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US Lawmakers Reconsider America's Dependance on Foreign Oil - 2002-06-21

As the Bush administration and Congress work to form a new homeland defense agency, lawmakers are again turning their attention to the security of the country's energy supplies. A congressional panel examined U.S. reliance on foreign oil sources and heard recommendations on how to lessen that dependency

The United States currently imports about 52 percent of the oil it consumes. This is less than it was during the Arab oil embargo of the 1970s. However, Middle East tensions, combined with new threats of terrorism, have sparked renewed debate over what can be done to lessen this dependence, and the impact of any future disruptions in oil supplies.

At a congressional hearing Thursday, lawmakers and witnesses said the United States must continue to diversify its energy sources, while preparing for so-called "supply shocks."

In the last two years, Iraq, a major Gulf oil exporter, attempted to disrupt supplies to the United States. According to Alan Larson, undersecretary of state for economic, business and agricultural affairs, the efforts failed because of concerted action by the United States and key allies. "Iraq has either interrupted its supplies or threatened to on three occasions," Mr. Larson said. "In each case, a combination of readiness of the United States and our partners to be able to respond through [petroleum] stocks, and assurances from Saudi Arabia that it would use its spare oil production capacity to offset such disruptions has moderated very significantly the response of markets to these threats."

Congressman Tom Lantos (D-California) is troubled by U.S. dependence on Mideast oil supplies. "Many of these regimes are either actively hostile to the United States, as is the case with Iran, Iraq and Libya or unsteady autocratic regimes beholden to Islamic fundamentalists, like Saudi Arabia," he said. "Not surprisingly, many of these same regimes funnel oil revenues into support for global terrorist organizations."

Frank Gaffney, a former U.S. government official, said heavy U.S. and Western dependence on Mideast oil supplies poses a serious problem for the war on terrorism. He says Iraq, a key regional supplier, is part of the problem.

"It does seem to me that our efforts to bring about regime change in Iraq can only add urgency to the need to reduce the vulnerability of our economy and that of our principle Western trading partners, to probable, if we would hope temporary, disruptions or dislocations in energy supplies from that region," Mr. Gaffney said.

U.S. oil consumption is likely to increase by a third over the next 20 years, with foreign dependence reaching 62 percent by 2020. U.S. energy secretary Spencer Abraham says Bush administration energy policy recognizes that oil dependency has serious economic, and national security implications.

"We must continue to champion free markets," he said. "We believe the genius of American technology will allow us to dramatically increase the efficient and clean use of energy, including oil. We must expand and diversity our sources of supply, both domestically and internationally, by expanding opportunities for increased investment, trade exploration and development beyond the traditional markets of the last 50 years."

Energy expert Daniel Yergin says world oil supplies will increase by about 20 percent this decade, with most of that in the Middle East. He says this presents the United States with opportunities to diversify. "We see Middle East production, based on what we know today, increasing by seven million barrels a day, very significant is growth in Russian and Caspian oil production by about 50 percent: four million barrels a day," he said. "And there is a conjunction of the modernization of the Russian oil industry and our new strategic relationship between Russia and the United States, and this is one of the important reasons to continue strengthening and broadening our political and economic relations with the Russian government, a very important area where the U.S. government can make a contribution."

Former Carter administration official Stuart Eizenstat says the September 11 terrorist attacks, and potential threats from Iran and Iraq, underscore the risks of U.S. reliance on Mideast supplies. "Our reliance on states that are unstable, or in the case of Iraq, even hostile, present a very real national security dilemma that has to be addressed immediately," he said.

Mr. Eizenstat agrees that Russia represents an important opportunity for U.S. diversification away from the Middle East. However, he says, problems in Russia's still-modernizing industry mean the United States cannot assume this will be a completely reliable alternative.