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Time to kick the oil habit

IT SHOULD BE clear by now, even to those in the White House, that America needs a new oil strategy.

Since 1980, U.S. oil policy has centered almost entirely on enlarging our supply of oil -- either by drilling more oil wells at home or by cozying up to foreign producers such as Nigeria or Saudi Arabia. But as a means to energy security, this plan is dangerously obsolete. U.S. oil fields are nearly tapped out. Most of our oil allies are so unstable that supply disruptions -- and price spikes -- will become routine.

More to the point, oil is a finite resource. Today's high prices have less to do with turmoil in Iraq than with the fact that oil companies can't find new oil as fast as the United States, China and other booming economies are using it -- and this trend isn't likely to change. The United States uses about 20 million barrels of oil a day; the world, about 80 million barrels.

In short, America can no longer afford the fiction that we still control our oil supply. Instead, we must refocus on the one area where we do have control: demand. Specifically, we need to find ways to use dramatically less oil, especially in our transportation fleet, where two-thirds of all U.S. oil use occurs.

To succeed, we'd need to commit to a long-term, broad-based and expensive research and development effort. But if successful, America could not only lower its reliance on an increasingly unstable oil economy, but also help start a global transition away from oil that even oil companies see as inevitable.

How do we move beyond oil?

Many commentators -- and the White House -- see hydrogen as oil's most likely successor. Yet by most realistic forecasts, it will be decades before we can roll out a fleet of cost-effective hydrogen-powered vehicles and a fueling system. In the meantime, America shouldn't be distracted from a host of energy options that could begin reducing our need for conventional oil -- and oil imports -- right now.

The most obvious first step is a radical improvement in automotive fuel efficiency. Although the United States has given back all of the dramatic efficiency gains achieved after the Arab oil embargo 30 years ago, it wouldn't be hard to recover. Automakers already have the technology to double miles per gallon, and if the surging popularity of hybrids is any sign, consumers may be ready for a new concept in cars.

Detroit, of course, will resist. U.S. automakers fear the high costs of retooling; indeed, some commentators (myself included) believe only a massive federal bailout will get auto companies to shift gears. But the benefits would be huge. By doubling the average fuel economy of cars and trucks to 40 miles per gallon (which existing hybrid technology could do), we could save 5 million barrels of oil a day by 2015 -- or more than twice our current imports from the Middle East.

The second way to cut our use of oil is to find other fuels. Here, too, the news is encouraging.

Today, most new cars can already burn ethanol, an alcohol brewed from corn. True, corn is far too expensive as a raw material (which is why our ethanol industry survives only due to massive federal subsidies) and has been criticized in part for not being efficient. But ethanol will soon be made from new, inexpensive crops, such as switch grass, specially bred to yield large volumes of cheap fuel.

With an adequately funded crash development program, the United States could be making enough ethanol by 2008 to replace 700,000 barrels of oil a day. By 2020, ethanol and other "bio-fuels" could supply a fifth of America's transportation fuel, displacing about 3 million barrels a day.

Thus, between efficiency and bio-fuels, America might be able to displace as much as 8 million barrels of oil a day by 2020, or nearly a third of the 26 million barrels of oil forecasters say we'd otherwise be using by then. The global ramifications would be staggering. As the world's biggest oil customer began using less, the price of oil -- and with it, the political power of OPEC and other producers -- would drop steadily.

These are, admittedly, somewhat optimistic scenarios. It's possible, for example, that hybrid cars might never gain wide market penetration, or that ethanol production might hit some unforeseen snag that would keep the price too high.

But what is just as likely is that by then, the United States could have uncovered a clever new way to displace oil.

For example, oil companies are already refining synthetic oil from massive deposits of tar sands in Alberta, Canada. Likewise, coal, which the United States has in abundance, can also be refined into liquid fuels. True, both processes release massive amounts of climate-altering carbon dioxide. But assuming we can find a cost-effective way to capture that carbon dioxide, the United States could displace even more imported oil.

The point is that the United States has options to an energy system dominated by a fuel that carries growing political and environmental risks. But U.S. energy options can't be realized without a serious national commitment -- and an acknowledgment that our current supply-side oil strategy is less a strategy than a eulogy.

Paul Roberts is the author of The End of Oil: On the Edge of a Perilous New World (Houghton Mifflin 2004).

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