Bodman Says US Must Diversify Energy

With global oil demand on the increase, the United States faces energy shortages and higher prices if it fails to look beyond its traditional Middle East suppliers, Energy Secretary Samuel Bodman said Wednesday.

"We need not only diversity of different types of energy, but we need diversity of the places from which you import in case there are problems of some kind," Bodman said.  Bodman spoke at a meeting of the National Petroleum Council, which is conducting a study on the future of global oil and natural-gas supplies.  Jerry Taylor, a senior fellow at the Cato Institute, disagreed with Bodman.  "The idea that we need to diversify to protect ourselves from embargoes or from disruptions abroad is a manifestation of a lack of understanding about oil markets," he said.  "Because transportation costs are so low, it really doesn't matter who is selling us oil. What matters is how much oil is on the world market.  "Oil embargoes are empty gestures that mean nothing," Taylor added. "The only thing producers can do to harm the United States economy from an oil standpoint is to cut production."

According to the Energy Department, about one-third of oil imported into the United States comes from Canada and Mexico. Other top sources of U.S. imports are Saudi Arabia, Venezuela, Nigeria, Iraq, Angola, Ecuador, Algeria and Kuwait. Those 10 countries accounted for 89% of U.S. imports.  About 15% of U.S. oil comes from the Persian Gulf region.

Fears have been raised that with 90% of the world's untapped conventional oil reserves controlled by governments, the United States would be powerless if a foreign nation raised prices.  "I'm not concerned about any particular nation," Bodman said. "I'm just concerned that our country seeks out supply from as many different substantial exporters as possible."