The following is the first in a seven-part series on American energy security by U.S. Representative Jo Ann Emerson.

“The price of light, sweet crude oil is trading above $77 per barrel; the price per barrel this week just ten years ago was $17 dollars – $60 dollars less than it is today.  In the annual cycle of summer price peaks the cost of oil is more than $25 more today than it was five months ago.

Now, I haven’t bought a barrel of oil in a while, but all of us buy gas – every week – which is made from the oil America imports.  The link between the price of oil and the price of gas is a direct one, it’s based on supply, and it’s often traded in futures, just like agricultural commodities. 

This means that the expected future price of oil can drive big fuel refiners to raise prices because they, and the market, expect the cost of oil to stay high.  Ever notice how the price at the pump can go up in a hurry, but takes a long time coming down?  That’s pretty much why.  Oil companies protect against risk.

The majority of the risk in the gasoline business is directly linked to the supply of oil, which is controlled by the Organization of Petroleum Exporting Countries (OPEC).  Their membership includes the likes of Iran, Saudi Arabia, Venezuela, Libya and Iraq.  Sudan and Syria have been invited to join.  It’s not exactly the best neighborhood in the world to do business.  Most of these nations are run by unstable or authoritarian regimes, and most of them, though rich in oil, have little other economic wealth to stabilize their national balance sheets.  They use oil pricing as an economic weapon.

 
OPEC nations account for roughly two-thirds of the world’s oil reserves, and they use this fact to create scarcity that pushes prices higher when is suits them as well as to flood the market when doing so works to their advantage, suppressing the rest of the world’s desire for alternative fuel technologies.

Demand for this commodity (which not only drives your car, but also drives whole economies) is growing on the world market.  China and India are pressing forward with economic expansions at breakneck speed.  More scarcity, coming soon.

And America still relies on oil – importing more of it than any other nation in the world: 12,000 barrels per day.  That’s almost as much as the next four countries on the list combined.  A full 60 percent of oil consumed in America is from foreign sources.

As the situation on the world market worsens, demand grows and oil becomes more scarce, America will stop experiencing price spikes for gasoline and start experiencing high prices all the time.

We have to prepare for this situation today, because stable sources of energy are vital to American national and economic security.

Some nations provide a model, such as Brazil, which set out to become independent from foreign oil some 20 years ago.  Today, Brazil has achieved that goal, largely through the use of ethanol.  The bottom line: America will have to aggressively implement alternative fuels – in every region, year-round – to replicate that kind of success. 

Corn is certainly part of the solution, but so are biomass, ethanol feedstock, and other emerging technologies as we also explore domestic sources of energy.  In future weeks, I’ll lay out the case for U.S. energy security and discuss how we are promoting new products and opportunities to break our dependence on foreign oil.  I don’t think there is a more urgent, or exciting, issue for our time than this.”

Next week: Quicksand Politics: Energy security and U.S. foreign policy.