Biodiesel Resource

Biodiesel is domestically grown, processed and distributed. Biodiesel reduces our dependence on foreign oil, and stimulates local economies.

Biodiesel Can Help Decrease Our Dependence on Imported Petroleum

Understanding the notion of oil dependence, and how it is both an economic and strategic problem for the United States and other net-importing nations, requires a review of some important energy and transportation facts about in the U.S.

• Fact #1: We have a limited amount of petroleum oil left
• Fact #2: Petroleum consumption in the United States is rising
• Fact #3: Domestic production of petroleum in the United States is falling
• Fact #4: Imports of petroleum are rising (see graphic below)

U.S. Petroleum Production, Consumption and Imports, 1949-2002.

• Fact #5: Not only is the transportation sector almost totally dependent on petroleum, but it's also the dominant petroleum consumer in our economy (see figure below)

A diagram showing petroleum flows (million barrels per day)

If these facts and figures are alarming, they should be. Some of the more disturbing information is not easily portrayed on a chart or a graph, which is the consequence of our need to import more and more petroleum. In 1977, the United States imported a record 46.5 percent of the oil it needed to fuel its vehicles, heat its homes, and run its industry. In reaction to rising prices and such high levels of imports, the U.S. established a Department of Energy, spent billions of dollars on researching and finding new sources of energy supply, and redesigned its cars, houses, and factories to make them more energy efficient. Yet last year, when the United States broke its 20-year record for foreign oil dependence, few cried or reacted.

In 1999, an investigation was conducted under Section 232 of the Trade Expansion Act of 1962 by the Department of Commerce to determine the effects on the national security of imported crude oil and petroleum products. The report stated: “The underlying physical reality is that the United States has already developed the bulk of its known and easily accessible low cost deposits.” Additionally, developing other geological prospects such as the Arctic National Wildlife Refuge (ANWR) and certain portions of the Outer Continental Shelf are passionately debated. Drilling in the ANWR, which the Senate voted in favor of on March 16th, 2005, will only provide a marginal contribution to solving the nation’s oil supply problems considering demand increase and import increase estimates. The report also stated that the U.S. is a high cost producer of oil compared to most other countries, production has steadily declined, and to offset this decline in production and increasing consumption, imports have increased dramatically since 1994.

Low oil prices result in positive benefits to the U.S. economy, since the U.S. is a net-importer of oil. In the past, the public benefited from lower prices for transportation fuels and heating oil. For the economy as a whole, low oil prices contribute to a reduction in inflation, a rise in real disposable income, and an increase in the Gross Domestic Product. However, oil prices are anything but stable, and gas prices upward around $3 a gallon are obviously not helping our economy.

As consumption grows and production falls, oil imports will continue to rise. This is an important fact when discussing energy security. The United States has historically taken the low price of petroleum for granted. Until an event occurs that directly affects the availability of a necessity, it is difficult to understand just how dependent one is on that necessity for everyday activities. An example of this concept in the context of petroleum is the oil shocks.

The first oil shock occurred in 1973. This increased the price of petroleum substantially. The second oil shock, sometimes referred to as the Iranian Revolution, impacted oil prices to an even higher degree. The images of long lines at the gas station are enough to show just how desperate and dependent we are on petroleum. The U.S. reacted by stepping up production, creating the DOE, and promoting conservation measures. Yet, in 1986, the trend of net importing surfaced once again and imports have increased steadily ever since. Fluctuations can be seen when geopolitical events occurred as well, like during the First Gulf War of 1991. Actually, the Department of Energy stated that since 1951, the United States has experienced a total of 115 months of supply disruption.

To ensure a steady oil supply, the U.S. relies on several suppliers. The Organization of Petroleum Exporting Countries (OPEC) supplies just over half of our petroleum, and has supplied as much as 80%. Mexico, Venezuela, Canada, and Nigeria are also “well within the sphere of political influence” of the United States. This translates to the United States needing to keep a close eye on the political stability of its suppliers if we wish to ensure an adequate supply of oil to meet our energy needs. It is not necessarily a question of who gets oil from where, since a spot market for oil exists more-or-less where export-import patterns can be arranged with a few phone calls. As the world oil shortage becomes ever more apparent, where the oil comes from is less important. Twenty-five percent of the world’s oil is burned by the United States, so whatever happens in the U.S. affects all others across the globe.

The U.S. transportation system is the largest in the world and is woven into nearly every aspect of life. Mobility of people and commodities is essential to modern societies. Who would have known a hundred years ago that you would be able to travel from one large city to another in less than a day? Transportation energy demand is not likely to decrease unless we get out of our vehicles and walk or bike to our destinations. However, how realistic is it for most to bike to work? To school? To the grocery store? I’m sure it’s not very realistic for the majority of Americans. Imagine trying to balance all of those groceries on your handlebars. That would be a sight! Hence, we need to concentrate our time and resources on developing domestic sources of energy for transport purposes. After all, the transportation sector does consume two-thirds of the United States' petroleum, is 97% dependent on petroleum, and is the fastest growing energy sector.