With the presidential race heating up both candidates will soon be climbing all over themselves to tell us how they will make the U.S. Energy Independent. Whether it is thru more drilling on Federal Lands and off the coast or more alternative energy projects across the land they will have a story to tell. The problem is that for the most part it is a fairy tale that ignores the data.
For example we can count on hearing how U.S. oil production has climbed since 2008 or that imported oil has fallen below 50% of consumption since peaking out in 2005. What is not mentioned is that production is just now getting back to levels last seen when Bill Clinton was in office and that the recessions impact on demand accounts for the majority of the import decline.
Even more important as this week’s report points out is ultimate product price consumers pay. Even as U.S production has climbed and imports have fallen the price being paid by consumers continues to rise. The reality of the data does not support the claims implicit in the “Energy Independence” mantra.
So what if the U.S. retraced it decline from its peak production in November 1970 when itthe U.S. produce 10.04 million barrels per day, would it make the nation “Energy Independent”? The answer on a crude oil basis is no. The U.S. would still be roughly 4 million barrels per day short of current consumption.
As you listen to the promises being made by both candidates don’t forget it is all about crude oil. The U.S. is totally independent on electric power generation. Liquid fuels derived from crude oil are what matters. Natural gas liquids don’t provide transport fuels so the shale gas boom that provides an abundance of them doesn’t help either. Neither does the inclusion by some of the 51st and 52nd states, Canada and Mexico in totaling up U.S. production.
The true reality is that there is only so much crude oil that the industry can provide at a price the global economy can afford. U.S. energy policy needs to reflect this reality and quit operating under the flawed assumption that the U.S. can either economically or politically control an ever increase piece of that stagnate and soon shrinking pie. When you hear a candidate face that head on cast your vote in favor.
The video below is of Michael Kumhof explaining the International Monetary Fund (IMF) Research Department’s il supply/price/demand prediction model released last April. According to the model oil prices will need to double in a decade to grow world oil production by 0.9%, in line with published EIA forecasts of consumption.
Last week’s web page referenced a New York Times article about how U.S. imports of Saudi crude had risen substantially. So now it is time for a quiz, how many readers read the last sentence of the article excerpted here?
The key five words are “Saudi production is flat out”. Maybe the New York Times and Sadad Al Husseini just gave the world a piece of information it has been searching for. Whether Saudi Arabia really does have spare any significant capacity?
So what was the total context of his comments? Was the quote correct?
It just reinforces how little the world knows about its supply of the second most important liquid on the planet (I still put fresh water as number one.).
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