US oil import dependence: Which way out?

Purpose - To explore the relationships among oil import dependence, energy (in)efficiency, and environmental damage for the USA. The goal is to illuminate possibilities for reducing oil import dependence. Design/methodology/approach - The paper uses current information about costs of oil imports and energy alternatives for transportation vehicles, and environmental concerns, along with information about alternatives for energy provision for this purpose, to demonstrate feasible ways to reduce dependence, including government policy steps. Findings - The USA is dependent on imported oil: two-thirds of US oil used today is imported, and mostly used as gasoline for autos - close to 70 percent of all oil is used in transportation. This greatly affects the US BOP; oil imports cost almost US$300 billion in 2006. Current energy efficiency of auto engines is about 15 percent. Using hydrogen fuel cells would at least double this value, as well as reducing waste and completely eliminating carbon dioxide emissions. An efficient means of producing the hydrogen must be developed. A related problem is damage to the environment caused by greenhouse gas emissions. This problem also can be attacked by increasing engine efficiency, and ultimately by replacing gasoline in auto engines with alternative fuels such as hydrogen in fuel cells, as well as by reducing auto use, via mass transport. Policy alternatives include: encouraging energy efficiency via new technologies for vehicle engines; encouraging mass transportation; and higher production of fuels in the USA. Reducing demand via taxes, as in Europe, could reduce consumption, but at a cost to overall GDP unless alternative fuels become competitively priced. Research limitations/implications - The two main limitations onour recommendations are technology for making fuel cells more competitive, and willingness of government to take the needed policy steps. The practical implication is that dependence can be reduced with these steps. Originality/value - The paper links the three corners of the energy triangle: dependence; efficiency, and environment.