This dependence is a serious problem, for several reasons. As the world’s demand for oil increases – especially in light of the economic growth we are seeing in India and China – its price is most likely to increase substantially. Deposits of unconventional oil – such as heavy oil and tar sands in Canada and Venezuela – are huge, but currently extraction is not only expensive but causes serious environmental problems. At least two thirds of the world’s reserves of conventional oil are concentrated in the volatile Middle East and nearby areas (Iran, the Caspian Basin). Thus oil’s production and refining infrastructure is not only subject to terrorist attack, but the reliability of various states as a source of supply could be in question in the event of chaos or radical changes in government.

Oil use contributes, of course, to pollution and to the release of global-warming gases. And as Senator Richard Lugar and the author set out in Foreign Affairs six years ago, oil imports into developing countries – denominated in hard currency – drive the build-up of such countries’ debt, which is often a major source of their inability to climb out of poverty.

Other aspects of international economic stability are also heavily influenced by oil. The current weakness of the dollar has produced widespread concern about a possible flight from it, and a sharp reduction in US imports, to the detriment of many countries’ economic stability. The dollar’s weakness is intimately related to the US current account deficit, which builds at the rate of around $10 billion per week. About $2 billion per week of that borrowing is for oil imports.

Changing focus
In this context two reports published in late 2004 make major contributions toward changing the focus of the somewhat sterile debate about oil and security. Their recommendations for action overlap on most key issues, and some highlights follow.

‘Ending the Energy Stalemate’ published in December by the National Commission on Energy Policy (funded chiefly by the Hewlett Foundation) proposes some deadlock-breaking paths. First, it recommends that the United States ‘significantly raise’ its fuel economy requirements, while allowing manufacturers to trade fuel economy credits among vehicle categories and among one another. The proposal also introduces the concept of a ‘safety valve’ for industry, permitting manufacturers to purchase credits from the government at a predetermined price. It thus seeks to have the US government mandate improvement but within a highly flexible framework.

We are all essentially in a worldwide oil market together

Within this system, the Commission suggests that the most successful near-term technologies that should be promoted to improve fuel economy are hybrid gasoline-electric vehicles and advanced diesels – the latter limited to those that meet the more stringent ‘Tier 2’ air quality standards being phased in between 2004 and 2008. The Commission tersely states that, on the other hand, ‘hydrogen offers little to no potential to improve oil security and reduce climate change risks in the next twenty years’. It focuses instead on vehicle and fuel changes that can radically reduce oil dependence in the next few years and that, unlike hydrogen fuel cells, do not require major changes in transportation infrastructure, such as installing equipment to produce hydrogen at all filling stations.

Attractive characteristics
The Commission particularly notes two attractive characteristics of current gasoline-electric hybrids. First – for the four hybrids that have conventional vehicle counterparts (two Honda, one Ford, one Toyota) – the hybrid version increases both fuel economy and horsepower over the conventional version: consumers need not choose between economy and performance. Second, hybrids lend themselves easily to adding a somewhat larger battery pack, making possible a most useful ‘plug-in’ feature: this means the hybrid could have its battery topped up by being plugged in to an electric power source when not in use. Thus electricity could be used entirely as a substitute for gasoline or diesel for many short trips without the vehicle having the disadvantages and inflexibility of an all-electric car. Plug-ins could thus substantially further reduce our reliance on oil.

In the second fascinating report, ‘Winning the Oil Endgame,’ the Rocky Mountain Institute (RMI) proposes substantially increasing the already growing use of carbon composites for automobile construction. These combine strength and light weight, but at less demanding levels than for aircraft – e.g. 80 per cent of the strength of aircraft composites at 20 per cent of the cost. Thus they can radically reduce weight and increase mileage while also enhancing safety. Again, technology can make it possible to avoid the need to choose between positive features.

Both reports also praise the potential of two types of alternative fuels: cellulosic ethanol and biodiesel produced from organic wastes. Both are now beginning to be produced commercially

Cellulosic ethanol produced from agricultural waste, such as rice straw, or from perennial grasses, has many advantages over starch-based ethanol (for example from corn). Not only are feedstocks available in very large volume worldwide (and to many small and subsistence farmers around the world), but the small amount of energy needed to produce such ethanol – and the use of some portion of the waste for co-generation of electricity – can, according to the Commission, make its production and use a carbon ‘sink.’ This creates ‘greater than 100 per cent ‘greenhouse gas reductions compared to petroleum use.

Economic significance
Biodiesel, currently being produced from offal at a turkey-processing plant in the United States, can now be derived from a wide range of organic waste feedstocks, including manure, household waste and used tyres. This has the potential to lower production costs substantially, by taking advantage of fees paid for waste disposal. The National Commission and RMI both note the potential economic significance of such waste use.

Using already developed technologies for vehicles and alternative fuels, where both are compatible with the existing transportation system, gives promise of early, even striking, results. For example, a hybrid fuelled by (cellulosic) E-85, i.e. 85 per cent ethanol, would travel more than four times as far on a given volume of petroleum as a conventional vehicle. If it is given a plug-in capability and thus uses only electricity for short trips, it could easily get around eight times the mileage. Build it with RMI’s proposed composites, and the light weight increases its mileage by a factor of 12. And a diesel vehicle that uses biodiesel made from organic waste is using no petroleum at all.