1 The Cost of Energy Dependence Frank Clemente Ph.D. Senior Professor of Social Science & Energy Policy Penn State University

2 The Price of Energy Dependence ●Dependence means loss of control. In 2000, the EIA projected oil would be $25 per barrel in Actual price is over $130 ●Cost of imported oil- record trade deficits. Over a decade we will spend more than $5 trillion to buy foreign energy -- $50,000 for each American household. ●Disproportionate costs. Lower income groups spend as much as 15% of their income on energy. ●Competition for oil from China, India and other developing nations must now be factored into our energy planning. ●National security is at risk because we are vulnerable to sudden disruptions and extortion---Iran, Russia, Venezuela

3333 The Reality of Energy Supply in the U.S.-- Oil and NG Production have both Peaked

4 Our Growing Dependence on Foreign Crude Oil DependenceDependence

55 The Cost of Dependence— Transferring wealth of the American People Annual Cost of U.S. Petroleum Imports

6666 The U.S. Bets On A Brave New World Where new NG supply came from Where new supply is projected to come from Source: EIA “North America is setting itself to import LNG in large quantities” (IEA, 2007)

77 Emerging Competition for LNG :

88 What We Pay for LNG Now and Will Pay if NG Replaces Coal For perspective, if NG replaces coal generation the cost for LNG from would be over 3 trillion dollars with Projection based on NYMEX Future Strip to 2013