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The true costs of imported oil

By Dave Frederickson
National Farmers Union President

(Sunday, Nov. 9, 2003 -- CropChoice guest commentary) -- The United States currently imports more than 55 percent of its petroleum, and the U.S. Department of Energy estimates this country will import close to 70 percent of its oil by the year 2010.

Since nearly two-thirds of the world’s known oil reserves are located in the volatile Persian Gulf region, these imports are coming at quite a cost to American taxpayers. In fact, a 2003 study by the National Defense Council Foundation (NDCF) found that America spends $49.1 billion defending Persian Gulf oil. The Foundation estimated this adds more than $1 to the cost of a gallon of gasoline. The study further concluded that the dependence on foreign oil costs the United States economy more than 800,000 jobs per year and costs federal, state and local government treasuries $13.4 billion in lost revenues. NDCF estimates the true costs of imported oil, when you count the economic losses due to money being spent outside the United States, defense and oil supply disruption, is approximately $250 billion per year, or close to $4 per gallon over the current purchase price of gasoline.

The Organization of Petroleum Exporting Countries (OPEC) forced up oil prices in the ‘70s and ‘80s by hiking oil prices. Although the 11-member cartel fell apart in the late ‘80s, OPEC appears to be making a comeback. Some anticipate OPEC’s market share to increase over the next two decades. Only by employing other alternatives to petroleum will our nation break its reliance on OPEC.

The U.S. Senate’s proposed renewable fuels standard (RFS) would make America less dependent on foreign oil. The Senate RFS amendment would triple the usage of renewable fuels by 2012 and would ban the petroleum-based additive methyl tertiary butyl ether (MTBE), a known water pollutant.

With the Senate RFS, the United States has the opportunity to make a historic shift from importing petroleum from unstable regions of the world to utilizing unlimited American grown and processed ethanol and biodiesel to power America’s cars and trucks. The more energy the United States produces from our own agricultural commodities the less we rely on other countries for oil. In fact, a U.S. Department of Agriculture study showed that each gallon of ethanol produced domestically displaces seven gallons of imported oil.

It’s time to utilize America’s farmers and ranchers to produce America’s fuel. We must move our society further away from its addiction to foreign fossil fuels and closer to renewable fuels from the farm. The renewable fuels efforts in the Senate would go a long way to reverse the precarious and costly trend of energy dependence.

As the energy conference committee continues to hash out their differences, it is imperative that progressive renewable fuels legislation emerges as the Senate passed it. If this means extracting it from the comprehensive and controversial energy bill, then so be it.

On behalf of 300,000 farm and ranch families, National Farmers Union (www.nfu.org) works to protect and enhance the economic interests and quality of life for rural citizens through legislative representation, educational opportunities and support for farmer-owned cooperative ventures. Contact NFU at nfunews@nfu.org.