Hello. We're continuing here with Energy 101.
And today, we're going to talk about oil imports.
We've talked about the resources we're using in fossil fuels to fuel our energy
needs: oil, gas, and coal. And we just finished with oil and how
much we use but we need to look a little closer at the.
The oil import's. Because that's the 1 of the biggest
reason that, that you see energy in the news a lot, is the impact of the oil
imports that we're, that we're using. A, this is, is a chart that we've seem
before. I just want to emphasize the red area
that's import over time. These about millions of barrels per day.
And you can see, the yellow is the lower 48.
Oil production in barrels per day. Versus years and the purple is the Alaska
production. And we're fortunately turned up here in
2009. And beginning to come up.
Our demand is coming up, though, also a little bit, and this is the import trend
itself. And it has dropped, that you hear
significant And for significant news about.
It's dropped from about 10 million barrels a day down to about 9 million
barrels per day on our oil imports. You might be surprised that it hasn't
dropped more than that. when you hear about all the new oil
production coming out of North Dakota for instance.
And oil sands and tar sands and things but there's a big reason why it's not,
our imports are not going down more than what this graph shows.
And that is because existing wells decline their production.
About 6% every year. So we're producing about 7 million
barrels a day. So 6% of that is 400,000 barrels a day.
The existing oils are decreasing in their production.
So to stay in the same place, to produce the same amount of oil.
We have to find and skip new producing oils of 4, 4 to 500,000 barrels a day
every year, just to keep our, our oil production in this country the same.
So we have to run hard in order to keep the same place.
If we want to make an inroad into the red area here which are imports.
We're going to increase our production and drilling.
Activity considerably. Because we've got, as you see.
We have to increase at a factor of 2 and a half or so.
Our production in order to become independent of oil imports.
Which we'll look at a little closer. So that's what we're talking about.
And quite previously, we've determined that the U.S.
is energy independent for oil in the. For excuse me, for coal and gas.
those are the pow, electric power fuel resource that we use, fuels.
And when it comes to electricity, we are energy independent.
that's why wind that produces electricity, solar TV that produces
electricity, and nuclear that produces electricity does not Have an impact on
our oil consumption, because we don't burn oil for electricity production.
So that's unfortunate because our renewables, the wind and solar, and
nuclear for instance Also would, have a big impact on our oil if we were burning
oil for electric power, but unfortunately, we're not.
the US is de, dependent on imported oil. Approximately 60% of our oil consumption
is, imported. 60% is imported.
So that's, that's where The problem is, from an economic and national security
viewpoint. So where's this oil coming from? Well
fortunately the top 2 countries that it's coming from are North American countries,
Canada being the biggest 1 of about 24% of the oil that we import is coming from
Canada. That's followed by Mexico and, at about
10%. And unfortunately Mexico's production
rate is declining and their, their domestic consumption is generally
increasing. So Their exports have been declining in
recent years. people expect that to happen for a while
longer so the oil that we can import from Mexico is probably going to decline over
the next few years. And one of the advantages of getting oil
from Canada and Mexico is that they're adjoining countries over land and we can
Bring the oil in by pipeline. Pipeline is a very cheap way to transport
oil. Much cheaper than even by ocean tanker.
then next in line is Saudi Arabia, the third country, and we get about 10% of
our imports from Saudi Arabia. Venezuela at about 8%, Nigeria at about
7%, Russia, Russia's 5%. Russia has really brought on, and
developed their oil resources and increased production considerably in the
last 10 years actually. And they're becoming a, and are, a major,
major oil exporter. Iraq.
Is they're up to about 4% now, Colombia in South America, Algeria, Angola, and
Brazil, and I left the rest off. They were all less than 2%.
So, you can see the main countries that we are depending on for our.
Oil imports, which is about 60% of what we use.
but Canada, Mexico we don't use as a major problem with those imports.
Probably rightfully so. and you can see here that approximately a
third of our yeah, Mexico and Canada together.
Approximately a third of our oil imports come from North America.
so those are much less problematic than the ones that the remaining oil-importing
countries that we're getting our oil from.
outside of North America is about two-thirds of the total oil imports.
So that means that about 40% of our oil supplies that we use every day is coming
from outside North America, which is, in my mind, probably one of the more
important numbers. 40 % of the oil we use is coming from
outside of North America. the 65% is of the.
of the oil that's being imported. So, you multiply that times about 60% of
the total import oil that is imported. And you get about 40% of the oil that we
use. Is coming from outside of North America.
well, why we import from those particular countries is a complicated story, and
there's no one factor that determines that, but it's useful to look at the.
Nations of the world that are exporting oil.
Saudi Arabia is exporting more oil for sale to other countries than any other
nation. At about 21% of the total oil that's
exported for purchase on the open market, that they don't, is not consumed within
the producing countries is coming from Saudi Arabia.
Russia's next. I mentioned Russia is becoming another
big player in the world oil market about 18% of the world's oil that is exported
is coming from Russia. That's available for purchase.
Iran. And you can see why Iran is a major
player, and one that's hot on our, our radar screen.
UA Emirates, Kuwait, Nigeria, Iraq, Norway, or, Angola, Venezuela.
Venezuela, with Chavez. Is, we don't have very friendly situation
with, with that country. so there are a lot of countries on here
that are not necessarily our best friends.
That, and when we choose among these countries about where we are going to get
our oil from, imported from. It's primarily dependent on price.
These, the oil that's imported is bought by private companies like Exxon and
Chevron. And they buy the oil from the cheap
resource they can get it. Whoever can deliver it to their refinery
at the least cost is where they get their oil from and where they purchase it from.
So it's price that is the primarily term. So of course, their price to their dock
is determined by how far it has to be shipped, so Canada and Mexico have an
advantage in that it doesn't have to be shipped very far, so there's less
shipping cost. So that helps them and hurts the
countries that have to ship it by, by ocean tanker.
So that's the available. oil supply on the market.
By the way, on interesting thing, there's a significant percentage of the oil is
pumped out, put on a tanker, and the tanker is in the middle of the ocean
before it's actually sold. So people don't really care, but
corporations, big companies don't really care where their oil's coming from.
If there's a tanker out there that's. That'll sell it them cheaper than
somebody else and anybody else. That's where they'll get it from.
So they're obviously some long term contracts too but the, the, the last
barrel that's sold is the on the margin is the one that determines the price of
oil. And we'll talk about that more.
so we see that, Saudi Arabia is, producing the largest amount of oil on
the world market for export. And I think it's interesting that they're
actually producing more oil than we're producing.
They're producing about 10. 10 million barrels a day and we're
producing about 7 million barrels a day. And in order to get that 7 million
barrels a day, we, you, right now have about 1,400 oil rigs that are actively
drilling for oil. That's an interesting number.
1,400, that's a lot of rigs. Guess what Saudi Arabia had? Well as
shown there, it's 50 rigs to get more oil than we are getting.
They're producing 10,000,000 barrels a day with 50 active drilling rigs.
Compared to 1400 rigs in which we're, have producing only seven.
And this is fairly consistent over time. We're, we've explored our country for a
hundred years now for oil and it's similar to the.
The analogy I like to use is like you've got beach ball, is like you've got volley
balls and ping pong balls buried in the sand on the beach, and each one of them
has oil in it. And you go around with a stick looking
for oil, and you're going to find the The volleyballs first and when you find one
is going to have a lot of oil. But not we've basically found all the
volleyballs so now we're looking for ping-pong balls that are harder to find.
And they, it's harder to get it out and we get a lot less oil for all the effort.
So, that's why we have so many rigs that actually looking for oil.
So we are, we are trying. It's not for the lack of trying.
so conclusions; US imports are about 40% of oil from outside North America.
Much of this oil comes from unfriendly, unstable countries.
And the issues are economic impact of that imported oil.
That's a billion dollars a day of imported oil.
We're sending a billion dollars a day out of this country for oil.
That's a huge economic impact. It has impact on jobs, on the economy On
people's personal bank account, etc. And the other one, of course, is national
security. And we learned about that in spades in
the 70's when OPEC decided to embargo us and wouldn't sell us any oil.
And, I lived through that, and it wasn't a very good time.
Because when it takes, it, it, we just don't have any alternatives when people
won't sell us oil and we can't get enough.
We really don't have any short time alternatives trying to solve that
problem. Thank you.