We've Made Significant Progress in Energy Efficiency, but Transportation Remains Heavily Dependent on Oil

United States

200

125

75

25

36

Quads

200

125

175

50

50

Today, the United States uses virtually no more energy (and less oil) than it did in 1973 -- although its population is still expanding and the Nation continues to turn out more products and services. Without the improvements in energy productivity that have taken place since 1973, the United States would now require the equivalent of about 14 million more barrels of oil every day.

Advances in technology have accounted for two-thirds of the recent energy-productivity improvements in U.S. industry and three-fourths of those in transportation-resulting in more product output per energy unit and more miles per gallon. Energy efficiency has also improved in other OECD countries. Higher energy prices should continue to encourage greater conservation -- which helps both energy security and environmental objectives.

The most heavily oil dependent sector remains transportation. U.S. transportation uses more oil each year than we produce, accounting for more than 62 percent of all oil use. Therefore continued priority should be given to improving automobile efficiency standards, as well as in encouraging greater use of alternative fuels such as natural gas derived fuels (such as methanol) and electric vehicles.

The majority of renewable energy used in the world now comes from large hydroelectric plants and wood fuel. Hydroelectric plants provide 20 percent of all electricity, or 8 percent of total free-world energy use. But, current conventional renewable energy has a relatively slight growth potential. Most large hydro resources have been developed, and dispersed woodburning is not expected to increase significantly since less developed countries will use more oil, gas, and electricity for heating and cooking.

The United States and the world will, in time, rely largely on essentially inexhaustible energy sources, including many diverse sources such as solar, wind, geothermal, water, and biomass energy. Achieving renewable energy's potential requires a far-sighted effort to improve the cost and performance of renewable energy. Improvements in the cost and performance of these technologies or a sustained increase in the price of oil and other alternative fuels will increase the cost competitiveness of these energy sources.

The approach to achieving renewable energy's potential contribution is through a realistic, far-sighted effort to improve the technology base from which private enterprise can make development and investment decisions. Competition with more conventional energy resources, as well as among the technological approaches for renewable energy, will ultimately determine how much of this country's energy needs each technology will satisfy.

Dependence on Imported Oil is A Global Problem and Requires a Global Solution

*Excludes centrally planned economies

Source: U.S. Energy Information Administration, United Nations. Shell Briefing Service

Millions of Barrels per Day

of Oil Equivalent

In addition to efforts undertaken by the U.S. and other individual countries to limit their vulnerability to energy disruptions, coordinated international energy action can make important contributions to global energy security. A nuclear power plant in Japan, a clean-coal generation project in Italy, a geothermal project in Central America or a hydropower plant in China all serve to reduce world demand for oil-and all countries reap the benefits. Important alternatives include:

• Coal-which has increasingly been used as a substitute for oil in generating electricity in the U.S., Japan and other countries can be expanded further to reduce oil consumption in the utility sector. Currently, concern over the relatively high environmental costs associated with coal burning has limited the appeal of this important and abundant fuel. However, clean coal technology research in the U.S. and Japan has yielded some promising developments, which will enable coal to be burned more cleanly in the future. Expanded international trade in steam coal can help lower energy costs in coal-importing countries. Effort should be made to reduce local subsidies (particularly in Germany, the UK and Belgium) which raise costs and lower economic efficiency.

• The future outlook for natural gas is bright. We predict that the environmentally superior attributes of natural gas—and its abundant worldwide reserves and relative low price—will make natural gas the world's fastest growing fossil fuel in the next two decades. Many countries are expressing interest in expanding consumption of natural gas-stepped up production in the North Sea, Alaska, the Pacific and USSR would help ensure supplies that could keep pace with demand. European efforts to deploy timely investment in gas infrastructure and diversify gas supplies would contribute to a more secure supply of natural gas in the years to come.

• Nuclear power has been a major contributor to reducing major energy consumers reliance on imported oil (including the U.S., France and Japan) in the utility sector, and continued or expanded use could extend these benefits further. Public opposition remains a constraint to further development of nuclear power, but new, more modular and standardized designs may help nuclear energy regain its momentum. International efforts to develop the new generation of “inherently safe" reactor technology, establish efficient and safe procedures for nuclear waste disposal, and enforce stringent international public safety standards when operating nuclear power plants-particularly in developing countries and the Soviet Union-could go a long way in reassuring the public about nuclear power and protect its position in a diversified global energy portfolio.

• Finding substitutes for oil in the transportation area offer promise for the future and provide security benefits by reducing dependence on oil; international research collaboration could help bring these technologies to market in a timely, cost-effective manner. Non-oil-based transportation fuels offer special promise in this regard, since so much of the world's oil consumption is devoted to the transportation sector. International research programs on effective, economic conversion technologies for non-petroleum transportation fuels such as electric vehicles, solar power autos, and natural gas-based fuels such as methanol could go a long way toward realizing the potential contribution of renewable resources to worldwide energy security.

• Conservation technologies. Largely as a result of significant advances in transportation technologies and residential construction designs that did not adversely affect consumers' lifestyles, OECD countries consumed slightly less oil in 1989 than in 1970, despite significant economic growth during this period. Future breakthroughs in conservation technologies could help maintain this significant progress.