The Impact of Efficiency

★ Since 1975 the U.S. has doubled the economic activity

wrung from each barrel of oil.

★ Overall U.S. energy savings, worth about $365 billion in 2000 alone,
are effectively the nation’s biggest and fastest-growing
major energy source — two-thirds bigger than total oil use, and
U.S. Energy Security
equivalent to 3 times oil imports or 12 times Gulf imports.

★ During 1977–1985, GDP rose 27%, oil use fell 17%, net oil imports fell 42%,
and imports from the Persian Gulf fell 87%. OPEC lost half its market, destroying
its pricing power for a decade. If we’d repeated that 5.2% annual gain
in oil productivity at the 2001 Presidential Inauguration, Persian Gulf
facts
imports would have disappeared by May of 2003.
(for a typical year, 2000)
★ The key to the huge 1977–85 oil saving was Detroit’s 7.6-mile-per gallon
improvement in new cars and light trucks, but in the 1990s light-vehicle
efficiency stagnated. A further improvement of 3.25 miles per
gallon would displace all Persian Gulf imports. Two decades
ago we were easily able to make that kind of gas mileage improvement, even
as we improved safety, increased power, and reduced emissions.

★ If 27% of our nation’s cars were hybrid-electric models,

all Persian Gulf imports would cease. The National Academy of
Sciences found in 2001 that our current 20.4-mpg fleet efficiency could be dou-
bled with the adoption of safe, cost-effective, but efficient cars and light trucks.

★ Even at $1.25 a gallon, the lifetime fuel savings associated with trading
a 23 mile-per-gallon 1990 car for a new $21,000, 48-mpg, 5-seat compact hybrid
car are equal to a lump-sum savings of $4,900 today. That $4,900 is equal to four
times the trade-in value of the older car; by scrapping it we would gain cleaner
A MORY B. L OVINS , CEO, R OCKY M OUNTAIN I NSTITUTE
air, a more stable climate, energy security, a reduced trade deficit, a stronger
2 J UNE 2003
economy, and a reduced need for military expenditures in the Persian Gulf. S UPPORTED B Y T HE O VERBROOK F OUNDATION , T HE J.M. K APLAN F UND ,
AND T HE C OMPTON F OUNDATION

For more information contact:

Rocky Mountain Institute • (970) 927-3128 • www.rmi.org
 ★ In peacetime, U.S. Energy Security
★ Half of the oil used in the United States is imported.
the cost of maintaining
One-fourth of oil usage comes from OPEC countries, one-seventh from
Arab OPEC countries, and one-eighth from Persian Gulf countries.
military forces earmarked facts
(for a typical year, 2000)
for Persian Gulf intervention
costs approximately $60 billion a year —
★ 15% of our net oil imports come from Saudi Arabia.
or $1.58 a gallon —
Of that, two-thirds rely on a single processing plant and two terminals. Each is
paid through our taxes rather than at the pump.
vulnerable to sabotage or attack that would have long-lasting consequences.

★ If forces with a Persian Gulf primary mission were motivated entirely by our
★ OPEC’s cartel power to keep oil prices above competitive levels is estimated to
desire to protect access to Persian Gulf oil, the true cost of Persian Gulf oil
have cost the U.S. economy somewhere between $4 trillion and $14 trillion over
would approach $100 per barrel.
the past 30 years. That’s roughly a year’s GDP.

★ Even in peacetime, the Pentagon is the world’s biggest

★ Net oil imports cost the U.S. $109 billion in 2000.
buyer of refined oil products — enough to drive each U.S. car
In the 25 years from 1975 to 2000, the total was two trillion dollars.
coast-to-coast every 4 years. Fighting a Gulf war can use as much oil as
we import from Kuwait or Iraq. For $7 billion—the amount of money spent
★ The United States has 4.6% of the world’s population and produces
by the United States on the 1991 Gulf War — we could have created energy
21% of Gross World Product. But it uses 26% of the world’s oil,
efficiencies that would have eliminated our need for Persian Gulf oil.
produces 9%, and owns only 2–3%.
We can’t drill our way out of this one.
★ Cost-effective windpower potential in the Dakotas
could make enough hydrogen to fuel (if efficiently used)
★ Americans pay as much for transportation fuels as for
all U.S. highway vehicles.
national defense.

★ U.S. light vehicles (cars and light trucks) use 70% of light vehicles (70%)
cars and light trucks
oil imports, or 2.9 times Persian Gulf imports, or nearly as much as Saudi
Arabia produces.

★ Model Year 2002 cars and light trucks hit a 22-year efficiency low. U.S. imported oil use
Yet if they’d stayed the same in weight and peppiness as in 1981, they’d be 33%
more efficient by now, displacing Persian Gulf oil 2.5 times over.
other uses (30%)
★ If the hydrogen now used to make gasoline and other fuels in U.S. refineries
instead fueled superefficient fuel-cell SUVs directly, they’d save a quarter of
U.S. gasoline—twice as much as Persian Gulf oil supplies.
Source: EIA,
Annual Energy Review 2001
(November 2002)
 ★ In peacetime, U.S. Energy Security
★ Half of the oil used in the United States is imported.
the cost of maintaining
One-fourth of oil usage comes from OPEC countries, one-seventh from
Arab OPEC countries, and one-eighth from Persian Gulf countries.
military forces earmarked facts
(for a typical year, 2000)
for Persian Gulf intervention
costs approximately $60 billion a year —
★ 15% of our net oil imports come from Saudi Arabia.
or $1.58 a gallon —
Of that, two-thirds rely on a single processing plant and two terminals. Each is
paid through our taxes rather than at the pump.
vulnerable to sabotage or attack that would have long-lasting consequences.

★ If forces with a Persian Gulf primary mission were motivated entirely by our
★ OPEC’s cartel power to keep oil prices above competitive levels is estimated to
desire to protect access to Persian Gulf oil, the true cost of Persian Gulf oil
have cost the U.S. economy somewhere between $4 trillion and $14 trillion over
would approach $100 per barrel.
the past 30 years. That’s roughly a year’s GDP.

★ Even in peacetime, the Pentagon is the world’s biggest

★ Net oil imports cost the U.S. $109 billion in 2000.
buyer of refined oil products — enough to drive each U.S. car
In the 25 years from 1975 to 2000, the total was two trillion dollars.
coast-to-coast every 4 years. Fighting a Gulf war can use as much oil as
we import from Kuwait or Iraq. For $7 billion—the amount of money spent
★ The United States has 4.6% of the world’s population and produces
by the United States on the 1991 Gulf War — we could have created energy
21% of Gross World Product. But it uses 26% of the world’s oil,
efficiencies that would have eliminated our need for Persian Gulf oil.
produces 9%, and owns only 2–3%.
We can’t drill our way out of this one.
★ Cost-effective windpower potential in the Dakotas
could make enough hydrogen to fuel (if efficiently used)
★ Americans pay as much for transportation fuels as for
all U.S. highway vehicles.
national defense.

★ U.S. light vehicles (cars and light trucks) use 70% of light vehicles (70%)
cars and light trucks
oil imports, or 2.9 times Persian Gulf imports, or nearly as much as Saudi
Arabia produces.

★ Model Year 2002 cars and light trucks hit a 22-year efficiency low. U.S. imported oil use
Yet if they’d stayed the same in weight and peppiness as in 1981, they’d be 33%
more efficient by now, displacing Persian Gulf oil 2.5 times over.
other uses (30%)
★ If the hydrogen now used to make gasoline and other fuels in U.S. refineries
instead fueled superefficient fuel-cell SUVs directly, they’d save a quarter of
U.S. gasoline—twice as much as Persian Gulf oil supplies.
Source: EIA,
Annual Energy Review 2001
(November 2002)
 The Impact of Efficiency

★ Since 1975 the U.S. has doubled the economic activity

wrung from each barrel of oil.

★ Overall U.S. energy savings, worth about $365 billion in 2000 alone,
are effectively the nation’s biggest and fastest-growing
major energy source — two-thirds bigger than total oil use, and
U.S. Energy Security
equivalent to 3 times oil imports or 12 times Gulf imports.

★ During 1977–1985, GDP rose 27%, oil use fell 17%, net oil imports fell 42%,
and imports from the Persian Gulf fell 87%. OPEC lost half its market, destroying
its pricing power for a decade. If we’d repeated that 5.2% annual gain
in oil productivity at the 2001 Presidential Inauguration, Persian Gulf
facts
imports would have disappeared by May of 2003.
(for a typical year, 2000)
★ The key to the huge 1977–85 oil saving was Detroit’s 7.6-mile-per gallon
improvement in new cars and light trucks, but in the 1990s light-vehicle
efficiency stagnated. A further improvement of 3.25 miles per
gallon would displace all Persian Gulf imports. Two decades
ago we were easily able to make that kind of gas mileage improvement, even
as we improved safety, increased power, and reduced emissions.

★ If 27% of our nation’s cars were hybrid-electric models,

all Persian Gulf imports would cease. The National Academy of
Sciences found in 2001 that our current 20.4-mpg fleet efficiency could be dou-
bled with the adoption of safe, cost-effective, but efficient cars and light trucks.

★ Even at $1.25 a gallon, the lifetime fuel savings associated with trading
a 23 mile-per-gallon 1990 car for a new $21,000, 48-mpg, 5-seat compact hybrid
car are equal to a lump-sum savings of $4,900 today. That $4,900 is equal to four
times the trade-in value of the older car; by scrapping it we would gain cleaner
A MORY B. L OVINS , CEO, R OCKY M OUNTAIN I NSTITUTE
air, a more stable climate, energy security, a reduced trade deficit, a stronger
2 J UNE 2003
economy, and a reduced need for military expenditures in the Persian Gulf. S UPPORTED B Y T HE O VERBROOK F OUNDATION , T HE J.M. K APLAN F UND ,
AND T HE C OMPTON F OUNDATION

For more information contact:

Rocky Mountain Institute • (970) 927-3128 • www.rmi.org