US Faces the Crude Facts On Foreign Oil Imports

Dependence on cheap imports hits domestic producers, alternative fuels

FEW Americans seem to remember the Arab oil embargo in the 1970s, which forced drivers into long gas lines and the economy into a tailspin.

Since then, the country's reliance on foreign oil imports has reached an all-time high and United States' supplies from the Middle East have soared. If the trends continue, analysts say, in 10 years, the US will look abroad for two-thirds of its energy needs.

Pollsters haven't been bothering to survey public opinion on energy security, confirming the lack of concern. ''It dropped off the screen,'' says Andrew Kohut, who runs the Princeton, N.J.-based Times-Mirror Center for the People and the Press. ''We measure things that are on the national agenda,'' he says, ''and we're just not thinking about energy these days.''

Boost US production

At a March 27 hearing, Senate Foreign Relations chairman Jesse Helms (R) of North Carolina, tried to sound the alarm bells as a warning to both American policymakers and consumers: Wean the US public from foreign oil dependence by boosting US domestic energy production. His hearing, Mr. Helms said, would be his most important one of the year.

He heard from Clinton officials and industry analysts, who acknowledged that the abundance of cheap imported oil certainly comes with benefits. For years it has been the single most important depressant on inflation. But its availability has made the extraction of domestic oil prohibitively expensive and has made interest in alternative fuels wane. The increasing appetite for imports is a hazard to US national security, they warned.

Putting the risk into perspective, Assistant Secretary of Defense for Economic Security Joshua Gotbaum referred to current developments in the Middle East. In just the past weeks, two of the region's toughest antagonists have reminded the oil-consuming world how disruptive they can be. Iran's anti-Western government is amassing troops along the Strait of Hormuz, the sea lane through which Gulf oil is transported.

And Iraq, which tried to take over Kuwait's oil fields several years ago, continues to rebuild its military arsenal. Baghdad recently stirred controversy by jailing two Americans who crossed the Kuwaiti border into Iraq. In his recent trip to the region, Defense Secretary William Perry warned of the threat to US national security.

Mr. Gotbaum stressed that an interruption in foreign-oil supplies would not compromise US military preparednesss in the event of war. But he said it would wreak havoc on the nation's economy, because there is minimal domestic capacity to draw on in an emergency.

As prices plummeted since 1985, the US-based oil-and-gas extraction industry contracted, and employment in that sector -- especially in Louisiana and Texas -- reached rock bottom.

The decrease in US oil output means domestic producers ''are closing down 17,000 wells a year,'' says Sen. Nancy Kassebaum (R) of Kansas. ''Once they're plugged, they're gone,'' says Ms. Kassebaum, who is pressing the White House to stimulate domestic production by offering tax breaks.

Other lawmakers accuse the Clinton administration of doing little to avert a possible crisis. A year ago, members of congress from oil- and gas-producing states met with Energy Department officials to recommend ways to jump-start their industries.

Long-term efforts for conservation and greater energy efficiency are laudable, they say, but a plan is needed to step up domestic production. Susan Tierney, the Energy Department's assistant secretary for policy, says her shop is producing a blueprint for beefing up US production. ''We're more likely to give regulatory relief than tax proposals,'' she said of the plan to be released next week.

T. Boone Pickens, president of MESA Inc., says he has a faster solution: concessions to natural gas producers. This, he says, is less costly ''than the imported oil we're importing and ... we have almost 100 years supply. It's cheap, abundant, and domestic.''

Government intervention

But some analysts balk at the prospect of government intervention. The growth in foreign oil dependence through the year 2000 is inevitable, says John Lichtblau, chairman of the Petroleum Industry Research Foundation. That time is necessary to allow for the development of the US natural gas industry, he says, which is already growing at 3 to 4 percent a year. Government mandates to force the use of natural gas vehicles would be an unnecessary cost, he says, especially given the flow of cheap oil from abroad.

Mr. Pickens contends that the US does not have the luxury to wait. ''It almost borders on insanity to believe that we are not going to confronted by a crisis in supply -- it's going to happen. It's the only way our enemy can get to us ... we can't win in a cutoff of the supply of oil if its done in a way that will really damage our economy.''

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