Like Brazil, U.S. must get serious about gaining energy independence
In Brazil last week, the production on a new offshore oil rig was celebrated as it symbolized the end of that nation's dependence on imported oil. That's a remarkable milestone, and in the United States that same week, drivers watched helplessly as gasoline prices hit $3 per gallon.
Granted, the United States is a larger market than Brazil, but the tales of the two countries' reactions to the oil crisis of the 1970s are studies in contrasts.
Brazil has for three decades pursued a muli-pronged approach toward the goal of energy self-sufficiency. In the United States, politicians mostly talked about energy self-sufficiency, but not much was accomplished. And for years drivers enjoyed the benefits of cheap gas due mostly to global supply that exceeded demand.
Today, the United States imports about 65 percent of the petroleum it uses. In Brazil, that figure soon will be zero, although some light crude is still imported for the production of certain refined products.
Even though the population of the United States exceeds that of Brazil by about 100 million people, the South American country still ranks as the fifth-largest in the world, so the milestone of energy independence for an industrialized, non-Arab state is no small accomplishment.
The two nations' paths since the oil crisis of the early 1970s is telling.
In the 1970s, the United States imported about one-third of all the oil it consumed. Today, the U.S. imports close to 60 percent of the oil it uses.
In Brazil in the 1970s, imported oil represented 85 percent of the country's consumption. Today, with the production of the P-50 rig off Brazil's South Atlantic coast coming on line, the level of imported oil will drop to next to nothing. This frees Brazil — its businesses, consumers and drivers — from the price shocks of the global oil market.
With its continued expansion of oil production, particularly from offshore drilling rigs, Brazil claims to have the world's fastest-growing oil industry. And, like most modern economies, Brazil's energy needs are not all satisfied by oil. It also uses nuclear, hydroelectric and natural gas — just like the United States. But unlike the United States, Brazil has made a huge commitment to a renewable energy source — ethanol — as a gasoline alternative.
With billions of dollars of investment in growing sugar cane for conversion to ethanol over the past 30 years, Brazil has created the world's largest market for so-called flex fuel cars. In just three years, flex fuel technology has been embraced to the point that 70 percent of new cars sold in Brazil are equipped with flex fuel engines, which can run on regular gasoline or any blend up to practically pure ethanol.
The benefit of flex fuel engines, which General Motors also sells in the United States, is that drivers can fill their tanks with whatever fuel is cheaper. Right now, ethanol is significantly cheaper. But in the unlikely event that sugar cane prices skyrocket or the price of petroleum-based gasoline plummets, Brazilian drivers are ready to fill up with the least-expensive fuel.
This week, President George W. Bush promised federal investigations to possible price-gouging by oil companies. That gesture might make people feel better, but most likely the news will be that prices at the pump are mostly determined by world oil prices that are set by market forces, meaning supply and demand. When the rapidly growing and energy-hungry economies of China and India are added to today's political instability in the oil-producing nations of Iran, Iraq and parts of Africa, the price of oil is not expected to fall anytime soon.
What Bush and Congress should be doing is creating a fast-track program to dramatically cut the United States' dependence on foreign oil. They need to do much more than talk this time.
The best program likely will be multi-faceted and include more domestic oil production, increased oil refining capacity, more tax incentives for development of biofuels (including ethanol and biodiesel), and tougher mileage standards for cars and light trucks (SUVs) — and more.
With gasoline selling at $3 a gallon or higher, political pressure should be adequate to force Congress and the president to act. The commitment must be long term to a program that decreases reliance on oil (particularly imported oil) and with a greater emphasis on renewable energy sources.
The inexpensive gasoline of the 1980s and 1990s lulled many Americans into not thinking about long-term energy issues. Those days are gone and it's time to get serious about a new national energy policy.
Bush has talked about hydrogen-powered cars and fuel cells. Those technologies might be viable decades from now, but ethanol and biodiesel are proven technologies that can provide U.S. drivers with a bridge to the high-tech future.
Compared with Brazil, the United States has squandered nearly 30 years in terms of a sustainable, progressive energy policy. And the failure to react to the energy crisis of the early 1970s is producing some very harsh lessons for Americans now — lessons that are very clear with $3-per-gallon gasoline, and lessons that must not be forgotten even if the price of gas retreats.
