Treasury Secretary Henry Paulson: “We are too dependent on foreign sources of oil”

An excerpt from his speech yesterday at Columbia University:

“Another serious long-term structural challenge is energy security. Today this is top of mind for many Americans because they are paying about three dollars per gallon at the gas pump – a cost that generates real hardship for all those who are trying to make ends meet. These prices are largely attributable to a strong global economy that brings with it an increasing demand for oil, particularly in rapidly growing and developing emerging markets such as China and India.

“The fact that our economy has remained strong in the face of these high oil prices is a testament to its remarkable resilience. The global demand for oil is outstripping supply and we as a nation have a long-term structural problem: We consume much more oil than we produce; We are too dependent on foreign sources of oil; And too much of it comes from troubled parts of the world. And this will still be true if gas prices decline.

“The President and this Administration are focused on this problem, and have made important proposals and progress in a number of areas. But everyone I have talked with, from the President, to Sam Bodman, our Secretary of Energy, to Senators and Congressman on both sides of the aisle, agree that much more has to be done. It is a major long-term challenge and one we need to fix through a comprehensive approach. We need to do more on the supply side, and we need to do more to conserve energy. In addition, we need to do much more in terms of investing in new technologies and further developing alternative sources of energy, including nuclear power* and ethanol. In doing so, we need to encourage market-based solutions. Moreover, an energy policy that takes us toward greater energy security should also lead to cleaner air and cleaner water. ”

*We should point out:  unlike in the 1970s, today only 3% of U.S. electricity is generated from oil, so shifting more electricity generation to nuclear power (and solar, and wind, etc etc) may be useful for a variety of reasons, but has nothing to do with reducing oil dependence.

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