Old Policies Make Shift From Foreign Oil Tough

July 28, 2004 -- The United States' growing dependence on foreign oil is widely recognized as the nation's Achilles heel, a disaster in the works. But sometimes it seems that every solution to that horrendous problem leads into a box canyon.

Alternative energy sources are too expensive, and often not cost effective. Some potential solutions are decades away. The nation has dug a very deep hole for itself, and the situation probably will get much grimmer before it gets better.

As physicist David Goodstein of the California Institute of Technology puts it, we may be heading towards "Oil War III."

Now, researchers at the University of Missouri in Columbia have identified a number of non-technical reasons why we can't seem to dig ourselves out of this grave. Instead of moving forward, we are kicking ourselves in the rear end with tax laws that were established a century ago, corporations that have billions invested in oil reserves and thus no incentive to look for alternatives, and a political system that seems paralyzed.

"What seemed like a good idea 100 years ago is not necessarily a good idea today in our global economy," says chemical engineer Galen Suppes.

Self-Inflicted Dependence

Suppes and Truman Storvick, professor emeritus at Missouri, told a recent meeting of the American Institute of Chemical Engineers that development of alternative fuels is being blocked by national policies and corporate commitments that tip the playing field in favor of foreign oil. In other words, we're doing it to ourselves.

For example, about half the cost of every gallon of synthetic oil produced in this country goes to federal and local taxes, Suppes says.

"But there's no U.S. taxes on foreign oil," he says. "You're taxing domestic production, but you're not taxing imports."

A tax on foreign oil is a tariff, a foul word in these days of free trade, but Suppes argues that all resources will have to be taxed the same if alternatives to foreign oil are to be commercially viable.