Addicted to Oil: One Year Later

In his 2006 State of the Union Address, President Bush exclaimed, "America is addicted to oil." One year later, little has changed on that front.

Ninety-seven percent of America’s transportation system still runs on oil.

Now an unexpected group is pressing Bush for energy innovation: the business community.

A bipartisan group made up of chief executives from powerful companies like Fed Ex, Dow Chemicals, and UPS is pleading with the Bush Administration and Congress to provide energy alternatives and to help release the U.S. from its oil dependence once and for all.

The group’s report argues that this dependence makes the U.S. vulnerable to international events, since 90 percent of the world’s oil supply is controlled by foreign governments.

Foreign oil

It’s not just foreign oil that worries these business leaders: "Exposure to price shocks is a function of how much oil a nation consumes and is not significantly affected by the ration of "domestic oil" to so-called "foreign oil," the report asserts.

Nevertheless, importation of foreign oil is causing big problems, like a weak U.S. dollar. Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry M. Paulson, Jr. traveled to Beijing in mid December 2006 to discuss the fact that U.S. imports far exceed exports, causing a trade deficit.

One of the main causes of this trade deficit is imported oil -- oil exporters’ trade surplus with America is about $500m a year.

But even oil produced in America has its problems. For years, oil companies like BP, ConocoPhillips, Shell, and Marathon Oil have produced oil in the U.S. without paying the accompanying royalties to the U.S. Treasury. After all, the oil belongs to the nation - which is us.

For more on this, click here.

Domestic oil

The legal loophole goes back to the Clinton administration, when oil prices were low and the government awarded companies royalty relief in order to spur greater production. For some reason, nobody added a clause that said companies had to pay again once the prices went back up.

Democrats in Congress promise that they will remedy this situation as soon as they take over the House and Senate in January. And it’s a bipartisan effort. House Republican Thomas M. Davis III (Virginia) says that the Government Reform Committee won’t be satisfied until companies pay all lost royalties. Check back with WomenMatter to find out if these royalties are recovered in the future.

In the meantime, blog with other WomenMatter readers about your views on U.S. oil consumption. What do you think needs to happen for the U.S. to lessen its dependence on oil? Do you consider energy innovation a top priority? If not, what is your top priority?

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Article Posted on: 12/30/2006