AN ALTERNATIVE TO FOREIGN OIL
An Issue Paper Presented to
Professor Sheila Christensen
Professor of Marketing
Utah Valley University
For Management 2200
By Greg Gossard
July 30, 2012
Over the past few decades, in the United States, oil is the primary fuel consumed by most vehicles on our roads and in our air space today. It is estimated that two-thirds of the oil used is due to the transportation sector. This report will examine the pros and cons of the need for alternate solutions to the ever increasing reliance the United States has on foreign oil. There are practical alternatives and solutions that the United States could implement in the short run, and ...view middle of the document...
The following questions will be answered as the topic is presented:
1. How does foreign oil affect businesses and transportation?
2. What are the different forms of alternative fuels and are they available to consumers?
3. Will the availability of alternative vehicles decrease the need of foreign oil?
This report was authorized by Ms. Sheila Christensen by written consent by marking her initials on the issue-paper proposal. This proposal is included in the Appendix.
An Alternative To Foreign Oil
In the United States, oil is the primary fuel consumed by most vehicles on the roads and in the air space today. It is estimated that two-thirds of the oil used is due to the transportation sector. The proponents of U.S. energy independence must take a stronger stance on an increase in domestic oil production immediately. While this could make a difference in the short run, the U. S. must take a stronger stance by shifting transportation to a combined use of oil (petroleum), alternative fuels, and plug-in hybrid’s, this in turn will free the U. S. from dependence on foreign oil.
How Foreign Oil Affects The U.S.
The idea of drilling for oil here within the borders of the U.S. could allow the national economy the opportunity to become healthy once again, but only for a limited time. One of the problems with this solution is that it takes the focus off the real cause of our oil shortage, which is the excessive consumption of oil. Wouldn’t it be far better if the U.S. could keep the hundreds of billions of dollars that is currently spending on foreign oil every year, instead of shipping those hard-earned dollars overseas? The high price of oil is a burden for all citizens alike, but price fluctuations are usually outside of normal control. Eventually, prices may return to lower levels, but history shows they will inevitably rise again. Oil prices are a main driver of gasoline prices, so let’s start with how much Americans pay at the pump. It would be difficult for many consumers to suddenly change how much gasoline they purchase when gas prices go up; in economics we call this inelasticity. Most people still have to drive to work, go to the grocery store, and drive their children around town to various activities. When the price of gasoline increases a dollar per gallon within a year (a 37 percent rise), Americans reduced the gallons of gasoline they purchased by just 7 percent, and at a time when the economy was slowing, so demand for gas was likely falling as well.( According to esa.doc.gov, Reasons to Break Americas Addiction to Foreign Oil.) Figure 1 show’s how much money per household is spent on gasoline and shows the change of gas prices and their overall effect. An increase in gas prices decreases what would be on hand every month to save or spend on other things. This allows consumers to see how direct costs of higher gas prices affect their savings, but there are indirect...