Energy Independence

The ethanol industry is powering energy dominance.

Energy security remains a significant concern for the U.S., but thanks in part to homegrown ethanol, Americans are importing less petroleum, helping the nation rein in oil imports for the transportation sector. On a net basis, U.S. dependence on imported crude oil and petroleum products fell to just 14 percent in 2018, due in part to booming domestic production. However, without the addition of 16.1 billion gallons of ethanol to the domestic fuel supply, U.S. import dependence would have been 20 percent. In other words, without ethanol’s contribution, it would have taken an additional 594 million barrels of imported crude oil to meet America’s petroleum needs!

While progress has been made to boost U.S. energy security, more needs to be done. The nation still transfers a significant amount of money to the OPEC cartel. In 2018, the U.S. sent a collective $54 billion, or $425 per household, to countries like Saudi Arabia, Iraq, Venezuela and Nigeria to OPEC to pay for crude oil imports. Energy security is one of the main drivers behind the Renewable Fuel Standard and why it remains critical the program stays in place and grows over time, providing consumers with more choices at the pump and shoring up domestic energy usage.

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Transferring American Wealth to OPEC

Even though U.S. oil production has increased in recent years, our nation’s’ economy still transfers tens of billions of dollars every year to the OPEC cartel. In 2018 alone, the U.S. sent some $54 billion – roughly $45 per American household – to OPEC nations to pay for crude oil imports.

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The Hidden Cost of Oil

An “oil import premium” exists, although it is not reflected in gasoline prices paid by consumers at the pump.

These hidden costs are comprised of:

An “oil import premium” exists, although it is not reflected in gasoline prices paid by consumers at the pump. These hidden costs are comprised of: 

• Oil-related defense expenditures, including the cost of maintaining the Strategic Petroleum Reserve. The U.S. Department of Transportation and U.S. Environmental Protection Agency estimate the additional cost of protecting the supply and transit of foreign crude oil is in the range of $5-$22/barrel.1

• Macroeconomic effects of oil supply disruptions and price shocks. Geopolitical tensions, conflict in the Middle East, strategic production shifts on the part of OPEC, and natural disasters can cause oil supply shocks that affect GDP. Higher oil prices push up nominal consumption expenditures by increasing the price of fuel and general inflation; require a higher investment in domestic oil exploration and development; and negatively affect international trade.2

• Higher U.S. petroleum product prices due to upward pressure on world oil prices driven by the U.S. market power (“monopsony”) in world petroleum consumption. 

• Subsidies and Tax Incentives. The U.S. Energy Information Agency reports that subsidies and support for the U.S. crude oil industry in FY2016 totaled $18.8 billion, a massive 63 percent increase from FY2010.3 

Supporting Documents/Articles