Candidates off on oil by $350 billion ... or so

Figure quoted about crude from unfriendly countries likely overestimates

updated 7:21 p.m. ET Oct. 16, 2008

WASHINGTON - It’s an attention-grabbing claim: Americans each year are sending $700 billion to unfriendly countries for oil, as much as the entire cost of the Wall Street bailout plan. In rare agreement, both presidential candidates use the number. But is it real?

“We have to stop sending $700 billion a year to countries that don’t like us very much,” Republican John McCain said again Wednesday night during the candidates’ final debate.

Democrat Barack Obama joined the refrain recently, declaring at a Wisconsin rally that a push for alternative energy “will stop us from sending $700 billion a year to tyrants and dictators for their oil.”

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The claim, however, wildly exaggerates the amount of money going to unfriendly nations. It also significantly inflates spending in general on petroleum imports, especially considering recent dramatic declines in oil prices.

The number appears to have originated with Texas oil mogul T. Boone Pickens, who is campaigning hard to displace some of those imports with windmills and domestic natural gas.

An examination by The Associated Press of government oil import costs in 2007 and the first seven months of this year, the latest figures available, indicates the $700 billion overstates total spending by nearly one-third — and possibly as much as one-half. Only about one-fourth of the imports come from countries that might be considered unfriendly, such as Venezuela and Iran, and from the politically volatile Persian Gulf.

According to government agencies that track energy imports, the U.S. spent $246 billion in 2007 for all imported crude oil; a majority came from friendly nations, including neighboring Canada and Mexico. An additional $82 billion was spent on imported refined petroleum products such as gasoline, diesel and fuel oil. A majority of the refined products came from refineries in such friendly countries as the Netherlands, Canada, the United Kingdom, Trinidad and Tobago and the Virgin Islands.

Oil prices zoomed in the first seven months this year, but even then the cost of oil and refined product imports totaled $283.6 billion from January through July, according to Foreign Trade Division of the Census Bureau — a hefty amount but not near an annualized $700 billion.

So where did the number come from?