called "paper barrels" traded vastly outnumbering the volume of actual physical oil traded worldwide each day. A popular misconception these days is that a country can decouple its domestic oil prices from international prices by lowering imports. The reality is that oil import levels are not a good measure of economic security or vulnerability to price increases. Security and vulnerability do not rise and fall with import levels. Even if a country imports no oil at all, its domestic oil prices will move directionally with international prices. It follows then, that there is no truth, whatsoever, to the popular belief that the dependence on "foreign" crude oil leads to higher prices for gasoline at the pump. The prices of both "domestic" and "foreign" crudes are set globally through the interaction of supply and demand. Any differences in the prices between "domestic" and "foreign" crudes are due to variations in quality, taxes and location. Yes, crude oil prices are an important component in the cost of gasoline. The relative level of a country's dependence on "foreign" oil has no meaningful effect on the prices consumers pay for gasoline at the pump. For example, consumers in Japan, which imports nearly 100% of its needs, are currently paying about $4.33/gallon for gasoline. By contrast, in the U.K., which is a net exporter of oil, consumers are paying an average of $5.85/gallon. Now I want to address what I believe needs to be done to enhance our future energy security. Let me begin by saying that I take strong exception to the notion that our current difficulties are a harbinger of things to come. The current problems that are resulting in high prices are not insurmountable. They do not warrant the rejection of oil. We should not lose sight of the fact that oil is merely a means to an end -- it is, simply put, an efficient energy carrier. Oil provides value and has brought prosperity to many. It can facilitate the process of bringing prosperity to even more of the world's population. We use oil because it provides the lifestyle we desire. It remains the most efficient and cost-effective fuel for transportation and will until technology dictates otherwise. Forcing consumers to prematurely switch away from oil to less efficient alternatives entails economic costs that must ultimately be borne by the consumer. This is not the way to foster sustainable energy security. As I said, our current difficulties can be overcome. However, while sustainable energy security is achievable, it is not guaranteed. We must produce and consume energy in the most efficient manner possible so as not to waste valuable natural resources - oil included. We must also work to remove constraints which limit our ability to bring energy supplies to consumers. I believe that Saudi Arabia and the United States, as the largest producer and largest consumer of oil, and with a 70-year history of cooperation in energy, are in a unique position to provide leadership in promoting sustainable energy security. --more 2135 Local Time 1835 GMT
