What’s American’s energy IQ?
Published Sunday, August 12, 2007
by John Johnston
http://www.bocaratonnews.com/index.php?src=news&refno=20710&category=Local%20N
ews

What’s America’s energy IQ?

“Not as high as it should be,” Dr. John Felmy told the Boca Raton
News. “In fact, we were very surprised at how much confusion and
misinformation was revealed by the survey.”

There’s been a survey? What survey?

Dr. Felmy smiles – the smile of a man who’s warming to his subject.

The survey, conducted for the American Petroleum Institute (API) by
well-known public opinion surveyors, Harris Interactive, shows that
“most U.S. adults have a fundamental lack of knowledge regarding
energy demand and supplies and the role of America's oil and natural
gas companies,” said Dr. Felmy, API’s chief economist.

In fact, when presented with 20 multiple-choice questions, on average
more than 25 percent of respondents said they were "not sure," and in
many cases people “chose the response that is farthest from the
correct answer,” said Felmy.

"Americans are concerned about energy issues, but they know very
little about where energy comes from, what it takes to get it to
market and the challenges the energy industry faces to meet growing
demand," said Jim Hoskins, Ph.D., senior vice president for Harris
Interactive, which conducted the survey. "This survey shows that when
it comes to important energy questions, the public is not just
uninformed, they are misinformed.”

"The results of this survey clearly show that we need to do a better
job of communicating with people about the realities of global energy
markets and our industry," said Red Cavaney, API’s president and CEO.
”Our companies are committed to sharing our perspectives on energy
issues with policymakers and the public, in the hope that by
increasing understanding we all can work together to enact policies
that ensure a reliable, sustainable energy future now and for
generations to come.”

Survey Results

API commissioned the online research by Harris Interactive of 1,333
Americans between May 29 and June 4, 2007. Among the survey’s key
findings:

• Those surveyed greatly overestimate the amount of oil the United
States imports from the Middle East. When asked which country was the
largest U.S. supplier of oil, almost 60 percent chose Saudi Arabia,
which is actually the fifth largest supplier, after Canada, Mexico,
Nigeria and Venezuela. Only one in 10 people correctly identified
Canada as the largest supplier to the United States.

• Only eight percent correctly noted that less than 15 percent of the
oil the United States consumers comes from Persian Gulf countries;
just over one-quarter of people pegged the figure between 46 and 60
percent – three to four times higher than the actual figure.

• Americans seriously overestimate the size of U.S. oil and natural
gas companies relative to competing companies that are owned by
foreign governments. When asked "What percentage of the world’s 10
biggest oil and natural gas companies are owned and operated by
foreign governments?,” only two percent of respondents knew that all
of the top 10 companies fall into that category.

• Similarly, only eight percent knew that ExxonMobil, the largest U.S.
oil and natural gas company, was not among the top 10 largest oil
reserve holders. More than one in three people (36 percent) thought
ExxonMobil was among the top three largest companies.

• The public underestimates the continued importance of fossil fuels
in meeting global energy demand in the next 25 years, and
overestimates the impact renewable sources will have in meeting that
demand. While the International Energy Agency projects that 81 percent
of global energy demand in 2030 will be met by fossil fuels like oil,
natural gas and coal, only 14 percent of respondents chose this
answer. The majority thought it would be 61 percent or less. While the
U.S. Energy Information Administration projects that less than 10
percent of U.S. energy use will be supplied by renewable sources in
2030, only five percent of respondents chose this answer. More than
one in three people (34 percent) thought renewable sources would
account for 20 percent or more.

• People overestimate the profits of US oil and natural gas companies
and have very little understanding of the significant investments
these companies are making in emerging energy technologies. On
profits, 42 percent of respondents guessed that the industry earned
between 16 and 20 cents on every dollar of gasoline sales in 2006. In
fact, the industry earned 9.5 cents – a choice (6 to 10 cents)
selected by only 14 percent of respondents.

• On investments, only seven percent correctly estimated that U.S. oil
and natural gas companies invested almost $100 billion in emerging
energy technologies in North America alone between 2000 and 2005. More
than one third estimated less than $25 billion, the lowest possible
choice.

In short, says Dr. Felmy, “America’s energy IQ is very low.”

Crude Prices

OK – so Americans have a lot to learn (accept?) about the energy
industry – but that still doesn’t answer the question uppermost on the
minds of most Americans. Why are we paying pork chop prices for a
gallon of gasoline?

With pump prices still rising, spot outages of gasoline cropping up in
some East Coast markets, and wild price fluctuations (mostly upward),
Americans are angry and want some answers.

Legislators at all levels have been trying to answer that anger with
plans for alternative fuels, and a variety of stop-gap measures.

But is it all for naught? Was President Bush in fact correct when he
said, and on more than one occasion, that there’s about a 50-year oil
energy history left?

Felmy questions whether Bush uttered, (or perhaps meant) those words.
Later, he suggests that what Bush might have been saying was that –
and factoring in both climate changes and market forces – the use of
oil as our primary fuel might have to change, rather than oil
availability will dry up.

And the biggest single factor driving up the price of a gallon of gas,
according to Felmy, is the sharp increase in oil prices. "The reasons
for high gasoline prices are very clear: the high cost of crude and
the high cost of manufacturing gasoline.”

He added there is little the White House or Congress can do to control
the price of crude oil.

At recent highs of $75 a barrel, “the cost of crude oil has jumped by
a third since November as demand for oil continues to grow faster than
global production capacity.” In turn, jittery oil buyers are paying
these high prices because they're worried about possible supply
bottlenecks from multiple hot spots like Iraq, Nigeria and Iran.

Other Factors

Also affecting gas prices is that America uses 14 different types of
gasoline across the nation – all based on environmental requirements,
“and each one adds to the cost, with the highest being California.”

Conservation? What about conservation?

“Mass transit works in certain areas, but only in certain areas,”
Felmy said, and then added emphatically. “And it doesn’t work with
daycare – it just doesn’t work.”

“Europe is instructive in one way,” he continued, as it’s moving more
and more to diesels.” He speculated that “if Detroit can make a car
appealing to consumers, and that uses diesel, there’s be a dramatic
improvement” in the cost of fuel.

The bottom line for Felmy and the API is that our energy future must
be found up in oil, together with a mixture of alternative energy
supplies, including nuclear, and that currently protected oil sources
need to be reexamined. API, for example, “strongly supports” drilling
in the National Wildlife Refuge – not in the Brooks Range, but in
other areas.”

And off-shore (oil) drilling shouldn’t be off the table, he argued.
“It could add a substantial amount of production.”

However, he added, “We need a thorough inventory to know if a decision
should be made. And what’s its environmental performance? We need a
review of the environmental performance of off-shore drilling.”

Aliens?

Should the oil industry be more heavily taxed?

Felmy smiles.

“It is though the folks arguing to take money from the industry think
our industry is owned by space aliens. In fact, retirees and other
investors own the oil companies. About 41 percent of the equity of
the oil firms is owned by retirement plans alone and millions of other
folks own shares in their savings. For example in Florida, there are
763,000 members of state and local pension funds that are invested in
oil companies.

“So, when a politician says to take money from the oil industry – grab
your wallet.”

PS: Felmy also provided the recent average costs for a gallon of
gasoline in Europe, as follows: As of July 30, 2007, the average cost
per gallon in Belgium, $6.84; France, $6.67; Germany, $6.95; Italy,
$6.99; Netherlands, 7.58; United Kingdom, $7.38 – and the United
States, $3.10.