ALEXANDRIA, VA – Even a small interruption of the daily oil supply impacts our nation’s economic engine, but a sustained disruption would alter every aspect of our lives — from food costs and distribution to what or if we eat, to manufacturing goods and services to freedom of movement. A new CNA analysis finds if America reduces its current rate of oil consumption by 30 percent, and diversifies its fuel sources, the U.S. economy would be insulated from the impact of such disruptions — even in the event of a complete shutdown of a strategic chokepoint like the Strait of Hormuz, the international passageway for 33 percent of the world’s seaborne oil shipments.
Released at U.S. House and Senate briefings today, Ensuring America’s Freedom of Movement: A National Security Imperative to Reduce U.S. Oil Dependence is a report by the CNA research organization’s Military Advisory Board (MAB). Members include some of our nation’s highest-ranking retired military leaders with 400 years of collective military experience. The report calls for immediate, swift and aggressive action over the next decade to achieve the 30 percent reduction in U.S. oil consumption.
“We have seen oil shocks before. And they have been immediate and far-reaching. But at today’s level of US consumption, a sustained disruption would be devastating – crippling our very freedom of movement,” said General Paul Kern, USA (Ret.) who chairs the MAB. “Our enemies know this fact and they exploit it at will.”
Citing the diverging trajectories of oil supply and demand, with countries such as China, India and other developing countries stepping on the accelerator, the leaders write, “Worldwide demand for oil is increasing at an alarming rate… Our military experience tells us transitional moments such as these are important and they come and go quickly. When the moment is ripe, we must act or fight our way out of the consequences of inaction.”
“You could wake up tomorrow morning and hear that the Iranians sense an attack on their nuclear power plants,” General James T. Conway, USMC (Ret) said. “And so they preemptively take steps to shut off the flow of oil in the Gulf. The U.S. would likely view this as a threat to our economy, and we would take action. And there we are, drawn into it.”
CNA analyzed the potential economic impact of a future oil disruption in one critical industrial sector that is heavily dependent on petroleum: the U.S. trucking industry. The analysis measured the effect of four different theoretical blockages in the flow of oil, each lasting 30 days, in the Strait of Hormuz, the Suez Canal, Bab el-Mandeb, and the Panama Canal.
Under a worst-case scenario 30-day closure of the Strait of Hormuz, the analysis finds that the U.S. would lose nearly $75 billion in GDP. But cutting current levels of U.S. oil dependence by 30 percent, the impact would be nearly zero. Oak Ridge National Laboratory found complementary results when measuring the impact of oil flow disruptions on other sectors.
MAB Vice-Chair Admiral Lee Gunn, USN (Ret.) adds that a meaningful reduction in U.S. reliance on imported petroleum over the next decade would provide substantial economic as well as security benefits. “Currently, our collective national conscience is focused on jobs, and rightly so,” he says. “Our economy is in serious trouble. But rather than divert us from the task, moving away from oil could contribute to restoring our economic strength.”
The military could benefit significantly from a 30 percent reduction in U.S. oil consumption, according to the report. Achieving a 30 percent reduction would undoubtedly require new methods of efficiency that would translate directly to the battlefield. In addition to greater efficiency resulting in saving lives by decreasing dangerous battlefield fuel convoys, a 30 percent reduction would spawn diversified power sources other than oil. Less oil use equals less oil we are required to import and greater flexibility for military presence in dangerous parts of the world. This flexibility could translate into putting fewer American troops in harm’s way and keeping more dollars at home.
The report calls on national leaders to take the following steps to reduce U.S. oil demand by 30 percent in ten years:
• Increase efficiency: The first, fastest and most effective strategy to reduce oil consumption is to increase efficiency. The report identifies fuel economy standards for cars and trucks as a proven and effective way to reduce the use of oil, and calls for strengthening those standards, as well as providing additional market incentives and research investments to help increase the fuel economy of America’s vehicles.
• Diversify supply: “Our current overreliance on a single fuel is a weakness; relying on diverse fuels and vehicle types can be a strength,” the report notes. Government must take action to promote the use of a more diverse mix of transportation fuels and to drive wider public acceptance of these alternatives.
Increased domestic production of oil might be useful short-term as long as overall oil consumption is reduced at the same time. Simply replacing foreign with domestic oil without reducing consumption does not reduce the national security and economic risks associated with a global oil market that is vulnerable to manipulation and disruption.
• Increase alternative fuels: The report acknowledges that not all alternatives to oil are created equal, and calls for a careful assessment of national security impacts. For the first time in any single document, the report assesses a suite of alternative fuels for impacts on a broad range of critical aspects of national security: economic, military, political/geopolitical and environmental. While environmental concerns may not seem related to national security, there is a connection. For example, an extended drought in Darfur, Sudan, led to economic instability, which in turn led to political instability and civil war.
• Develop a national, cogent, dedicated and sustained energy roadmap that rises above partisan politics. The military leaders warn “security must trump ideology,” adding “the scale of impact associated with our energy use is massive.” They write that “the right energy choices can bring down our trade imbalance, lead to new jobs at home, launch new American-made technologies, strengthen our foreign policy hand and increase our military and foreign policy options. These benefits are time-sensitive – waiting for a convenient time to address this challenge will weaken us while others continue to gain strength. Administration and congressional leaders should require that major energy policy documents address the national security implications of our energy choices.”
“The cost of inaction is too high,” concludes MAB Vice-Chair Admiral Dennis McGinn, USN (Ret). “A 30 percent reduction in oil consumption would loosen our tether to hostile states, reduce our trade deficit, and keep the money here at home to create jobs.”
“The nation is at risk because of intransigency,” said Conway. “Instead of viewing this problem through the prism of ideology, they must view it through a national security prism. Compromise is the only way we’ll be able to develop a national strategy.”
In 2007, the MAB was among the first to identify climate change as a “threat multiplier” because the projected impacts of severe weather events will exacerbate existing security risks, create conflicts around limited resources and prompt mass migration. Building on the 2007 report, in 2009 the MAB found that the nation’s “approach to energy and our approach to climate change have profound impacts on each other – and both have impacts on our national security.” They expanded this outlook and in 2010 published a report that established clear links between the nation’s energy posture, the economy, and national security.
The CNA MAB
The MAB, which produced the landmark 2007 report “National Security and the Threat of Climate Change,” 2009’s “Powering America’s Defense: Energy and the Risks to National Security,” and last year’s “Powering America’s Economy: Energy Innovation at the Crossroads of National Security,” is comprised of retired admirals and generals from the Army, Navy, Air Force, Marine Corps, Coast Guard, National Guard and Reserve. The board includes a former Army Chief of Staff, a former Commandant of the Marine Corps, Commanders of U.S. forces in global regions, and leaders in logistics, procurement, research and development, engineering and material management.
The full report and additional information are available at www.cna.org/EnsuringFreedomofMovement.
CNA is a not-for-profit organization that serves the public’s interests by providing in-depth research and solutions-oriented analyses to help decision makers choose the best course of action in setting policy and managing operations. CNA: Nobody gets closer — to the people, to the data, to the problem. www.cna.org
… CNA is the parent organization of the Institute for Public Research and the Center for Naval Analyses, which, if referenced, should be cited as “CNA’s Institute for Public Research” or “CNA’s Center for Naval Analyses.”
