Gen. Charles F. “Chuck” Wald discusses how to resolve our energy and national security risks.

Last month, the Military Advisory Board at the Center for Naval Analysis (CNA) which I was honored to lead, released a report titled “Powering America’s Defense: Energy and the Risks to National Security.” This report, the result of months of study combined with the collected experience of the dozen retired general officers who serve on the board, concluded that “Our dependence on foreign oil reduces our international leverage, places our troops in dangerous global regions, funds nations and individuals who wish us harm, and weakens our economy.”
Our nation’s energy security is an issue about which I have long been concerned. Since 2006, I have served as a member of the Energy Security Leadership Council, a group of business leaders and retired senior military officers who have come together to deliver an urgent call to action: The nation’s energy security is at risk, and leadership, ingenuity, and commitment are required to protect current and future generations. I continue to pursue this issue for a single reason: Based on my career and professional experience, I can think of no more pressing threat, aside from global terrorism, than America’s economic and national security dependence on an unpredictable, uncontrollable global petroleum market.

In 2006, I retired from the United States Air Force after 35 years of service. In my final assignment, I served as the Deputy Commander of United States European Command (EUCOM). During my tenure at EUCOM, I saw firsthand the dangers posed by our nation’s dependence on oil. And those dangers have only become more acute in the time since.

The U.S. now consumes nearly 20 million barrels of petroleum a day. About 11 million barrels – or 60 percent of the total – are imported. In 2008, we sent $386 billion overseas to pay for oil. Our oil and refined product, in fact, accounted for 57 percent of the entire U.S. trade deficit. This is an unprecedented and unsustainable transfer of wealth to other nations.

Our transportation system accounts for 70 percent of the petroleum we consume, and 97 percent of all fuel used for transport is derived from oil. In other words, we have built a transportation system that is nearly 100 percent reliant on a fuel that we are forced to import and whose highly volatile price is subject to geopolitical events far beyond our control.

With 90 percent of global oil and gas reserves held by state-run oil companies, the marketplace alone will not act preemptively to mitigate the enormous damage that would be inflicted by a serious and sudden increase in the price of oil. What is required is a more fundamental, long-term change in the way we use oil to drive our economy.

The lynchpin of any legislation or policy that is serious about confronting oil dependence must be the transformation of a transportation system that today is nearly 100 percent dependent on petroleum. A solution can be found in something that nearly every single one of us uses every day. The lithium ion batteries that power our cell phones and laptop computers can one day form the nucleus of an electrified transportation sector that is powered by a wide variety of domestic sources: natural gas, nuclear, coal, hydroelectric, wind, solar, and geothermal. No one fuel source – or producer – would be able to hold our transportation system and our economy hostage the way a single nation can disrupt the flow of petroleum today.

And if our cars are to run on electricity, we must guarantee the source of that energy is readily available. We must improve the planning, siting, and cost-allocation process for a national Electrical Power Grid that has added only 14 interstate transmission lines between 2000 and 2007 that are subject to FERC’s jurisdiction. We must implement time-of-day pricing and build a smart grid. We must encourage companies to build those electric cars and consumers to buy them.

Each of these elements – multiple sources for electric power generation, a robust electric grid, and highly efficient electric cars – contribute to make up a highly-integrated system, in which every part depends on the other. We would see few results if we separately improved transmission in the Northeast, created a smart grid in the Northwest, and introduced more electric cars in the deep South. Indeed, we must develop all of these elements simultaneously (even if it is in a limited geographic area), creating electric transportation ‘ecosystems’ where the concept can take root and grow.

Finally, it would be impossible to pursue those goals, and irresponsible to try, without safeguarding our economy and our nation in the short and medium term. We will still be using oil and other liquid fuels for many years even as we pursue this energy transformation. Increasing the domestic production of oil and natural gas, as well as advanced biofuels, is among the most effective near-term steps for improving American energy security.

Some may be surprised to hear a former general advocating for electric cars and advanced biofuels, but they shouldn’t be. In the military, we learn that force protection isn’t just about protecting weak spots; it’s about reducing vulnerabilities before getting into harm’s way. That’s why reducing America’s oil dependence is so important. If we can lessen the oil intensity of our economy, making each dollar of GDP less dependent on petroleum, we would be less vulnerable if – and likely when – our enemies manage to successfully attack elements of the global oil infrastructure. The best way to reduce oil intensity is to bring to bear a diversity of fuels in the transportation sector, and this is best achieved by the electrification of transportation system.

Oil “dependence” is a very real and imminent threat to our National Security. But it is a threat we can confront. It will take a major effort, and most of all, it will take leadership on the part of industry, policymakers, and the American people. We can no longer afford to wait.

General Wald is a director and senior advisor to the Aerospace & Defense Industry practice for Deloitte LLP.

As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.


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