Without oil imports, the U.S. would presumably be running much smaller current account deficits over time. A current account deficit isn’t necessarily a bad thing, particularly the high investment levels that you often see in a highly productive, growing economy; but if it reflects low savings levels and unsustainably high consumption levels that persist over a long period of time, it’s probably a bad thing.
So it’s not crazy to think about how we might decrease oil imports over time, and that is the chief goal of a group called Securing America’s Energy Future (SAFE). Earlier this year, SAFE released a report on how congestion levels increase oil consumption and increase oil imports, and it offered a number of proposals for how we might reduce congestion. The following passage provides a broad overview:
In 2008, when oil prices peaked, the U.S. sent $386 billion—55 percent of the total trade deficit—overseas for crude oil and petroleum products. This year, net expenditures on petroleum imports are again expected to exceed $300 billion. With oil prices averaging nearly $100 per barrel, the Department of Energy forecasts OPEC net export revenues to exceed $1 trillion in real terms in 2011—their highest level ever. Looking forward, OPEC is expected to provide more than half of the world’s oil supplies by 2035 significantly increasing the net oil trade surplus in the Middle East.
Direct wealth transfer is but one of the many economic costs of U.S. oil dependence. Researchers at the Oak Ridge National Laboratories (ORNL) have shown that significant economic costs stem from the temporary misallocation of resources that occurs as a result of sudden price changes. Specifically, budgeting and financial decisions for both businesses and households become more difficult, affecting long-term economic activity. They have also shown that the existence of an oligopoly inflates oil prices above their freemarket cost, which reduces economic activity by forcing the diversion of resources to cover the higher cost of oil.
In total, they have calculated that oil dependence cost the nation more than $5 trillion between 1970 and 2010. Since 2006, these costs, which include wealth transfers, potential GDP loss, and macroeconomic adjustments, have risen to an average of more than $350 billion a year, and topped $500 billion in 2008. This burden is simply unsustainable.
One obvious strategy is for the U.S. to draw more heavily on domestic energy supplies. But SAFE suggests that reducing congestion might also be fruitful, and it points to a number of potential strategies:
(a) better road traffic management (deploying dynamic congestion pricing, etc.);
(b) more effective accident/incident resolution;
(c) improving transit options, employing travel demand strategies (facilitating carpooling, telecommuting, etc.), promoting the use of carsharing platforms;
(d) encouraging the embrace of intelligent transportation systems, including autonomous vehicles;
(e) encouraging higher density urban development.
I would support (a)-(e) even without giving due consideration to the potential impact on oil imports, so I’m not the target audience. But I think SAFE makes its case intelligently and effectively.
(It’s worth noting that, as Clifford Krauss and Eric Lipton report, the U.S. imported 45 percent of its liquid fuels in 2011, down from 60 percent in 2005.)