S. automobile manufacturers for retooling their assembly lines to increase sharply the production of cars that run on an alcohol-gasoline combination, hybrid vehicles, and plug-in hybrid vehicles. The bill's sponsors claim that this strategy will help to reduce oil consumption by 2.5 million barrels a day by 2015 and by 7 million barrels a day by 2025. Yet there has not been much support for this bill from the Bush administration.
In May 2006 the House of Representatives Energy and Commerce Committee gave the Bush administration the authority to set per-gallon mileage targets for passenger cars in a new system that is based on vehicles' size and weight. Some lawmakers called for this authorization to include a stipulation that higher CAFE standards be established by 2015 and a fleetwide average of 33 mpg for light trucks and passenger cars be set by 2015, but the Energy and Commerce Committee rejected that proposal. This is just one example of a proposal that many say the United States could have taken to address the energy supply issue better—but chose to reject, continuing to follow a path of oil depletion.
Many of the possible strategies for addressing energy crises and shortfalls, if implemented, could help the United States to cope with other energy-related issues, too. For example, measures to promote energy efficiency, energy conservation, and renewable energies may also help to address energy-related environmental issues. And measures designed to decrease reliance on nondomestically produced energy may also help to address concerns about energy affordability and economics. Energy affordability and economics, in fact, are two issues that historically have been directly linked to many of the U.S. energy crises and shortfalls just reviewed.
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