In the 1970s, the nation endured a series of energy crises. The 1973 oil embargo severely disrupted petroleum supplies and substantially raised the price of all fuels. A second oil crisis in 1979 led to further price hikes and sporadic fuel supply shortages. The electrical generation sector reduced oil use and diversified and expanded its use of domestic energy resources. The utility industry successfully weaned itself from its thirst for oil, reducing the fraction of generation fueled by oil from 17% in 1973 to 3% today.¹⁷

Indisputably, adequate reserves of coal exist in the United States to support electrical generation markets; the constraint on coal use always has been its environmental effects, not resource availability. Natural gas supply has performed a dramatic about-face since the shortages of 1979. It now appears that supplies are adequate to meet projected electric generation markets for at least several decades.¹⁸ Combined cycle power generation using natural gas has emerged as a very clean, highly efficient, and low-cost technology. It is currently the least expensive provider of energy for most new capacity additions.

By contrast, the transportation sector remains almost entirely dependent on oil, and the United States' petroleum vulnerability has worsened. Domestic oil production has dropped 24% since 1970 due to depleting low-cost reserves; total oil use, propelled mainly by increased use in transportation, has risen 20%. Imports, which accounted for just 21% of total U.S. oil consumption in 1970, now approach 50%.¹⁹ The bill for imported oil now exceeds $55 billion per year. The United States spends an additional $50 billion annually to maintain a military presence in the Middle East partly to secure the continued flow of oil.

Global oil use is growing. Even assuming a modest 2% annual growth for global oil consumption, half the actual growth rate experienced during the 20th century, the world will consume more oil during the next twenty years than it has consumed throughout history. Moreover, should countries with minimal automotive infrastructure expand their use of gasoline-burning automobiles, international competition for oil will become intense. In China, for example, there is one car for every 652 people; in the United States, there is one car for every 1.5 people. Viewed another way, the United States has 19 million more vehicles than registered drivers. If China or other developing nations seriously enter the competition for oil, global oil demand would soon far exceed production capacity.²⁰

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