The global contest for energy resources has continuously reshaped modern history. Japan’s vulnerable energy supplies and the attack on Pearl Harbor; Hitler’s move into the Caucuses, prompting the beginning of the end of the Third Reich; the oil embargoes of the 1970s that imperiled U.S. prosperity and international influence; Iraq’s invasion of Kuwait and Operation Desert Storm. Oil has been a driver of geopolitics for the entire modern era.
Rising U.S. oil production over recent years has yielded major economic benefits. Hard-working, innovative men and women have positioned the United States as the world’s top oil producer—a status that would have seemed unimaginable only a few years ago. Nonetheless, our nation has not achieved energy security, and in fact, America remains profoundly vulnerable.
Oil is priced on a volatile market driven by geopolitical events, cartels, and ever-changing and surprising supply and demand dynamics. Today’s low oil prices, although thankfully benefiting U.S. consumers, threaten domestic oil production trends and investment in long-term solutions like alternative transportation. Oil price volatility has returned to record levels not seen since the aftermath of the 2008 financial crisis. All leading forecasters expect OPEC to play a major role in the global oil market going forward. For 40-years, we have been lulled into complacency when oil prices drop, only to be tripped up again when oil prices spike.
For businesses reliant on oil for every day operations, including FedEx, this volatility makes long-term planning nearly impossible. With oil accounting for 92 percent of the energy consumed by the nation’s cars, trucks, and aircraft, an oil price spike often yields calamitous effects.
Delinking the U.S. economy from an increasingly unpredictable global oil market will require four specific measures.
First, we must ensure that we have a domestic oil and natural gas policy framework for the 21st century that maximizes domestic production to benefit both our economy and balance of trade. Second, we must reduce overall U.S. oil consumption through greater fuel efficiency in our cars, trucks, and aircraft. Third, we must accelerate the deployment of alternatives, including electricity and natural gas, to diversify the fuels that power our transportation sector. And finally, we must convene a national conversation on the importance of undertaking these three steps as the only way forward in tackling one of our greatest economic and national security challenges—oil dependence.
Ultimately, to advance long-term solutions that revolutionize American prosperity and energy security, it will take all of us and all of our voices, which I hope you will share here, on The Fuse.