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20

Our soil, our oil—that’s the slogan of a Northeast heating oil dealer who has stopped selling foreign oil. As of May 31st, the company’s 25,000 customers only receive home heating oil produced in North America, the news site lancasteronline reported. The same pledge applies to the other fuels they also sell—diesel and biodiesel immediately, wholesale gasoline shortly.

The swing in sources is significant for this company: previously, around two-thirds of their oil-based products were imported, mostly from the Middle East. To fulfill their pledge, the company has had to find North American sources—Texas, Louisiana, and and neighbor Mexico—to replace the majority of its supply. According to the company, it took "months of negotiations" to line up sufficient North American supplies.

Why did this Northeast company do this? To do their part to stimulate domestic spending? To launch a "made in America" marketing campaign? No, at least not according to a senior executive. The decision, the company’s vice chairman says, was made after he visited a family friend in intensive care at Bethesda Naval Hospital. The friend is a soldier, severely wounded during a firefight in the Middle East. As the vice chairman tells it, walking out of the hospital room, he thought about the billions of gallons of oil that the United States imports from hostile foreign nations, and the hundreds of billions of dollars we send annually to them for their oil. His (or his company’s) money, he says, could have paid for the bullet that shot his friend.

While it’s overstating the case—badly!—to say that we’re in open conflict with most of the oil-exporting world, it is fair to note that many of the leading oil-producing nations support policies or groups opposed to us. Russia, Venezuela, Iran, Iraq, Saudi Arabia (if you count the Bin Laden/Al Queda connection), Libya…those nations together account for over one third of all current oil production. If you include all of OPEC in the calculation of oil produced by nations whose interests are at odds with ours—which OPEC interests often are—then it’s more like 45% of world oil coming from those countries.

In 2008, the US imported around 5.73 million barrels per day from countries with interests at odds with our own, which would be over 2 billion barrels per year. At an average 2008 price per barrel of almost $100 for crude oil—anomalously high—that means we sent over $200 billion overseas, some portion of which helped finance policies or groups opposed to the United States. Even at a lower average price of $60 per barrel, as we have been seeing in 2009, that’s still $120 billion shipped abroad.

Getting back to our Northeast oil dealer: it’s a business, so undoubtedly the company will be happy for any positive press or sales increase their "Our Soil, Our Oil" campaign brings. There’s nothing wrong with that—businesses exist to make money after all, which then pays salaries and other companies for their wares. So whether or not this dealer ends up profiting from their pledge is beside the point…that point being that a heavy reliance on foreign oil has very real economic and policy consequences. Every dollar sent overseas is a dollar not spent in the United States; it’s a dollar expatriated from the country, especially when it’s sent to nations that do not in turn import heavily from us.

It’s also a dollar that goes to finance other nation’s governments, and therefore their policies. For example, in 2008, Iran made around $85 billion exporting oil, Russia made $189 billion, and Venezuela made $80 billion. That is, to state the obvious, a lot of money, much of which goes to support actions to which our government is opposed.

As Secretary of the Interior Ken Salazar has noted, energy independence is a matter of national and economic security. While it’s unrealistic to every be fully "independent" in our interconnected world, any steps in that direction—any reductions in crude oil or petroleum product imports—are helpful. And to the degree that we are not independent, shaping our purchases to funnel dollars towards our friends is also a good thing.

(Note, though, that it’s not easy to ensure domestic, or even North American, sources for crude oil. As The HEAT Zone has previously reported, imported oil is purchased on a few large mercantile exchanges, where oil from different nations is mixed together in a huge "pot." Once delivered, the oil can be traced to its country of origin. But until then, the contracts to purchase the oil change hands too many times to know where the original oil came from. This system complicates any "North American fuel" effort.)

This article was posted on Thursday, June 11, 2009 at 6:56 pm and is filed under International Politics, Middle East, OPEC, U.S. Economics, U.S. Politics, heating oil, local politics

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