United States Department of Transportation
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Transportation's oil dependence and energy security in the 21st century
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1997-10-01
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NTL Classification:NTL-ENERGY AND ENVIRONMENT-ENERGY AND ENVIRONMENT
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Abstract:The persistent and in many parts of the world rapid motorization of transport is intensifying global dependence on petroleum. Transportation's global oil dependence poses real energy security risks for the first few decades of the 21st century, at least. At the same time, the world economy is in no danger of running out of oil" during the next century. In this essay, I will attempt to explain this paradox of oil scarcity and its implications for energy security in an increasingly motorized world. The scarcity which immediately threatens world energy security today is an economic, rather than a physical or geologic scarcity. Economic scarcity does depend on geology, but, more to the point, it can be created by anticompetitive (monopolistic) behavior, or may temporarily result from any of a variety of shocks to which the world's oil producing regions are subject. The inability of oil markets to adjust rapidly to sudden changes in supply, enables supply shocks, whether deliberate or inadvertent, to produce enormous increases in oil prices and, consequently, immense profits for oil producers together with massive losses for oil consumers. The adequacy of fossil energy resources is an important issue from the perspective of the sustainability of human society, as are the consequences of its use. While there appear to be more than enough fossil energy resources to last 100 years, use of this resource by conventional means would produce cumulative carbon emissions six to seven times the current atmospheric carbon content of 760 GtC. Thus, the immediate oil dependence problem must be understood in the context of global efforts to address associated problems of urban air pollution, greenhouse gas emissions and, above all, the sustainability of modern society. Each one of these motivations to transform transportation's oil dependence arises from a kind of market failure. Urban air pollution and greenhouse gas emissions are environmental externalities. The failure of market systems to adequately consider the long-run sustainability of society is yet a different kind of market failure that is at present still being defined (Pearce and Warford, 1993). At the heart of the oil security problem is the potential for market power to be exploited in imperfectly competitive energy markets. All of these transportation energy problems appear to share a common solution: the transformation of transportation technologies to better achieve society's environmental and economic goals. The importance of changes in transportation technology to reducing oil dependence will be briefly explored in this paper.
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