Obama Calls for Deep Cuts in U.S. Oil Imports

Obama lays out four areas to help reach his goal to cut oil imports by a third: more oil and gas drilling, biofuels, natural-gas vehicles and efficiency

Mar 30, 2011

Credit: arbyreed

President Barack Obama set an ambitious goal on Wednesday to cut U.S. oil imports by a third over 10 years, taking up a challenge that eluded previous U.S. leaders, as high gasoline prices threaten to undermine the country's economic recovery.

Obama outlined his strategy in a speech after spending days explaining U.S.-led military action in Libya, where fighting, accompanied by unrest elsewhere in the Arab world, has helped push U.S. gasoline prices toward $4 a gallon.

"There are no quick fixes...And we will keep on being a victim to shifts in the oil market until we get serious about a long-term policy for secure, affordable energy," Obama said.

In his speech to roll out a blueprint on energy security that directly acknowledged the "big concern" caused by fuel prices, Obama said the country must curb dependence on foreign oil that makes up roughly half of its daily fuel needs.

But previous presidents have made similar promises on energy imports and failed. And any new policy initiatives can expect tough opposition from Republicans who control the House of Representatives and see high energy prices hurting Democrats in the 2012 presidential and congressional elections.

Republicans have mocked the idea of Obama curbing oil imports a week after visiting Brazil, where he said the United states wanted to be a good customer for its oil exports.

Obama laid out four areas to help reach his target of curbing U.S. dependence on foreign oil: lifting domestic energy production, fostering the use of more natural gas in vehicles like city buses, making cars and trucks more efficient, and boosting alternative energy by encouraging biofuels.

"We cannot keep going from shock to trance on the issue of energy security, rushing to propose action when gas prices rise, then hitting the snooze button when they fall again," he told students at Georgetown University in Washington.

Hard Sell

Analysts and experts said Obama's goal is ambitious.

"All U.S. presidents since the early 1970s have outlined ambitious plans to reduce their reliance on imported oil," said John Sfakianakis, chief economist at the Banque Saudi Fransi.

Truly reforming U.S. energy use would involve sweeping changes, including possible fuel taxes to encourage Americans to change their habits, which could be politically toxic, analysts said.

Polls show Americans have mixed feelings about getting entangled in a third Muslim country, with the United States still engaged in Iraq and Afghanistan, and they are clearly worried by high gas prices before the summer driving season.

The latest measures of consumer confidence have also been dented by rising energy prices, which sap household spending and could derail the U.S. recovery if prices stay high enough for a long time, hurting Obama's re-election prospects.

A Quinnipiac University poll released on Wednesday showed that 48 percent of American voters disapprove of Obama's job performance, and 50 percent think he does not deserve to be re-elected in 2012, compared with 42 percent who approve and 41 percent who feel he does deserve to be re-elected.

Those were his lowest ratings ever, Quinnipiac said.

The poll of 2,069 registered voters, conducted March 22-28, has a margin of error of plus or minus 2.2 percentage points.

Some analysts reckon Obama may tap America's emergency oil stockpiles if U.S. oil prices hit $110 a barrel. Prices were hovering just over $104 a barrel in Wednesday's trade.

The United States consumed almost 20 million barrels of oil a day in 2010 of which roughly half was imported. Canada and Mexico are the country's two largest suppliers, followed by Saudi Arabia and Venezuela.

The U.S. Interior Department estimates millions of acres (hectares) of U.S. energy leases are not being exploited by oil companies and the White House wants that to change.

This argument also helps the administration push back against Obama's Republican opponents, who claim he is tying the hands of the U.S. energy industry by denying leases and restricting offshore drilling in the wake of the 2010 BP Gulf of Mexico oil spill.

(Additional reporting by Timothy Gardner and Caren Bohan)

FACTBOX: Obama Unveils New Energy Goals

Here are some of the energy goals Obama announced and the administration's planned steps to accomplish them:

EXPAND DOMESTIC OIL, GAS PRODUCTION

The Interior Department said that 57 percent of onshore acres leased for oil and gas development are unused, and 70 percent of offshore leased acres are unused. The department is developing incentives to expedite development by lease-holders and is evaluating royalty rate structures similar to those used in Texas in order to encourage faster production.

DEVELOP ALTERNATIVES TO OIL

The White House set a goal of breaking ground on four cellulosic or advanced bio-refineries over the next two years to help commercialize those technologies.

The administration also will focus on improving transparency about natural gas fracking and begin developing recommendations for safe shale extraction.

DEVELOP MORE EFFICIENT CARS AND TRUCKS

Fuel economy standards for new cars are expected to save 1.8 billion barrels of oil during those vehicles' lifetimes, the administration said. The White House said it plans to finalize in July 2011 national fuel economy and greenhouse-gas emission standards for vehicles built starting in 2014.

A $7,500 tax credit to encourage adoption of electric vehicles and funding for research in battery technology, which were included in President Obama's proposed 2012 budget, are intended to further a goal of 1 million electric vehicles by 2015.

The president also has asked agencies to purchase only alternative-fuel vehicles by 2015.

MOVE TOWARD CLEANER ENERGY AND IMPROVE ENERGY EFFICIENCY

The administration wants to generate 80 percent of the nation's electricity from clean sources by 2035, which includes weatherizing homes and making commercial buildings 20 percent more efficient by 2020.

The White House also said its 2012 proposed budget more than doubles funding for the Advanced Research Project Agency-Energy, which funds research projects in smart-grid technology, carbon capture and other areas.

(Reporting by Emily Stephenson; Editing by Lisa Shumaker)

Facebook Twitter Google Plus Email LinkedIn RSS RSS Instagram YouTube