The United States is the largest oil consumer in the world. American consumption averages about 20 million barrels per day. Our rate of consumption is more than the total of the rates of the second, third, fourth, and fifth highest consuming nations put together.

Americans use the oil they buy to conduct the vital economic activity of production. Whether driving to work, trucking, shipping, flying, moving cargo by rail, running industrial equipment or producing electricity, oil accounts for about 40 percent of American energy. Without that energy, we would have at least 40 percent less production of goods and services, and a lot of us would lose our jobs.

With the rising cost of gasoline and frequent incidents of Middle Eastern terrorism in recent years, many Americans wonder if there may be an alternative energy source that could end our reliance on oil. Currently, however, there are no alternatives that can immediately supply energy as economically and conveniently as oil. If there were, they would already be at the corner filling station. A true alternative would cost less than oil and would not require prohibitively expensive equipment to use. Such an alternative will no doubt one day be developed, but it is not presently available. For now, oil is the best choice on the market for a large portion of our energy needs.

Of the oil we consume every day, about 28 percent of it is produced here in the United States. About 16 percent of it is produced in the Persian Gulf. It may be tempting to think that if we could find other sources to supply that 16 percent, then we could end our reliance on Middle Eastern oil. Unfortunately, insulating the oil supply of the United States from events in the Middle East is nearly impossible. This is because oil is traded on a global market. If oil production in any region of the world drops, then prices rise in all other oil markets because supply has gone down while demand has remained constant or risen. A buyer unable to bid on Persian Gulf oil very quickly bids for North Sea, Russian, or American oil instead.

The effect of a disruption to Middle Eastern oil flows would be significant. Oil is transported out of the Strait of Hormuz, at the southern end of the Persian Gulf, at a rate of almost 18 million barrels per day. While the US only purchases a little over 2 million barrels of that flow, the total Persian Gulf production is nearly equal to the rate of consumption for the entire United States. Since oil is purchased in a global market, a major interruption in gulf oil exports could mean a shortage in the world oil supply equal to the oil requirements of the United States for the duration of the shortage. Even if we no longer imported oil from the Persian Gulf at the time of the crisis, the world price of oil would rise drastically. Since the amount of production to be compensated for would be tremendous, it would take time for production in the rest of the world to make up the shortfall. The increased cost of oil would be passed on to the consumer in most goods and services, even ones that seem far removed from the petroleum business.

Until a convenient, plentiful source of energy is developed that is more economical than oil without government subsidization, the Persian Gulf oil supply will remain a vital US interest that we cannot afford to ignore.