There has never been a more global, more integrated, more transparent market than the modern crude oil and oil products market. And yet, the calls for America to be “energy independent” continue to be heard from both the Right and the Left.

The most persistent of the advocates for “energy independence” are the neoconservatives affiliated with Set America Free, a Washington-based group that has been touting the mirage of independence since 2004. And the highest-profile member of that group is former CIA director James Woolsey. Woolsey and his allies at Set America Free have written several articles, and have even recently published a book, claiming that the US should take the lead by, as they put it, “turning oil into salt.” Their claim: oil’s importance as a strategic commodity will end if only the US would get more aggressive in its use of plug-in hybrid-electric vehicles, as well as the use of more “methanol, butanol, and other alternative fuels produced from grasses and even waste.”

While Woolsey and his allies are focusing on turning petroleum into various condiments, a look back at the federal efforts to create alternatives to petroleum shows an unbroken record of failure, i.e., the Synthetic Fuels Corporation and the corn ethanol scam.

Of course, the neoconservatives at Set America Free seldom let the facts get in the way of their demagoguery. Nor have they bothered to pick up a dictionary to examine the word “fungible.” Were they to do so, they might begin to understand the global nature of the oil industry. Alas, the neoconservatives aren’t alone in this regard. Most of the energy talking-heads on TV and elsewhere (T. Boone Pickens, Thomas Friedman, etc.) only talk about US oil imports. Few bother to look at the amount of oil leaving US ports. And fewer still bother to look at just how many trading partners the US has when it comes to oil and oil products.

Here are the facts: In 2007, when you count crude oil and all other oil products, the US imported oil from 90 different countries. Thus, the US maintains oil-based trade with nearly half of the countries on the planet. And while the neoconservatives love to talk about the dangers of the petrostates and repressive regimes, America continues to have oil-related trade with Syria, Algeria, Oman, Belarus, and Yemen – none of which are exactly bastions of Jeffersonian democracy.

Furthermore, in 2007, the US exported oil and oil products to customers in 73 countries. Indeed, over the past few years the US has become one of the world’s biggest exporters of refined products. In 1998, the US was exporting about 945,000 barrels of oil and refined oil products per day. By 2008, the US was exporting nearly twice that amount, some 1.8 million barrels per day. And through the first six months of 2009, those exports have continued to rise, with daily exports averaging 1.9 million barrels per day. At that level, US oil exports are on par with countries like Angola and Venezuela.

Of course, the vast majority of those exports are refined products, not crude. But why has the US become a major player in the international oil market for refined products? The answer: US refineries are among the best in the world. And those refineries can produce the types of fuels the global market demands. One of the largest elements of US oil exports involves distillate fuel oil, much of which is going to customers in Europe and South America. Buyers in those regions are eager to purchase low-sulfur diesel fuel. Europe has a shortage of diesel refining capacity and given that US refiners can supply the needed product, European buyers are relying on the US to make up for their shortfall.

While America’s role as an oil exporter is partly a function of its position as the world’s biggest oil importer, it’s also true that the US refining sector is bolstering its role as a global player in manufactured goods. That can be seen by looking at crude oil import levels. In 1998, US crude oil and petroleum product imports averaged 10.7 million barrels per day. By 2008, that number had increased to 12.9 million barrels per day. Thus, while total US imports increased by 2.2 million barrels per day, or about 20%, over that time period, the amount of US exports of refined products doubled, to about 1.8 million barrels per day.

The fundamental point here is obvious: the US cannot secede from the global oil market. It has always been a major player in global oil trade and it will continue being a major player for decades to come. So much for “energy independence.”

Original file here: http://www.energytribune.com/articles.cfm?aid=2367