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An Opportunity to Reduce OPEC's Role


Any discussion about U.S.-Saudi relations quickly gets to the subject of oil. Washington is awash in ideas about cutting U.S. reliance on OPEC oil. First the facts. The U.S. has already done a decent job in cutting its dependence on OPEC oil. In 1960, 81.3% of all imported oil came from OPEC. In 1990, it was 60%. By 2000, only 50.9% came from OPEC, and that figure continues to trend downward sharply. The U.S. has also succeeded in weaning itself off oil in generating electricity. Today, domestically produced natural gas, coal, hydroelectric power, and nuclear power provide practically all the electricity in the nation. Oil is used mostly for transportation, as well as petrochemicals and heating homes, mainly in the Northeast.

Conservatives are demanding more drilling and more oil supply. Certainly, a portion of that should now come from within the U.S., but the fastest way to boost production may lie in helping America's old nemesis and new geopolitical friend, Russia. Russia is already the second-largest oil producer, exporting 3 million barrels a day, compared with 8 million for Saudi Arabia. With just a small capital investment, it has already boosted production by 1 million barrels a day, to 7 million. With assistance, it could probably increase production to 11 million barrels, its peak in the 1980s, with most going for export.

The new U.S.-Russian anti-terrorist alliance can also help boost production in the Caspian Sea region. This area has the largest oil field found anywhere over the past 30 years, but Washington and Moscow have battled fiercely over rival pipeline routes to get the oil out. With Russia, Uzbekistan, and other Central Asian countries joining with the U.S. against the Taliban, that geopolitical competition is over. Millions of barrels could be pouring out of the Caspian Sea in two to three years. Together with large projects in Brazil, off the coast of West Africa, and in the Gulf of Mexico, the supply of non-OPEC oil is due to surge. That could permit the U.S. to significantly cut its dependence on OPEC oil in short order.

But it's not enough. To cut dependency, Detroit must do its part. Cars and light trucks (SUVs) are the main users of oil in the U.S. Existing technology today could nearly double mileage for autos. Washington, as a matter of national security, now should tell Detroit to raise its mileage standards. And providing tax credits to consumers who purchase high-mileage vehicles is one tax break worthy of consideration.

It may never be possible for the U.S. to be totally independent of OPEC oil. But encouraging production, especially overseas, while boosting engine efficiency at home could gain the country a lot more freedom and maneuverability in the years ahead.


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