World oil reserves are currently estimated at about 1200 billion barrels1. Current world oil consumption is approximately 30 billion barrels per year2. 1200 divided by 30 equals an average of approximately 40 years before the world oil supply is depleted.
Unfortunately, the average of 40 years consists of some countries with less than 12 years and a few countries with over 100 years. The United States and Norway are forecasted to run out of most of their oil in less than 12 years3. Saudi Arabia is not expected to run out of oil for about 100 years at the present rate of production. Much sooner if the rate of production increases.
This means that in just 12 years or less, the United States will be considerably more dependent on Middle East oil than it now already is.
The rate of world oil consumption is sure to increase as China, India, and other countries modernize. To be sure, some additional oil reserves will be discovered, but not nearly as fast as world demand for oil increases. Oil companies have been searching diligently for new oil reserves for many years now with very few new major discoveries. Oil is currently being consumed at four times the rate that new discoveries are made4.
Consumption of thirty billion barrels per year amounts to around 80 million barrels per day. The world will not go from consuming 80 million barrels per day to almost nothing in one day. The reduction in consumption will be gradual as supplies diminish. Another reason that the world oil supply will diminish gradually is that there is a limit at which existing oil wells can be pumped without damaging them. Consequently, world oil supplies will be steadily dwindling at the same time that demand for oil will be steadily increasing. Oil prices could begin to start rising rapidly in the near future.
The United States government needs to act immediately to first stabilize and then begin reducing its consumption rate of oil. Bold action is necessary. The first step in my energy policy is to provide a five cent per kilowatt-hour subsidy for renewable electric energy production.
Renewable electric energy is energy produced by wind, water, the sun, and the earth (geothermal). Currently, about 7% of our total energy use including electrical and transportation is renewable5. The subsidy would continue until about 25% of our electric energy use was renewable and then the subsidy reevaluated. Short term impact to the utility industry would be minor because the transition would take a long time. There would still be a need for coal and nuclear power plants to meet demand. In addition, coal would eventually be utilized to produce a gaseous substance similar to natural gas from coal gasification plants.
The approach of government to utilize subsidies for the public good in order to avoid crisis situations is not new. Subsidies have been used in the farming industry for over 70 years to provide stability to food prices. A subsidy to decrease our dependency on foreign oil in the public good is even more imperative.
The second step in my energy policy is to exempt sales of automobiles that average over 60 miles per gallon from corporate income tax. Such vehicles already exist as gas-electric hybrids6. They could be mass produced if tax incentives were provided to manufacturers.
Just as food prices have been held down over the years as the result of farm subsidies, both electricity and hybrid automobile prices would be held down by the proposed renewable electric energy subsidies and higher mpg automobile income tax exemptions.
Since the demand for gasoline would be reduced by greater utilization of gas-electric hybrids, the price of gasoline and other petroleum products would be relatively lower than they would have been. In addition, the utility industry would focus expansion on using clean, renewable electric energy generation rather than consuming precious petroleum products and continually increasing their capacity by building more environmentally unfriendly power plants.
My most important consideration of the energy policy is that the United States would be less dependent on foreign oil in the future.
1 — Current World Oil Situation, Web Site: http//planetforlife.com/oilcrisis/oilsituation.html
2 — Current World Oil Situation, Web Site: http//planetforlife.com.oilcrisis/oilsituation.html
3 — World Oil Production, Web Site: http://planetforlife.com/oilcrisis/oilproduction.html
4 — Campbell, Colin J., “Peak Oil: an Outlook on Crude Oil Depletion”, Web Site: http://www.greatchange.ov-campbell,outlook.html
5 — Lavelle, Marianne, “Power Revolution”, U. S. News & World Report, 11/05/2007 issue, pg. 53.
6 — Lavelle, Marianne, “Power Revolution”, U. S. News & World Report, 11/05/2007 issue, pg. 53.