Increasing United States dependence on Middle Eastern oil is creating the potential for a “national security threat in the next decade,” a Reagan Administration official warned Tuesday.
“Although lower oil prices have benefited the economy in the short-term, there is justification for national concern over both the declining competitiveness of American oil and gas and over rising imports,” said Secretary of Energy John Herrington in releasing a report on energy security.
The report, which was submitted to President Reagan, states that the Persian Gulf is expected to supply between 30 and 45 percent of the world’s oil by 1995.
“Over the longer term, U.S. oil imports could exceed the range they reached in the mid-1970’s,” the report states. “U.S. net oil imports (could reach) in the range of 8 to 10 million barrels per day — about one half or more of total projected U.S. oil consumption.” The bulk of this oil comes from the Persian Gulf nations.
Oil imports are currently 33 percent of U.S. consumption.
The report warns that “recent Middle East history shows that oil supplies there can be interrupted” as they have been 15 times since 1950 such as during the Iranian revolution and the Iran-Iraq War.
A “politically inspired oil embargo” such as occurred in 1973-4 during the Yom Kippur War is not a “significant threat,” although it could become one if oil imports increase, the report warns.
“Although there is only a small risk of a significant disruption that could cause another sharp increase in oil prices in the near term,” the report says, “many of the political, social and military factors that led to sharp disruptions are likely to persist in the future.”
The Department of Energy stops short of supporting an oil import tax, noting that for a $10 barrel fee the GNP would lose as much as $273 billion from 1988 to 1995, said Herrington. An oil import fee would also cause U.S. businesses to pay higher energy costs than international competitors and would hurt U.S. export sales, said Herrington.
Herrington said he supports tax initiatives to increase U.S. production such as the elimination of the windfall profits tax, deregulation of natural gas and electricity, development of coal, and regulatory measures on nuclear power to restore its economic vitality.
The Department of Energy report notes that while other fuels such as coal, natural gas, nuclear power and renewable resources will increase their share of world energy consumption, oil will remain the most important fuel in the 1990’s.
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