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09/17/2009

Where Will Our Oil Come From? [Part One]

Michael T. Klare, professor at Hampshire College and author of Rising Powers, Shrinking Planet: The New Geopolitics of Energy, had an essay in the July/August 2009 issue of The National Interest titled “Tithing at the Crude Altar.” 

Professor Klare discusses the myth of energy independence. “We will not be energy independent for the next thirty to forty years, even with a strong push to increase energy efficiency and spur the development of petroleum alternatives. During this time, America will remain dependent on oil derived from authoritarian regimes, weak states and nations in the midst of civil war.” 

But, “Contrary to popular belief, these petro-regimes need the United States more than the United States needs them. The tyranny of oil can be stopped.” 

Klare has some good statistics that should be common knowledge for all. To wit: 

“Much hope has been placed…on the development of advanced biofuels that can be derived from nonedible plant matter like switchgrass and straw…But no such refineries are now in operation and it will be a decade or more before fuel of this type is available in large quantities….Boosting wind, solar and nuclear energy to produce more electricity for use by plug-in hybrids, all-electric cars and high-speed rail will also require trillions of dollars in new investment and take several decades to achieve. Thus, even in 2030, the Department of Energy projects that biofuels and coal-to-liquids will provide a mere 14 percent of the nation’s liquid-fuel supply, with petroleum providing the remaining 86 percent. And, because of the long-term decline in domestic oil output, imports will have to provide about half of all that petroleum. 

“This is a crisis long in the making. U.S. domestic oil output reached its peak and began a long-term decline almost forty years ago. Back in 1972, America produced approximately 12.5 million barrels of oil per day and imported only 4.5 million barrels, so foreign crude constituted about one-fourth of the total supply. Since then, our oil consumption has continued to grow while domestic output has fallen, so the difference has had to be satisfied with ever-increasing quantities of imported petroleum. We crossed the 50 percent threshold of reliance on foreign oil in 1998 and have been heading toward 60 percent dependence ever since. Plans announced by President Obama to stimulate the development of petroleum alternatives will reverse this trend and possibly bring U.S. dependence back below the 50 percent threshold in a decade or so; but with domestic consumption continuing to rise, there will be no reduction in the actual volume of oil we must obtain from foreign suppliers…. 

“Until now, we have been very fortunate, securing a large share of our imported petroleum from more-or-less friendly suppliers in the Western Hemisphere – but these happy days are drawing to a close. In the fourth quarter of 2008, the United States obtained approximately 45 percent of its imported oil from Western Hemisphere sources, mainly Canada, Mexico and Venezuela. The more we look into the future, however, the less we can expect to rely on these countries to meet our import requirements. Canada’s conventional oil output is expected to fall by half between now and 2030, from 2.1 to 1.1 million barrels per day, and while the production of unconventional fuels derived from tar sands (bitumen) could more than compensate for that decline, the high cost of producing these fuels and the various environmental hazards involved could cap production at but a few million barrels per day, limiting the potential benefit to America. Mexico presents a more ominous picture. Its net petroleum output is expected to fall below domestic demand by 2030, leaving zero oil for export to the United States. Venezuela will still be producing a surplus in 2030, but so much harm has been caused to its oil fields and production infrastructure by Hugo Chavez that the amounts available for export will not be sufficient to make up for the loss of Mexican supplies. Brazil is the one bright spot on this map. It is developing new fields in the deep waters off Rio de Janeiro that promise substantial additions to world supplies; however, Brazil is a fast-developing nation with huge energy needs of its own, so whether any of this new oil will be available for export to the United States remains to be seen. Bottom line, the Western Hemisphere’s share of U.S. oil imports will shrink considerably over the next twenty years.” 

So this means an increasing amount of our oil will come from producers in the Middle East and Africa, with only a dozen or so capable of providing significant amounts for export, such as: Algeria, Angola, Libya, Nigeria and Sudan in Africa; Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the UAE in the Persian Gulf; and Azerbaijan, Kazakhstan and Russia in the former Soviet Union. “The Persian Gulf states alone are expected to provide 31 percent of the conventional oil supply by 2030, while the former-Soviet states will provide about 18 percent and the African states 16 percent.” All told, 65 percent. The other suppliers “are either in decline (e.g., Indonesia and the North Sea countries of Denmark, Norway and the United Kingdom), need all their oil for domestic use (e.g., China) or are too insignificant to make a difference. Iran, which certainly has the capacity to provide oil, doesn’t even figure into this dire equation as long-running sanctions cut off the American market – not that Tehran would be a desirable supplier in any case. So, whatever our preferences, we will increasingly rely on these fourteen key producers.” 

And therein lies our problem. Some are antagonistic and/or have a propensity for violence. Then there are the Saudis. 

Next week, their story.
 
Brian Trumbore


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09/17/2009

Where Will Our Oil Come From? [Part One]

Michael T. Klare, professor at Hampshire College and author of Rising Powers, Shrinking Planet: The New Geopolitics of Energy, had an essay in the July/August 2009 issue of The National Interest titled “Tithing at the Crude Altar.” 

Professor Klare discusses the myth of energy independence. “We will not be energy independent for the next thirty to forty years, even with a strong push to increase energy efficiency and spur the development of petroleum alternatives. During this time, America will remain dependent on oil derived from authoritarian regimes, weak states and nations in the midst of civil war.” 

But, “Contrary to popular belief, these petro-regimes need the United States more than the United States needs them. The tyranny of oil can be stopped.” 

Klare has some good statistics that should be common knowledge for all. To wit: 

“Much hope has been placed…on the development of advanced biofuels that can be derived from nonedible plant matter like switchgrass and straw…But no such refineries are now in operation and it will be a decade or more before fuel of this type is available in large quantities….Boosting wind, solar and nuclear energy to produce more electricity for use by plug-in hybrids, all-electric cars and high-speed rail will also require trillions of dollars in new investment and take several decades to achieve. Thus, even in 2030, the Department of Energy projects that biofuels and coal-to-liquids will provide a mere 14 percent of the nation’s liquid-fuel supply, with petroleum providing the remaining 86 percent. And, because of the long-term decline in domestic oil output, imports will have to provide about half of all that petroleum. 

“This is a crisis long in the making. U.S. domestic oil output reached its peak and began a long-term decline almost forty years ago. Back in 1972, America produced approximately 12.5 million barrels of oil per day and imported only 4.5 million barrels, so foreign crude constituted about one-fourth of the total supply. Since then, our oil consumption has continued to grow while domestic output has fallen, so the difference has had to be satisfied with ever-increasing quantities of imported petroleum. We crossed the 50 percent threshold of reliance on foreign oil in 1998 and have been heading toward 60 percent dependence ever since. Plans announced by President Obama to stimulate the development of petroleum alternatives will reverse this trend and possibly bring U.S. dependence back below the 50 percent threshold in a decade or so; but with domestic consumption continuing to rise, there will be no reduction in the actual volume of oil we must obtain from foreign suppliers…. 

“Until now, we have been very fortunate, securing a large share of our imported petroleum from more-or-less friendly suppliers in the Western Hemisphere – but these happy days are drawing to a close. In the fourth quarter of 2008, the United States obtained approximately 45 percent of its imported oil from Western Hemisphere sources, mainly Canada, Mexico and Venezuela. The more we look into the future, however, the less we can expect to rely on these countries to meet our import requirements. Canada’s conventional oil output is expected to fall by half between now and 2030, from 2.1 to 1.1 million barrels per day, and while the production of unconventional fuels derived from tar sands (bitumen) could more than compensate for that decline, the high cost of producing these fuels and the various environmental hazards involved could cap production at but a few million barrels per day, limiting the potential benefit to America. Mexico presents a more ominous picture. Its net petroleum output is expected to fall below domestic demand by 2030, leaving zero oil for export to the United States. Venezuela will still be producing a surplus in 2030, but so much harm has been caused to its oil fields and production infrastructure by Hugo Chavez that the amounts available for export will not be sufficient to make up for the loss of Mexican supplies. Brazil is the one bright spot on this map. It is developing new fields in the deep waters off Rio de Janeiro that promise substantial additions to world supplies; however, Brazil is a fast-developing nation with huge energy needs of its own, so whether any of this new oil will be available for export to the United States remains to be seen. Bottom line, the Western Hemisphere’s share of U.S. oil imports will shrink considerably over the next twenty years.” 

So this means an increasing amount of our oil will come from producers in the Middle East and Africa, with only a dozen or so capable of providing significant amounts for export, such as: Algeria, Angola, Libya, Nigeria and Sudan in Africa; Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the UAE in the Persian Gulf; and Azerbaijan, Kazakhstan and Russia in the former Soviet Union. “The Persian Gulf states alone are expected to provide 31 percent of the conventional oil supply by 2030, while the former-Soviet states will provide about 18 percent and the African states 16 percent.” All told, 65 percent. The other suppliers “are either in decline (e.g., Indonesia and the North Sea countries of Denmark, Norway and the United Kingdom), need all their oil for domestic use (e.g., China) or are too insignificant to make a difference. Iran, which certainly has the capacity to provide oil, doesn’t even figure into this dire equation as long-running sanctions cut off the American market – not that Tehran would be a desirable supplier in any case. So, whatever our preferences, we will increasingly rely on these fourteen key producers.” 

And therein lies our problem. Some are antagonistic and/or have a propensity for violence. Then there are the Saudis. 

Next week, their story.
 
Brian Trumbore