Tuesday, July 6, 2010

How Important is Foreign Oil to the United States?

The networks are inundating us with news of the offshore pipeline leak in the Gulf of Mexico. It reminds us once again that the United States is a major oil producer. Why, then, should we care about sources of oil outside the United States? Couldn't we develop domestic sources of energy and become energy self sufficient--as so many politicians discuss? The answer is no. The United States produces 25% of all the goods and services in the world, but it uses 33% of the world's energy to do so. America is an oil-thirsty country.

According to the International Energy Agency (IEA), in the first quarter of 2010 North America imported 28,368,000 Metric Tons of oil products (crude oil, NGL and Refinery Feedstocks.) Of these, 2,346,000 MT came from the countries of the former Soviet Union. Even with American, Canadian and Mexican domestic production, the NAFTA countries still required massive amounts of foreign oil. Europe, which lacks the North American domestic production capability, imported 78,830,000 MT of which 16,248,000 originated in the former Soviet Union. (IEA Monthly Oil Survey, March 2010)

How great is America's thirst? Well, in 2008 the United States produced 7.6% of the world's oil (300 million MT). In addition, in 2007 (most recent data available) the United States imported an additional 573 million MT, which was over 27% of the world's production. (IEA, Key World Energy Statistics, 2009) Interestingly, all of the top 5 net importers were Pacific Rim countries--United States, Japan, China, India and Korea--demonstrating graphically where economic growth is occuring.

Where did the oil come from? The top 5 oil exporters are all countries with which the United States has had differences over the past twenty years. These countries are Saudi Arabia (17% of world exports), Russia (13%), Iran (7%), Nigeria (6%), and the United Arab Emirates (5%). Clearly, reliable sources of oil are necessary for the United States and its allies.

Dr. James J. Coyle is available to speak to your organization or at your event. Please contact him at jimcoyle@verizon.net.