President Obama calls for one-third cut to oil imports

Correction: An earlier version of this story inaccurately reported the year that is Obama’s goal for a one-third cut in oil imports.

President Obama called Wednesday for a one-third cut in oil imports by 2025 to reduce U.S. reliance on foreign petroleum.

With rising gasoline prices at home and turmoil throughout the Middle East, Obama sought in a speech at Georgetown University to rally Americans — and lawmakers — behind a program his aides said draws equally from energy savings and increases in domestic energy production.

“We’ve been down this road before,” he said, acknowledging that several past presidents have made similar calls for greater energy independence. But, he added, “we can’t rush to action when gas prices are high and then hit the snooze button when prices are low again.”

He said that rising demand from developing countries such as China meant that future oil demand would rise faster than supplies. And he warned that even though current gasoline costs were pinching household budgets, “when you look at the long-term trends, there are going to be more ups in gas prices than downs in gas prices.”

Most facets of his plan are familiar, and none of them provides fast relief. “There are no quick fixes,” Obama said.

The president proposed wider use of natural gas, including incentives to use it to fuel fleets of vehicles such as city buses. He backed greater production of biofuels and vowed to establish at least four commercial scale refineries producing cellulosic ethanol or advanced biofuels within the next two years. He also pledged to establish higher fuel efficiency standards for heavy trucks, just as he did for passenger vehicles early in his administration.

Obama also urged oil companies to make greater use of federal leases onshore and offshore to prop up domestic oil output. A White House briefing paper said the Interior Department might shorten lease terms or use a sliding royalty rate scale to encourage speedier exploitation by companies.

Complaints about delays

The oil industry and GOP lawmakers have vociferously complained about delays in the approval of offshore drilling permits in recent months. But an irked administration, which had pledged tougher scrutiny of drilling applications after last year’s oil spill in the Gulf of Mexico, fired back Tuesday with an Interior report that revived earlier claims that oil firms weren’t exploiting leases they already have.

“We just spent all that time, energy and money trying to clean up a big mess,” Obama said. “I don’t know about you, but I don’t have amnesia. . . . I think it’s important that we prevent something like that from happening again.”

Obama said that Interior has issued drilling permits for 39 shallow water and 7 deepwater wells since his moratorium ended. Later Wednesday, Shell Oil said it had received a permit to drill a development well in its Cardamom field in the Gulf of Mexico.

Obama has made energy a policy centerpiece. In early 2009, he reached a deal with carmakers, unions and regulators to boost automotive fuel efficiency, a measure with far-reaching effects on U.S. oil consumption, 70 percent of which goes to transportation. The 2009 economic stimulus package set aside $70 billion in grants and loan guarantees to promote energy efficiency, advanced batteries for cars and renewable energy. But Obama poured a lot of effort into winning passage of a cap-and-trade climate bill, which failed.

Obama said his goal for cutting imports was “one that is reasonable, one that is achievable and one that is necessary,” but he faces a plethora of obstacles.

One is the appetite of a growing economy. The federal Energy Information Administration forecasts that the United States will import a net of 9.7 million barrels a day of crude oil and refined petroleum products in 2011 and 10 million barrels a day in 2012. Net imports accounted for 49 percent of all U.S. liquid fuel consumption in 2010, down from 57 percent in 2009 primarily because of the deep recession.

But Obama said he would measure progress against 2008 figures, before he took office, when net oil imports averaged 11 million barrels a day. That baseline makes it easier to reach his target.

Another obstacle is political. Republican leaders have fastened on to energy to attack the president. Senate Minority Leader Mitch McConnell (R-Ky.) accused the administration of “waging a war on American energy” because of delays on permitting drilling on federal lands.

Meanwhile, environmental groups were dismayed at Obama’s emphasis on expanding U.S. oil and gas production. The backdrop during Obama’s speech displayed the phrase “winning the future.” But Friends of the Earth issued a statement saying Obama’s speech was “more about polluting the future than winning it.”

In addition to political obstacles, Obama faces technical ones. Legislation passed in 2007 required oil refiners to use minimum amounts of biofuels, including 16 billion gallons a year of cellulosic ethanol by 2022. Though substantial amounts of venture capital — and government subsidies — have gone into pilot plants, commercial viability has remained elusive.

Presidential push

Virtually every president in the last 38 years has called upon Americans to conserve energy and seek alternatives to oil in the name of independence from international turmoil or pressure.

In 1973, President Richard M. Nixon called for a “Project Independence,” an effort he said should summon the spirit of the Apollo space missions or Manhattan Project and achieve self-sufficiency by 1980. Instead, the United States was importing more oil by that time.

In January 1975, President Gerald R. Ford said that “Americans are no longer in full control of their own destiny, when that destiny depends on uncertain foreign fuel at high prices fixed by others.”

In 1977, President Jimmy Carter called the energy challenge “the moral equivalent of war” and proposed conservation, alternative energy, higher gasoline taxes, ethanol fuels and wider use of nuclear power. He, too, set a goal of reducing oil imports by a third — to 6 million barrels a day by 1985 from 9 million a day in 1977.

That target was surpassed by 1982, thanks to a rise in Alaskan oil production, an oil price shock in 1979, and the virtual end of the use of oil by electric utilities and manufacturers. But imports resumed their relentless climb. By 2006, President George W. Bush was calling on Americans to end their “addiction” to oil.

“We’ve been having this conversation for nearly four decades now,” Obama said in a March 11 news conference. “Every few years, gas prices go up; politicians pull out the same old political playbook, and then nothing changes. And when prices go back down, we slip back into a trance. And then when prices go up, suddenly we’re shocked. I think the American people are tired of that.”

Steven Mufson covers energy and other financial news.
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