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The Hidden Cost of Our Oil Dependence

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By Bill Moore

When Milton Copulus speaks in Washington, D.C.'s corridors of power, people listen, the most recent example being his appearance before the influential Senate Foreign Relations Committee.

In his March 30, 2006 testimony, he presented an updated report of the National Defense Council Foundation's original 2003, in-depth analysis on total economic cost of the nation's growing dependence on imported oil. That original report involved the evaluation of "hundreds of thousands of documents" over more than an 18-month period, the findings of which were "rigorously peer reviewed" he told EV World in an exclusive interview.

"At that time, we determined that the total of these hidden costs, which include things like the cost of defending the flow of oil in the Persian Gulf, the loss of domestic jobs and investment, the uncertainties that enter the economy and the costs related with oil supply disruptions… We came to $304.9 billion annually, which equates at that time to adding $3.60 to the pump price of a gallon of gasoline.

"But in that year we were only spending about $99 billion on imported oil. Since that time, a lot's changed."

I'll say. As I write this, the futures price of a barrel of oil is within pennies of $75 and as the summer driving season nears, it appears headed north of that. (Just as I was finishing this article, the price hit $75).

When Copulos did his original analysis the refiner’s cost of a barrel of oil was just over $28 a barrel.

"We were paying $99 billion for imports. We were spending about $49.1 billion defending the Persian Gulf. Oil prices are, of course, much , much higher than they were."

Since that original 2003 study, Copulos and his associates have "revisited" their numbers.

"Now this year in 2006, we're going to spend about $320 billion to buy imported oil. That's 3.2 times what we were spending three years ago. We feel that the average refiner price will be about $60 a barrel, not $28 and some change. And in contrast to the $49 billion we were spending in the Persian Gulf to defend oil supplies, that figure is now $132.7 billion. And when you add everything together and take the economic consequences into account…that $304 billion in 2003 will increase in 2006 to $825.1 billion. That's almost twice as much as much as we're going to spend on national defense this year. It adds the equivalent of $8.35 to a gallon of gasoline when we look at the price that was posted yesterday (April 14, 2006), that means at the pump -- if you were paying the full cost -- it would be $11.06 per gallon, meaning that it would cost you about $220 to fill up a sedan and about $325 to fill up an SUV."

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