U.S. Oil Supply: Drilling Down to the Facts 16 comments
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Let us drill down, pun intended, to the facts concerning the actual sources of United States petroleum products. Of course, Big Oil has served as the all-to-convenient whipping boy of politicians, commentators, and consumers hell-bent upon railing against this 'evil price gouger.'
The outrage reached a fever pitch this past summer, paralleling a relentless march towards $150 oil and $4.50 gasoline. We shall work to proactively expose these greedy purveyors of destruction, mayhem, and outright terror that have embarked upon a coordinated mission to wage warfare and chaos towards Western Civilization:
Texas. Louisiana. Oklahoma. Alaska. The Gulf Coast. Canada. Mexico.
Huh?
In 2007, the United States of America consumed 20.7 millions barrels per day (MMbd), ranking as the world's leading market for petroleum products. At 5.1 MMbd the U.S. also represents the third largest producer of crude oil on the planet behind Russia and Saudi Arabia. According to the U.S. Department of Energy, these two resource rich nations tallied 2006 production levels of 9.2 and 9.15 million barrels per day, respectively.
In spite of these staggering figures, Texas, Alaska, Louisiana, California and the Gulf Coast are responsible for a larger share of our daily crude oil supply than these Russian and Saudi Arabian fossil fuel behemoths.
Refining efficiencies add another 3.6 MMbd to total U.S. production. Interestingly, the United States exported 1.4 MMbd of crude oil, while importing 13.5 million barrels per day of Black Gold. Basic arithmetic arrives at a shortfall separating domestic consumption from production at 12 million barrels per day that is the net balance between imports and exports of crude oil.
20.7 MMbd = (5.1 U.S. + 3.6 refining + 13.5 imported) - 1.4 exported
*.1 MMbd difference due to rounding
No regime listed amidst our top fifteen crude oil suppliers is openly hostile towards the United States Government. The Department of Energy lists the following nations as our primary 2007 sources of crude oil - supplying 9.3 million barrels per day, or 93% of all imports: Canada (18.2%), Mexico (11.4%), Saudi Arabia (11%), Venezuela (10.1%), Nigeria (8.4%), Angola (5%), Iraq (4.8%), Algeria (4.4%), Ecuador (2%), Kuwait (1.7%), Brazil (1.6%), Colombia (1.4%), United Kingdom (1%), Libya, and Chad (since replaced with Azerbaijan and Equatorial Guinea.)
Venezuela and Hugo Chavez represent the lone regime out of this group that may be identified with anti-American rhetoric. Indeed, the controversial leader that labels George W. Bush as "the devil," leader of the "cruelest, most terrible most murderous empire that has ever existed" is mere talk.
Venezuela would collapse without its top customer to the north - responsible for 60% of all petrodollar revenue that has been showered upon the Venezuelan people in the form of grandiose social programs. The United States is the only existing industrialized nation equipped with the refining technology capable of processing this lower quality, heavy Orinoco Basin crude oil.
Additionally, 90% of all finished petroleum products such as gasoline, jet fuel, heating oil, and diesel that are consumed by Americans have also been refined within our borders.
Please arm yourselves with these statistics and proceed accordingly.
Diligent readers may note that I correctly foreshadowed the imminent price collapse of crude oil amidst a raging bull market for the energy complex. We must not allow ourselves to fall privy to the shock and awe display of rash politics and hack, tabloid journalism.
Disclosure: Author holds a long position in XOM
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This article has 16 comments:
1) Canada is the only country that is genuinely friendly towards the USA and has stable government.
2) Mexico is experiencing double digit declines in oil reserves and the country is under siege by drug cartels. Mexico will likely be an oil imported after 2010.
3) Saudi Arabia: Let's see 15 of 19 9/11 terrorists hailed from here and this country routinely funds Hamas, Al-Quieda and Hezbollah. This country could easily be toppled by Wajib fundamentalists, if it were not for US military support.
4) Venezuela: Hugo Chavez would jump at the opportunity to sell oil to anybody but the USA. This could be a possibility if China and India develop their own heavy oil refining technology.
5) Nigeria: The government is corrupt and is in a constant state of civil war with the MEND rebels.
6) Iraq: I think the Bush shoe throwing incident summarizes the appreciation of the Iraqis for being liberated from Saddam Hussein.
Bottom line, with exception of Canada and internal US reserves, the USA cannot count on foreign oil as a long term solution and should intensify alternative energy and conservation technology efforts before it is too late.
1) in spite of $145/barrel oil, year over year production at the three biggest US oil producers was down (XOM, CVX, COP)
2) the oil market is a global market. the US imports 65-70% of its oil, and the direct benefactors are russia, saudi, iran, iraq, venezuela.
3) the world is entering an era where worldwide oil supply will not keep pace with worldwide oil demand. any country therefore that is strategically dependent on importing 70% of its oil is therefore not only exposed, but is has an unsustainable economic strategy.
4) the extreme debt run up in the last 8 years will pressure the US dollar further as exhibited by yesterday's nearly 2% drop in the US dollar index. since oil is priced in US dollars (at least for now), a continued weak dollar merely exascerbates the problem.
5) the current low prices for oil and gasoline are a direct result of failed bush and republican economic policy: deregulation of the financial markets, idiotic energy policy, and deeply flawed tax and spend policy (i.e. tax breaks for the ultra-wealthy and huge fiscal deficits at the expense of the middle class). current low oil prices are NOT the result of huge new supply, but rather due to a drastic reduction in oil demand caused in part by the $145/barrel price of oil earlier in the year.
to paint a rosy picture from these facts is not only unwise and unpatriotic, it's downright dangerous. from an economic perspective US reliance on foreign sources for 70% of its oil (and growing) is simply unsustainable and will lead the US into the economic abyss (are we already there??) if not corrected.
Turning to Mr Longoil, I think that we should look on the bright side of that shoe throwing incident: President Bush displayed a surprising and praiseworthy nimbleness in ducking those shoes. Also, think of how much worse it would have been if the gentleman had thrown his socks too and they had connedted somewhere above the president's chin line. As for the appreciation of the Iraquis, the US won the war in Iraq when they entered Baghdad. That was the natural end of the war. Instead of pulling out though, they stayed around long enough to increase the misery of the Iraqui people. What for? Was Greenspan right that the war was fought for oil, or was the intention to give the next Republican presidental candidate the opportunity to talk about a hundred years of war?
Ferdinand E. Banks
import 13.5MMbd and then lists 15 nations from whom we import
9.3BBpd and says that represents over 90% of our imports when
in actuality is is closer to 69%??????
What am I missing here. It also appears that his article suggests
that we import about 60% of oil used. Is that correct?
Fred, I didn't know anyone still questioned that truth?
I think that the US imports 65-70% of its 20.7 MMbbls per day oil requirement, which would be 13.5 to 14.5 MMbbls per day
On Dec 17 11:02 AM Bob Belsito wrote:
> I could not follow the math. Help me out here.The author states that
> we
>
> import 13.5MMbd and then lists 15 nations from whom we import
>
>
> 9.3BBpd and says that represents over 90% of our imports when
>
> in actuality is is closer to 69%??????
>
> What am I missing here. It also appears that his article suggests
>
> that we import about 60% of oil used. Is that correct?
Actually, this isn't entirely correct. China has the refining technology capable of refining Venezuelan crude. In fact, Venezuela has recently been shipping crude tankers to China. China is also due to finish completing a new much larger refining plant which will enable them to receive much more Venezuelan crude. The problem is cost to ship is much more than the U.S., and with prices so low now, it may be a loser for Venezuela currently.
Additionally, you mentioned Venezuela as the lone country expressing anti-American rhetoric from your list but, Ecuador is following in Chavez footsteps with the rhetoric. Nevertheless, they're just a pipsqueak anyway.
I got the stats straight from the Department of Energy.
On Dec 17 11:02 AM Bob Belsito wrote:
> I could not follow the math. Help me out here.The author states that
> we
>
> import 13.5MMbd and then lists 15 nations from whom we import
>
>
> 9.3BBpd and says that represents over 90% of our imports when
>
> in actuality is is closer to 69%??????
>
> What am I missing here. It also appears that his article suggests
>
> that we import about 60% of oil used. Is that correct?
There is a difference between crude oil and finished petroleum products (gasoline/ jet fuel / asphalt).
Crude oil + finish petroleum product imports = 13.5 Mmbd in 2007.
Crude oil = 10 MMbd in 2007.
Here is the chart from the Department of Energy:
tonto.eia.doe.gov/dnav...
The math is correct. Those top 15 nations are responsible for over 93% of strictly crude oil supply.
I am sorry for the confusion.
And yes, the U.S. does import roughly 60% of crude oil + finished petroleum products used. But out of that 60% - a very large fraction is supplied from regimes friendly to the U.S.
On Dec 17 01:11 PM Kofi Bofah wrote:
> Let me go in and check my math - and post up the table that I got
> the info from. I put a hyperlink somewhere in the article.
>
> I got the stats straight from the Department of Energy.
A big reason for the decline in production were the profit sharing agreements that allowed the national oil companies to acquire larger portions of the production at higher prices. And yes, Nigerian rebels took a large percentage of Nigerian oil off-line by blowing up pipelines.
Remember, a large field has been discovered off the coast of Brazil.
Also, Thunder Horse in the Gulf of Mexico is well on the way to be exploited - increasing U.S. production.
On Dec 17 08:55 AM The FItzman wrote:
> your article insinuates that america is not in an oil crisis. yet,
> here are the scary facts presented in a different perspective::
>
>
> 1) in spite of $145/barrel oil, year over year production at the
> three biggest US oil producers was down (XOM, CVX, COP)
>
> 2) the oil market is a global market. the US imports 65-70% of its
> oil, and the direct benefactors are russia, saudi, iran, iraq, venezuela.
>
>
> 3) the world is entering an era where worldwide oil supply will not
> keep pace with worldwide oil demand. any country therefore that is
> strategically dependent on importing 70% of its oil is therefore
> not only exposed, but is has an unsustainable economic strategy.
>
>
> 4) the extreme debt run up in the last 8 years will pressure the
> US dollar further as exhibited by yesterday's nearly 2% drop in the
> US dollar index. since oil is priced in US dollars (at least for
> now), a continued weak dollar merely exascerbates the problem.
>
>
> 5) the current low prices for oil and gasoline are a direct result
> of failed bush and republican economic policy: deregulation of the
> financial markets, idiotic energy policy, and deeply flawed tax and
> spend policy (i.e. tax breaks for the ultra-wealthy and huge fiscal
> deficits at the expense of the middle class). current low oil prices
> are NOT the result of huge new supply, but rather due to a drastic
> reduction in oil demand caused in part by the $145/barrel price of
> oil earlier in the year.
>
> to paint a rosy picture from these facts is not only unwise and unpatriotic,
> it's downright dangerous. from an economic perspective US reliance
> on foreign sources for 70% of its oil (and growing) is simply unsustainable
> and will lead the US into the economic abyss (are we already there??)
> if not corrected.
After the fall of the Shah, who was in their hip pocket, a prime replacement , shall we say, prime "co-operative" , was desperately needed to secure a stable and reliable source of oil from the M.E.
Many times they used the carrot and stick approach on Sadam, and each time the carrot got smaller, and the stick got larger.
His doom was sealed long before the invasion of Iraq, when he summarily expelled the WMD inspectors, and ceased relations with the US. It was then instantly apparent to me that neither he nor his sons would survive, with or without an invasion. However, an invasion proved necessry to accomplish this goal. So , yes , the primary reason was OIL, but there is much, much more to the story.