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Page added on September 5, 2013
America’s Oil Boom Won’t Make It Energy-Independent From Middle East Madness
If the U.S. does strike Syria, the price of oil — already at $115 and rising in the Brent index, largely because of political disruptions in Libya, a major producer — is likely to spike. It’s not that Syria is a major oil producer — even before the war its exports were modest by Middle East standards, and now the embattled regime of Syrian President Bashar Assad can manage just 50,000 barrels a day, barely 5% of what tiny Oman can pump. But even limited strikes would raise fears that the civil conflict in Syria could spread, inviting retaliatory action against Israel, moves by Assad’s ally Iran and disruptive protests in Middle Eastern countries that actually do produce a lot of oil. Fear alone would likely be enough to raise the price of oil above $120 a barrel, and if any of those scenarios actually came true, we might see crude beat the record $147 per barrel reached in 2008. Should that come to pass, the International Energy Agency would likely coordinate releases from national petroleum reserves to increase global supply and bring down prices somewhat, just as it did during the Libyan civil conflict in 2011. Nonetheless, U.S. drivers, currently paying an average of $3.61 a gallon, would be hit hard at the pump
But wait a minute. The U.S. is in the midst of a boom in domestic oil production, thanks largely to new unconventional reserves in North Dakota and Texas, even as oil demand has fallen thanks to improving energy efficiency (and a still sluggish economy). The U.S. now imports 36% of the oil it uses, down from 60% in 2006. With U.S. oil production projected to increase by 28% between 2011 and 2014, according to the Energy Information Administration, and tougher CAFE fuel standards forcing more-efficient cars and trucks, oil imports will likely keep dropping in the years to come. The U.S. — or at least larger North America — could finally achieve something that politicians on both sides of the aisle have been chasing for decades: energy independence. Finally Americans would no longer be dependent on oil from countries that don’t like us very much — which would in turn make us that much freer in the Middle East.
Tom Friedman put it this way in a recent New York Times column:
As that reality has sunk in, so has another reality, which the American public intuits: Our rising energy efficiency, renewable energy, hydraulic fracturing and horizontal drilling are making us much less dependent on the Middle East for oil and gas. The Middle East has gone from an addiction to a distraction.
There’s just one problem — one that, in fairness, Friedman acknowledges: less dependent does not make us independent. It’s easy to forget, but the price of oil is truly global. If something happens to disrupt production in a major oil-exporting nation like Saudi Arabia or Kuwait — or worse, if Iran were to actually close the Persian Gulf as it has threatened to in the past — the supply of crude would contract, the price would skyrocket and all the shale oil in North Dakota’s Bakken formation wouldn’t be enough to shield American drivers from even more expensive gas.
The truth is that domestic oil production in the current market has little impact on the price of gas. In 1995 — which happens to be the last year that U.S. oil production exceeded imports until now — America pumped about 6.5 million barrels of oil a day. That’s less than the 7.2 million barrels a day the U.S. produces now. But gas in 1995 cost $2.07 in current dollars — a little more than half of what it costs today.
This isn’t to say that the miniboom that American oil producers have experienced over the past few years is meaningless. It has helped reduce U.S. oil imports, which in turn shrinks America’s huge foreign trade deficit. In June the gap between how much petroleum the U.S. imports and exports in dollar terms fell to $17.4 billion, down from a record $42.4 billion five years ago. That means more dollars stay in the U.S. rather than being sent abroad. And the shale-oil boom has been very good to U.S. oil companies and their employees, which is good for the larger economy. The research firm IHS Global Insight estimates in a new report that increased production from unconventional oil and gas has increased disposable income by an average of $1,200 per household, a figure that’s predicted to rise in coming years.
But while the oil boom has been a nice boost, it hasn’t quite been a revolution. Since 2007, U.S. oil production has increased by a little more than 2 million barrels, good for a 44% increase. But those additional 2 million barrels represent just 2% of the 90 million barrels a day the world is consuming now. No wonder it’s had little impact on the price at the pump.
What truly protects American consumers — and what could really make the U.S. functionally energy-independent — is simply using less oil. And we are doing that: U.S. oil demand peaked in 2007 and has dropped in most of the following years, though it has ticked back up recently. Much of that change is due to the slowing economy and higher unemployment — no job means no commute. But better fuel efficiency and, intriguingly, structural changes like a decrease in young people getting driver’s licenses and more Americans moving to cities could indicate long-term reductions in oil use. Alternatives like biofuels, natural gas and electric cars will further cut into oil demand. The less oil the U.S. needs — from both foreign and domestic sources — the less vulnerable it should be if things go wonky in the Middle East and crude skyrockets. That’s real energy independence.
8 Comments on "America’s Oil Boom Won’t Make It Energy-Independent From Middle East Madness"
J-Gav on Thu, 5th Sep 2013 9:51 pm
Friedman’s a shill but OK, the article does almost admit that reality exists in its conclusion.
The simple fact of course is that nobody, including the biggest oil producers today, is going to be “energy independent” for much longer. The hurt will be very unequal at first but eventually it will nonetheless be spread around to all concerned.
DC on Thu, 5th Sep 2013 10:07 pm
The above article is 99% certified nonsense.
TIKIMAN on Thu, 5th Sep 2013 11:47 pm
You mean a fake “boom” of 800K barrels/day vs a country that uses 18 million a day wont do anything?
Well fuck me…
BillT on Fri, 6th Sep 2013 1:54 am
Another load of Bullshit from the corporate MSM. The ME is about to make a liar out of our ‘oil boom’ shills. $200 oil by Christmas?
GregT on Fri, 6th Sep 2013 4:30 am
If Time thinks this is ‘Middle East Madness’, they ain’t seen nothing yet. Just wait until Saudi Arabia blows up, then the real fun begins.
Kenz300 on Fri, 6th Sep 2013 3:27 pm
Quote — ” better fuel efficiency and, intriguingly, structural changes like a decrease in young people getting driver’s licenses and more Americans moving to cities could indicate long-term reductions in oil use. Alternatives like biofuels, natural gas and electric cars will further cut into oil demand. The less oil the U.S. needs — from both foreign and domestic sources — the less vulnerable it should be if things go wonky in the Middle East and crude skyrockets”
————————-
Diversify …diversify…diversify…..
We need to diversify our sources and types of energy we use.
The oil companies hate the growing use of biofuels in the worlds energy supply. They want to protect their PROFITS and reduce any competition.
Biofuels can now be made from waste or trash. Every landfill around the world can now be converted to produce biofuels, energy and recycled raw materials for new products. That is much better than burying the trash. It will also provide a market for all the waste that currently ends up in fields and the oceans.
bobinget on Fri, 6th Sep 2013 3:58 pm
It’s 19.2 MB/pd Tikiman.
Lucky for us we won’t be testing ‘energy independence’
anytime soon. This ‘attack Iran’ trial ballon will not fly.
A still-bearded Mark Halperin said Friday he was not sure President Obama could win the crucial Congressional vote to authorize military action in Syria.
Various whip counts from news outlets have suggested that the representatives who favor a strike are outnumbered by the ones who are opposed. Though several pundits have advised caution at reading the tea leaves so early in the game, others, like Halperin, appear to be close to throwing in the towel.
“Yesterday I thought [Obama would win the vote]; now I’m deeply skeptical,” Halperin said on Friday’s “Morning Joe.” “Time is not on the president’s side right now…public opinion and the member dynamics are all going against the White House. I’m not sure, now, how they get time back on their side.”
That view was echoed in a piece in Politico on Thursday night:
If the House voted today on a resolution to attack Syria, President Barack Obama would lose — and lose big. That’s the private assessment of House Republican and Democratic lawmakers and aides who are closely involved in the process.
NBC’s First Read blog had a similar take. “Right now, the administration is losing,” a post read.
bobinget on Fri, 6th Sep 2013 4:06 pm
Oh.. all the propaganda about a new oil renaissance
in America is working. Autos are selling like hotcakes.
So far this year, world-wide, 45,551,618 cars (not counting big trucks, tractors, motorcycles, jet skis,
motor yachts, civillian and military aircraft of all kinds including missiles.
How many cars are produced in the world every year?
In 2012, for the first time in history, over 60 million cars passenger cars will be produced in a single year (or 165,000 new cars produced every day).
After a 9% decline in 2009 (due to the 2008 global financial crisis), global car production immediately jumped back the following year with a 22% increase in 2010, to then consolidate at the current 3% yearly growth rate.
Going back in history, in 2006 there were less than 50 million passenger cars produced in the world, with an increase of 6.45% over the previous year. The increase for 2007 was more modest, and 2008 showed a decline. Analysts from various institutes had in fact pegged the year 2007 as the year which would end the 5-year cycle (2002, 2003, 2004, 2005, 2006) of record global auto sales worldwide.
year cars produced
in the world
2011 59,929,016
2010 58,264,852
2009 47,772,598
2008 52,726,117
2007 53,201,346
2006 49,918,578
2005 46,862,978
2004 44,554,268
2003 41,968,666
2002 41,358,394
2001 39,825,888
2000 41,215,653
1999 39,759,847
Which country produces most cars?
China.
1 out of 4 cars produced in the world comes from China.
China was the world’s third-largest car market in 2006, as car sales in China soared by nearly 40% to 4.1 million units. Soon thereafter, China took the lead and became the world’s first-largest car market, as low vehicle penetration, rising incomes, greater credit availability and falling car prices lift sales past those of Japan. Furthermore, vehicle penetration in China still stands at only about 40 vehicles per 1,000 people, compared with approximately 700 vehicles per 1,000 people in the mature markets of the G7.
More than half of the cars are produced in Asia and Oceania, whereas Europe produces almost a third.
Below, a summary of global car production by country in 2011:
Rank
Country
Cars produced
% of total
world production
1
China
14,485,326
24.0%
2
Japan
7,158,525
11.9%
3
Germany
5,871,918
9.7%
4
South Korea
4,221,617
7.0%
5
India
3,038,332
5.0%
6
U.S.A.
2,966,133
4.9%
7
Brazil
2,534,534
4.2%
8
France
1,931,030
3.2%
9
Spain
1,819,453
3.0%
10
Russia
1,738,163
2.9%
11
Mexico
1,657,080
2.8%
12
Iran
1,413,276
2.3%
13
U.K.
1,343,810
2.2%
14
Czech Republic
1,191,968
2.0%
15
Canada
990,483
1.6%
16
Poland
722,285
1.2%
17
Slovakia
639,763
1.1%
18
Turkey
639,734
1.1%
19
Argentina
577,233
1.0%
20
Indonesia
561,863
0.9%
21
Belgium
560,779
0.9%
22
Thailand
537,987
0.9%
23
Malaysia
488,441
0.8%
24
Italy
485,606
0.8%
25
South Africa
312,265
0.5%
26
Romania
310,243
0.5%
27
Taiwan
288,523
0.5%
28
Hungary
211,218
0.4%
29
Australia
189,503
0.3%
30
Sweden
188,969
0.3%
31
Slovenia
168,955
0.3%
32
Uzbekistan
146,300
0.2%
33
Portugal
141,779
0.2%
34
Austria
130,343
0.2%
35
Ukraine
97,585
0.2%
36
Egypt
53,072
0.1%
37
Netherlands
40,772
0.1%
38
Serbia
25,494
0.04%
39
Finland
2,540
0.004%
Others
367,138
0.6%
Total
60,250,038
100.0%