U.S. Foreign Policy Shaped by Energy Supply

WASHINGTON, DC, April 8, 2003 (ENS) - The U.S. government must ensure that the United States can pursue its foreign policy and national security interests unconstrained by energy concerns, a senior State Department official says.

Undersecretary of State Alan Larson said the Bush administration plans to achieve this objective by promoting energy supply diversification, coordinating internationally an effective response to oil supply disruptions and encouraging major oil producing countries to maintain responsible production policies.

Larson

Undersecretary of State Alan Larson (Photo courtesy U.S. State Department)
Testifying today before a Senate Foreign Relations subcommittee, Larson said that the U.S. economy must have access to energy "on terms and conditions that support economic growth and prosperity."

He told the Senate Foreign Relations Committee Subcommittee on International Economic Policy, Export and Trade Promotion that the Bush administration has signaled to major oil producing countries that it expects them to follow through on their offers to offset market disruptions. Consuming countries on their part stand ready to use strategic petroleum reserves to calm the market if necessary, he added.

Larson said that energy security cannot be equated with self-sufficiency, "as much as we would like that to be the case," because the United States and its allies' demand for imported oil is forecast to grow until at least 2020.

"So we must find more oil and gas supplies, and these supplies must be reliable and made available on terms that permit sustained economic growth," he said.

Larson reviewed concerns, expectations and U.S. policies related to major oil producing regions and countries. He said that the world needs a "highly flexible, resilient oil market that will allow for some regions to compensate for ebbs and flows in others."

Energy investments are costly, risky and require long-term commitments, he noted. Therefore energy security will be advanced by sustained improvements in the investment climates in Russia, the Caspian region, Africa, and in the Western Hemisphere, as well as by improved investment opportunities in the Gulf region and Venezuela, Larson said.

He said that despite frequently expressed concerns about "dependence" on the Middle East, Gulf producers will continue to play an "indispensable" role in the world oil market.

Larson cautioned that due to complex relationships between political, economic and security considerations "energy security will not be achieved by one dramatic breakthrough but rather by sustained, patient and determined efforts."

The United States is the world's second largest natural gas producer and its third largest oil producer. But imports supply roughly half of the oil needs of the United States, Larson said, and an even greater share of the needs of some of the U.S.'s most important allies and economic partners.

The United States is no longer self-sufficient in natural gas, Larson told the legislators. "We now import 15 percent of our natural gas, almost entirely from Canada, but in growing volumes from Trinidad and other LNG [liquid natural gas] suppliers."

Two-thirds of proven world oil reserves are in the Middle East. In contrast, the United States has two percent of proven world oil reserves.