Oil prices rise and fall on the whims of the OPEC cartel and geopolitics in the Gulf region, but domestically produced, renewable ethanol remains the lowest cost octane source available to refiners. And despite the recent boom in domestic oil output, the U.S. remains a major importer of crude oil and petroleum products. In fact, 47% of the crude oil processed in the U.S. in 2014 was imported.
Reducing America’s addiction to imported oil is important not only because of the risk that foreign governments will reduce supplies and raise prices, but also because of the dangers of shipping the oil from troubled regions such as the Persian Gulf.
FACT: Without 14.3 billion gallons of domestic ethanol used in the U.S. in 2014, the United States’ net import dependence would have stood at 35% instead of 28%.
For the past five years, ethanol has constituted 10% of our nation’s gasoline supply, providing valuable octane and lowering consumer prices at the pump. In effect, the ethanol produced in 2014 displaced an amount of gasoline refined from 512 million barrels of crude oil – slightly more than the amount of oil imported annually from Saudi Arabia.
FACT: We are dangerously dependent on petroleum from volatile areas of the world.
Military leaders from all branches of the U.S. armed forces have recognized that our addition to foreign oil presents real dangers to our national security, economy and environment. Secretary of the Navy Ray Mabus has said, “When we did an examination of the vulnerabilities of the Navy and Marine Corps, fuel rose to the top of the list pretty fast. We simply buy too much fossil fuel from actual and potentially volatile places. We would never allow somoe of these countries we buy fuel from to build our ships, our aircraft, our ground vehicles – but because we depend on them for fuel, we give them a say in whether our ships sail, our aircraft fly, our ground vehicles operate.”
FACT: Global fossil fuel subsidies reached almost half a trillion dollars in 2010. This figure is up $110 billion over 2009 and could reach $660 billion by 2020.
Source: “World Energy Outlook 2011 Factsheet,” International Energy Agency, October 2011.
FACT: According to the Congressional Research Service, $46.6 billion in tax expenditures has been granted to fossil fuels 1977-2010, and more than $130 billion in government subsidies have gone to the oil industry from 1968-2000, as detailed by the U.S. General Accounting Office.
This does not take into account the billions spent since the turn of the century or the money spent to protect our military troops in the Middle East.
Sources: “Energy Tax Policy: Historical Perspectives on and Current Status of Energy Tax Expenditures,” CRS Report for Congress R41227 (Congressional Research Service, May 2, 2011). [Molly F. Sherlock] “Tax Incentives for Petroleum and Ethanol Fuels,” GAO/RCED-00-301R (U.S. General Accounting Office, September 25, 2000).
“With more research and incentives, we can break our dependence on foreign oil with biofuels…We need to get behind this innovation. And to help pay for it, I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. I don’t know if you’ve noticed, but they’re doing just fine on their own. So instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s.” Source: President Barack Obama, State of the Union Speech, January 25, 2010.
FACT: Ethanol constitutes a large and growing share of domestically produced fuel for gasoline-powered vehicles.
Ethanol presents the U.S. with a critical opportunity to expand domestic energy production and reduce imports. Ethanol now accounts for one out of every four gallons of fuel offered for gasoline vehicles from domestic energy sources.
FACT: All oil-related external costs are estimated to be $825 billion per year.
The U.S. spends between $27 billion and $137 billion a year on military operations securing the safe delivery of oil from the Persian Gulf, equivalent to adding an extra $1.17 per gallon of gasoline. And new oil supplies are getting harder and more expensive to find. Nonconventional reserves, like Canadian tar sands, pose significant environmental and economic risks.
Sources: “The Hidden Cost of Oil,” Milton R. Copulos, 2007, and “Securing Foreign Oil: A Case for Including Military Operations in the Climate Change Impact of Fuels,” Adam J. Liska and Richard K. Perrin, July/August 2010.
Page last updated March 2015