Donald Trump Could Free the US from OPEC
Every president since Bill Clinton promised to move the US embassy in Israel from Tel Aviv to Jerusalem. While his predecessors failed, President Trump had the courage to do it. Every president since Richard Nixon has promised to make America energy independent and failed. President Trump is now uniquely suited to succeed where his predecessors failed.
The imperative for energy independence is as strong as ever. On April 20, 2018 the United Press International reported that a surge in gas prices “coming from higher crude oil prices means OPEC is cancelling out the gains of US consumers” from last year’s tax cut legislation. The price of oil has more than doubled since its low of $28.48 in January 2016. The spike not only threatens the economic recovery, but could have severe repercussions for the 2018 midterm elections and beyond.
Oil supplies the fuel for 92% of our transportation system. Even though we have increased domestic oil production and are now exporting, the US still imports around 40% from foreign sources. These imports account for 20 percent of our trade deficit.
Even if we didn’t import one barrel of oil, we’d still be held hostage to the tyranny of the price, which to a large extent is set by OPEC. This manipulation has devastatingly negative consequences for our economy and prospects for economic growth. As long as Americans drive vehicles that are limited to one fuel (gasoline), we will never break the addiction to OPEC oil.
President Trump’s National Security Strategy published in December 2017 tells us that we must “embrace energy dominance” by “unleashing our abundant energy resources,” including natural gas. Specifically, it says “the United States will use our strategic advantage as a leading natural gas producer to transform transportation and manufacturing.”
The fracking revolution has structurally decoupled oil and natural gas prices, creating an enormous economic benefit in favor of natural gas. This benefit can be transferred to American consumers by converting natural gas into a liquid transportation fuel like ethanol. Such a conversion produces fuel that is cheaper than gasoline and has a well-established, if skeletal, distribution infrastructure. Of course, the vast majority of ethanol today comes from corn, an industry that also would benefit greatly from an increased use of ethanol.
Almost every car and pickup truck on the road today can run on 10-15% ethanol and more than 22 million vehicles can run on any mixture of gasoline and ethanol up to 85% ethanol (E85) according to the Fuel Freedom Foundation.
Interestingly, according to the Renewable Fuels Association, six of the top 10 states for ethanol usage are not in the Midwest. The leading state for E85 sales is Texas, where at local H-E-B stations you can buy E85 for at least 50 cents a gallon less than regular gasoline. Moreover, also according to the Fuel Freedom Foundation, the technology exists today to manufacture all-new vehicles to run on any mixture of gasoline and up to 85 percent ethanol for a nominal cost.
The president could direct the EPA, the Department of Energy, and the Department of Transportation to take measures to increase fuel choice for Americans by removing barriers to using ethanol from corn, natural gas, or other feedstocks. Unlocking America’s vast natural resources would create hundreds of thousands of new jobs, significantly increase economic growth, cut our trade deficit, leave more money in people’s pockets, and achieve genuine energy dominance.
Americans have waited 50 years for a president to take on entrenched interests that oppose breaking the addiction to oil. President Trump is that president. This issue will unite Americans. Pollster Frank Luntz found that fully 92% of the country (99% of Republicans, 87% of Democrats, and 90% of Independents) support a specific effort and priority to “make America energy dominant by using more American-made energy, including American natural gas and biofuels like ethanol, and purchasing less foreign oil.”
The actions required for the US to become energy independent do not require Congressional action. This issue, however, provides the opportunity for members of the House and Senate to demonstrate that they place their constituents’ welfare above positioning themselves for the next election. They can do so by avoiding politics as usual — the art of vitriolic disagreement instead of the search for compromise. Energy independence is something on which Chuck Schumer, Mitch McConnell, Nancy Pelosi, and Paul Ryan can and should agree.
Bernie Marcus is the chairman of the Marcus Foundation and founder of the Job Creators Network. This article was originally published by RealClear Politics.