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U.S. Vulnerability to an Oil Import Curtailment - September 1984

Office of Technology Assessment

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Table of Contents

I Introduction 3
II Summary 9
  Introduction 9
Major Findings 9
Specific Findings 17
  Replacing Oil Through Energy Technologies 17
Macroeconomic Impacts 23
Environmental Impacts 23
Longer Term Effects 24
Policy 25
  Policy Strategy 26
Advance Preparation for an Oil Supply Shortfall 29
Measuring the Rate of Oil Replacement 31
Selected Regional and International Considerations 33
 
  Table 1. Major Oil Replacement Options 11
Table 2. Estimated investment Costs for Major Oil Replacement Technologies 13
 
  Figure 1. Potential Replacement of Oil Through Fuel Switching and Increased Efficiency 10
Figure 2. Economic Comparison of two Oil replacement Scenarios 14
Figure 3. Potential Reductions in Oil Consumption 20
Figure 4. Potential Oil Replacement 21
Figure 5. GNP: Two Shortfall Projections 21
 
III U.S. Energy Consumption Patterns, 1952-82 39
  Energy Consumption and Intensity Averaged Over the Entire U.S. Economy 41
Energy Consumption by End-Use Sector 43
  All Fuels Products 43
Oil Consumption 43
Natural Gas 44
Petroleum Product Mix 45
  Motor Gasoline 45
Distillate Fuel Oil 45
Residual Fuel Oil 45
Ethane and Liquefied Gases 46
Jet Fuel 46
Other Petroleum Products 46
The Combination of Oil Product Mix and Four Demand Sectors 47
  Residential and Commercial Sectors 47
Electric Utilities 47
Transportation 47
Industrial 48
Industrial Sector Energy Intensity 48
Industrial Product Mix Shift 50
Economic Recession and Poductivity Decline 51
 
Table 3. EIA Petroleum Product Categories 45
Table 4. Refined Petroleum Products Supplied to End-Use Sectors, by Type, 1982 47
Table 5. Growth Rates for Alternative indices of Mining and Manufacturing Output 51
 
  Figure 6. Total Oil Consumption and Price per Barrel 39
Figure 7. Total Natural Gas Consumption and Average Price 40
Figure 8. Average Price of Electricity Sold by Electric Utilities, 1960-1982 40
Figure 9. Consumption of Energy by End-Use Sector 41
Figure 10. Energy Consumption-GNP Ratios, 1962-82 41
Figure 11. Energy Use and GNP Growth Rate Trends, 1952-82 42
Figure 12. Refined Petroleum Products Supplies to End-Use Sectors 44
Figure 13. Consumption of Natural Gas by End-Use Sector 44
Figure 14. Industrial Energy Intensity Using the FRB Outfit Index 49
Figure 15. Industrial Energy Intensity Using Census Data 50
Figure 16. Gross National Product Overtime 52
Figure 17. Total Investment and Expenditures for Durable Goods 52
 
IV Fuel Switching 57
  Introduction 57
Options Considered 58
Technologies 59
  Electric Heat Pumps 59
Conversion to Solid Fuels 60
Ethanol 62
Compressed Natural Gas in Motor Vehicles 64
Liquefied Petroleum Gas in Motor Vehicles 64
Mobile Gasifiers 66
  Fuel and Grain Supplies 67
    Coal 68
Wood and Other Solid Biomass 69
Natural Gas 70
Liquefied Petroleum Gas 71
Enhanced Oil Recovery 71
Grain 73
  Deployment of Fuel Switching Technologies 75
  Electric Utilities 78
Residential and Commercial Space Heat and Hot Water 83
Industrial Boilers 86
Mobile Engines 89
Summary 93
 
Environmental Impacts 93
 
Appendix A - Reasons for Excluding Various Oil Replacement Technologies From Detailed Consideration 94
  Fossil Synthetic Fuels 94
Active Solar Systems 95
Photovoltaics 95
Electricity from Wind 96
Solar Thermal Electric Generation 96
Electric Vehicles 96
Ethanol from Food Process Wastes 96
 
Appendix B - Addition Considerations Regarding Ethanol's Net Energy Balance 96
V Increased Efficiency 101
  Introduction 101
Buildings 102
  Heating Oil Conservation 103
Natural Gas Conservation 106
Transportation 107
Industry 110
  Technologies Available to Reduce Oil Dependence 111
Energy Conservation Potential of Industry 113
Summary 115
 
Table 17. Assume 1985 Oil Consumption in the Residential and Commercial Sectors, by Region 103
Table 18. Potential Oil Replacement by Energy Efficiency Invests in the Residential and Commercial Sectors 104
Table 19. Transportation Oil Use by Mode and Fuel Type, 1980 108
Table 20. Industrial Users of Residual Oil for Fuel, 1980 111
Table 21. Fuel Use Projections 114
 
Figure 35. Automobile Fuel Consumption Projections, 1985-90 109
Figure 36. Industrial Energy Demand, 1951-1981 110
Figure 37. Total Fuel Use Projection 115
Figure 38. Petroleum Fuel Use Projections 116
Figure 39. Natural Gas Use Projections 116
VI Fuel Use Changes and Longer Term Effects 119
  Fuel Use Changes
Alternative Scenarios 121
Longer Term Effects 122
 
Table 22. Changes in Fuel Consumption Through Fuel Switching and conservation 120
 
Figure 40. Potential Replacement of Oil Through Fuel Switching and Increased Efficiency 119
Figure 41. Potential Reductions in Oil Consumption 121
 
VII Economic Impacts 127
  Introduction 127
The INFORUM Macroeconomic Model of the U.S. Economy 127
  The Macroeconomics Without Energy Detail 128
The INFORUM Energy Skirt 132
 
A Modeling Strategy Based on the OTA Technology Data Base 135
  The Energy Sector Guidelines 135
Guidelines for the Rest of the Economy 139
Guidelines for Scenario Integration by Iteration on Fuel Prices 141
 
Economic Projections 143
  A Normal Economic Projection: The Reference Case 143
Two Macroeconomic Projections of Oil Import Shortfall Impacts 144
 
Table 23. Petroleum Products and End Uses Common to Many Industries 133
Table 24. Illustrative Energy Skirt Table for 1982: Flows in 1977 Dollars, Quantities and Btus 134
Table 25. Estimated Investment Costs for Major Oil Replacement Technologies 138
Table 26. Estimated Investment Costs for Selected Oil Replacement Technologies in Transportation 138
Table 27. Petroleum Uses Largely Excluded From Technological and Economic Analysis of Oil Replacement 139
Table 28. Petroleum Price Projections: Real Crude Price Per Barrel and Product Piece Indices 141
Table 29. Product Mix for Personal Consumption Expenditures After 5 Years 151
Table 30: Product Mix for All Economic Activity (GNP) 5 Years After Curtailment 152
 
Figure 42. Model of the U.S. Economy 129
Figure 43. 1980 Petroleum Consumption by Sector 133
Figure 44. Comparison of Shortfall Projections 145
Figure 45. Comparison of Shortfall Projections 145
Figure 46. GNP: Two Shortfall Projections 145
Figure 47. Unemployment: Two Shortfall Projections 147
Figure 48. Inflation: Two Shortfall Projections 148
Figure 49. Investment in Producer Durables 149
Figure 50. Personal Consumption Expenditures 150
  Index 157