"We have a serious problem,” said George W. Bush in his 2006 State of the Union Address, “America is addicted to oil, which is often imported from unstable parts of the world.” Whilst not capturing the entire scope of the problem, Bush was correct – the US is facing a huge obstacle in the form of its dependence on oil.
The sentiment was echoed in Obama's first address as President, when he said “America's dependence on oil is one of the most serious threats that our nation has faced. It bankrolls dictators, pays for nuclear proliferation, and funds both sides of our struggle against terrorism. It puts the American people at the mercy of shifting gas prices, stifles innovation and sets back our ability to compete.”
The Cost of US Oil Dependence
The USA currently consumes 20.8 million barrels of oil a day, or around a quarter of the world's daily oil consumption. With the cost of a barrel of oil at around $50, American daily oil consumption is worth around $1 trillion on the open market. This is a huge expense in itself, but, considering that the price of oil topped $147 a barrel in July 2008, the possibility of much greater payments for oil is likely as the US is highly exposed to fluctuations in the price of oil.
Also, a great deal of this oil is consumed because the US has oil inefficient infrastructure. While other first world countries have high density urban areas with good public transport links, the USA has embraced the concept of urban sprawl and use of the car. This has led to the average citizen of the US using 250% more oil (11 liters per day) than their counterparts in Germany (4.7 liters) or the UK (4.6 liters).
Importing Oil from Unstable Regimes
Since the early 1950s the level of American oil imports has steadily risen as US oil production declined and US oil consumption grew. Currently, around two thirds (13 million barrels per day) of US oil is imported. In recent years, a large percentage of this oil has come from Mexico and Canada. However, the vast majority comes from a number of unstable or potentially hostile states in Africa, the Middle East, the Caspian Basin, and Latin America.
Reliance on these states for such a vital product is a huge national security risk. The poor governance that commonly accompanies large natural resource endowments in the third world means that the majority of these countries have corrupt leaders who are propped up by US oil imports and are liable to be deposed by their own disgruntled subjects, which would lead to significant disruptions in supply.
Furthermore, these states could intentionally seek to harm the US through its oil imports, as they did in 1973. Their ability to push the price of oil higher means that they could easily cost the US trillions of dollars; giving them significant leverage over the world's greatest power. As technologies to replace oil are currently scarce on the ground, this leverage is likely to continue to exist for a long time.
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