slowed down into a recession. When the global economy recovers in the long term and as the economies of developing countries grow with their populations, the demand for oil will grow again.

The majority of current demand for liquid transportation fuel is met by the Organization of the Petroleum Exporting Countries (OPEC) crude and non-OPEC crude and condensate (ExxonMobil, 2007). Other energy sources that contribute a small fraction of transportation fuels include oil sands, natural gas, and biofuels. Whether and when global petroleum production will reach its peak (beyond which it will decline) and be unable to meet global crude-oil demand is uncertain. By the end of 2006, the proven worldwide reserves of oil—that is, resources that are discovered, recoverable with current technology, commercially feasible, and remaining in the ground—was reported to be 1,372 billion barrels (BP, 2007).

The primary source of energy for transportation in the United States and elsewhere is oil. Between 2007 and 2008, when this report was written, the crude-oil price fluctuated from about $70/bbl when the committee convened its first meeting in November 2007 to a record high of $147/bbl in July 2008 and then dropped to about $35/bbl at the end of 2008. Volatile oil prices, oil importation in large quantities and its associated tremendous shift of U.S. wealth overseas, a tight worldwide supply-demand balance, and fears that oil production would peak in the next 10–20 years all motivate a search for domestic sources of alternative fuels. The United States uses 25 percent of global oil production for 4.5 percent (U.S. Census Bureau, 2008) of the global population. The United States imports about 56 percent of its oil and in 2008 spent $10–38 billion each month (depending on oil price and demand) overseas for oil.

U.S. oil demand stems from four main sectors: transportation, industry, electricity generation, and residential and commercial use. Transportation is by far the largest consumer, at nearly 70 percent (EIA, 2009) (Table 1.1). Domestic demand

TABLE 1.1 Consumption of Liquid Fuel in United States in 2008, by Sector


Liquid Fuel Consumption (millions of barrels per day)

Residential and commercial use






Electricity generation




Source: EIA, 2009.

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