The oil industry recently marked a milestone. This month, the world's oldest operating oil well celebrated 150 years of on-going production. On August 16, 1861, oil men drilled the McClintock Well No 1 in northwestern Pennsylvania to a depth of 620 feet and struck black gold. A century and a half later, the McClintock continues to pump out petroleum, although it now operates every other month at a rate of about 10 barrels a day.
The McClintock Well serves as a historic reminder of the pioneering days of petroleum production, showing us how far the industrial world has come as oil evolved into a multi-billion dollar energy industry that drives the world's economy. Oil helped build America into the world's economic and military superpower. Americans now use about 20 million barrels of oil a day, 71 percent of it for transportation, and 23 percent for industry and manufacturing, according to the U.S. Energy Information Administration.
Most of us tend to look only at the cost of oil in relation to a fill-up at the local gas station. But our nation's high dependence on petroleum comes with a price far steeper than what consumers pay at the pump. Oil, along with coal and natural gas, comes with what economists call externality costs, the indirect expenses widely shared by human society.
These externalities include the toxins released into America's environment from oil production and consumption which add considerably to our nation's health care costs. And pollution-related illnesses reduce worker productivity. Buying foreign oil slowly strangles American jobs and industry by weakening the value of our dollars. Ironically, as dependence on foreign oil deteriorates our economic security, Americans bear the burden of paying to protect overseas oil. According to the Institute for the Analysis of Global Security, American taxpayers fund a bill of more than $50 billion a year for our military to protect our access to Middle East oil.
Also tally into the total of our oil addiction the expenses that come from changes to Earth's climate. We're now seeing more extreme weather events such as hurricanes, blizzards, floods, and mega-droughts, which are related to global warming resulting from burning fossil fuels. These meteorological events place a heavy toll on state and local economies.
If we truly wish to revitalize our economy and preserve our quality of life, let's honestly face the hidden and high price of our nation's fossil fuel dependence. That will motivate us to take the burden of oil's externality costs off the shoulders of Americans consumers and taxpayers. Instead let's make fossil fuel corporations pay their fair share as they benefit by gaining the billions of dollars every year from oil, natural gas, and coal production.
To achieve this, an innovative idea called "fee and dividend" is emerging as a hot topic of discussion in U.S. energy policy. If implemented, it would empower the American public with financial incentives to reduce our nation's externality costs from fossil fuels and thus secure our economic and energy freedom. This market-driven mechanism works by placing a fee on fossil fuels at their point of entry into the American market (such as at an oil well, a coal mine, or a supertanker). This fee is raised gradually over time based on scientific and economic measurements. One hundred percent of this cost on carbon is divided among American citizens on a monthly basis as an offset to the higher prices households will pay from rising energy costs induced by the fee. Each household gets to spend the fee as it wishes, thus letting ordinary people (and not politicians) decide in which direction to grow America's energy economy. If the American public spends dividend money on non-fossil fuel energy sources, we will enjoy growth in entrepreneurship and innovations leading to new industries in renewable energy and fuel efficiency. These industries will create millions of new jobs that will provide a solid economic foundation and broad revenue-generating base for America.
The cardinal rule of economics it is that money motivates. So long as Americans fail to see the external costs of oil and other fossil fuels and mistakenly perceive them to be "cheap" in comparison to renewable energy resources and energy efficient consumption, the U.S. economy will continue to weaken as we waste fossil fuels and deplete our limited supply of hydrocarbon resources. When we as a people face reality and honestly acknowledge that we pay too much in our taxes, our health costs, and our quality of life because of our fossil fuel chemical dependency, we will start moving forward to upgrade America's economy with innovative clean energy technology. Hopefully, a century and a half from now, the historic McClintock Well No 1 might serve as a reminder of the dirty and dangerous fossil fuel age we left behind.