1 00:00:00,012 --> 00:00:04,164 Hello. We're continuing here with Energy 101. 2 00:00:04,164 --> 00:00:08,574 And today, we're going to talk about oil imports. 3 00:00:08,574 --> 00:00:15,788 We've talked about the resources we're using in fossil fuels to fuel our energy 4 00:00:15,788 --> 00:00:21,596 needs: oil, gas, and coal. And we just finished with oil and how 5 00:00:21,596 --> 00:00:26,602 much we use but we need to look a little closer at the. 6 00:00:26,602 --> 00:00:30,837 The oil import's. Because that's the 1 of the biggest 7 00:00:30,837 --> 00:00:36,712 reason that, that you see energy in the news a lot, is the impact of the oil 8 00:00:36,712 --> 00:00:43,087 imports that we're, that we're using. A, this is, is a chart that we've seem 9 00:00:43,087 --> 00:00:46,667 before. I just want to emphasize the red area 10 00:00:46,667 --> 00:00:52,676 that's import over time. These about millions of barrels per day. 11 00:00:52,676 --> 00:00:56,861 And you can see, the yellow is the lower 48. 12 00:00:56,861 --> 00:01:04,229 Oil production in barrels per day. Versus years and the purple is the Alaska 13 00:01:04,229 --> 00:01:09,338 production. And we're fortunately turned up here in 14 00:01:09,338 --> 00:01:12,578 2009. And beginning to come up. 15 00:01:12,578 --> 00:01:19,495 Our demand is coming up, though, also a little bit, and this is the import trend 16 00:01:19,495 --> 00:01:22,941 itself. And it has dropped, that you hear 17 00:01:22,941 --> 00:01:26,268 significant And for significant news about. 18 00:01:26,268 --> 00:01:31,220 It's dropped from about 10 million barrels a day down to about 9 million 19 00:01:31,220 --> 00:01:36,275 barrels per day on our oil imports. You might be surprised that it hasn't 20 00:01:36,275 --> 00:01:40,938 dropped more than that. when you hear about all the new oil 21 00:01:40,938 --> 00:01:44,947 production coming out of North Dakota for instance. 22 00:01:44,947 --> 00:01:51,700 And oil sands and tar sands and things but there's a big reason why it's not, 23 00:01:51,700 --> 00:01:56,386 our imports are not going down more than what this graph shows. 24 00:01:56,386 --> 00:02:01,112 And that is because existing wells decline their production. 25 00:02:01,112 --> 00:02:05,803 About 6% every year. So we're producing about 7 million 26 00:02:05,803 --> 00:02:10,281 barrels a day. So 6% of that is 400,000 barrels a day. 27 00:02:10,281 --> 00:02:15,018 The existing oils are decreasing in their production. 28 00:02:15,018 --> 00:02:20,314 So to stay in the same place, to produce the same amount of oil. 29 00:02:20,314 --> 00:02:27,324 We have to find and skip new producing oils of 4, 4 to 500,000 barrels a day 30 00:02:27,324 --> 00:02:34,337 every year, just to keep our, our oil production in this country the same. 31 00:02:34,337 --> 00:02:39,705 So we have to run hard in order to keep the same place. 32 00:02:39,705 --> 00:02:46,153 If we want to make an inroad into the red area here which are imports. 33 00:02:46,153 --> 00:02:51,422 We're going to increase our production and drilling. 34 00:02:51,422 --> 00:02:55,285 Activity considerably. Because we've got, as you see. 35 00:02:55,285 --> 00:02:58,858 We have to increase at a factor of 2 and a half or so. 36 00:02:58,858 --> 00:03:03,189 Our production in order to become independent of oil imports. 37 00:03:03,189 --> 00:03:08,244 Which we'll look at a little closer. So that's what we're talking about. 38 00:03:08,244 --> 00:03:12,004 And quite previously, we've determined that the U.S. 39 00:03:12,004 --> 00:03:17,383 is energy independent for oil in the. For excuse me, for coal and gas. 40 00:03:17,383 --> 00:03:23,472 those are the pow, electric power fuel resource that we use, fuels. 41 00:03:23,472 --> 00:03:29,006 And when it comes to electricity, we are energy independent. 42 00:03:29,006 --> 00:03:34,995 that's why wind that produces electricity, solar TV that produces 43 00:03:34,995 --> 00:03:41,792 electricity, and nuclear that produces electricity does not Have an impact on 44 00:03:41,792 --> 00:03:48,517 our oil consumption, because we don't burn oil for electricity production. 45 00:03:48,517 --> 00:03:55,092 So that's unfortunate because our renewables, the wind and solar, and 46 00:03:55,092 --> 00:04:01,962 nuclear for instance Also would, have a big impact on our oil if we were burning 47 00:04:01,962 --> 00:04:06,423 oil for electric power, but unfortunately, we're not. 48 00:04:06,423 --> 00:04:13,334 the US is de, dependent on imported oil. Approximately 60% of our oil consumption 49 00:04:13,334 --> 00:04:16,223 is, imported. 60% is imported. 50 00:04:16,223 --> 00:04:22,938 So that's, that's where The problem is, from an economic and national security 51 00:04:22,938 --> 00:04:27,124 viewpoint. So where's this oil coming from? Well 52 00:04:27,124 --> 00:04:34,290 fortunately the top 2 countries that it's coming from are North American countries, 53 00:04:34,290 --> 00:04:40,859 Canada being the biggest 1 of about 24% of the oil that we import is coming from 54 00:04:40,859 --> 00:04:45,334 Canada. That's followed by Mexico and, at about 55 00:04:45,334 --> 00:04:49,436 10%. And unfortunately Mexico's production 56 00:04:49,436 --> 00:04:55,847 rate is declining and their, their domestic consumption is generally 57 00:04:55,847 --> 00:04:59,982 increasing. So Their exports have been declining in 58 00:04:59,982 --> 00:05:04,147 recent years. people expect that to happen for a while 59 00:05:04,147 --> 00:05:10,197 longer so the oil that we can import from Mexico is probably going to decline over 60 00:05:10,197 --> 00:05:14,732 the next few years. And one of the advantages of getting oil 61 00:05:14,732 --> 00:05:20,442 from Canada and Mexico is that they're adjoining countries over land and we can 62 00:05:20,442 --> 00:05:26,327 Bring the oil in by pipeline. Pipeline is a very cheap way to transport 63 00:05:26,327 --> 00:05:30,762 oil. Much cheaper than even by ocean tanker. 64 00:05:30,762 --> 00:05:37,437 then next in line is Saudi Arabia, the third country, and we get about 10% of 65 00:05:37,437 --> 00:05:44,298 our imports from Saudi Arabia. Venezuela at about 8%, Nigeria at about 66 00:05:44,298 --> 00:05:50,210 7%, Russia, Russia's 5%. Russia has really brought on, and 67 00:05:50,210 --> 00:05:57,718 developed their oil resources and increased production considerably in the 68 00:05:57,718 --> 00:06:04,210 last 10 years actually. And they're becoming a, and are, a major, 69 00:06:04,210 --> 00:06:07,072 major oil exporter. Iraq. 70 00:06:07,072 --> 00:06:13,964 Is they're up to about 4% now, Colombia in South America, Algeria, Angola, and 71 00:06:13,964 --> 00:06:19,208 Brazil, and I left the rest off. They were all less than 2%. 72 00:06:19,208 --> 00:06:24,852 So, you can see the main countries that we are depending on for our. 73 00:06:24,852 --> 00:06:28,800 Oil imports, which is about 60% of what we use. 74 00:06:28,800 --> 00:06:34,960 but Canada, Mexico we don't use as a major problem with those imports. 75 00:06:34,960 --> 00:06:40,878 Probably rightfully so. and you can see here that approximately a 76 00:06:40,878 --> 00:06:45,452 third of our yeah, Mexico and Canada together. 77 00:06:45,452 --> 00:06:50,097 Approximately a third of our oil imports come from North America. 78 00:06:50,097 --> 00:06:56,447 so those are much less problematic than the ones that the remaining oil-importing 79 00:06:56,447 --> 00:06:59,562 countries that we're getting our oil from. 80 00:06:59,562 --> 00:07:05,455 outside of North America is about two-thirds of the total oil imports. 81 00:07:05,455 --> 00:07:11,576 So that means that about 40% of our oil supplies that we use every day is coming 82 00:07:11,576 --> 00:07:17,430 from outside North America, which is, in my mind, probably one of the more 83 00:07:17,430 --> 00:07:21,760 important numbers. 40 % of the oil we use is coming from 84 00:07:21,760 --> 00:07:25,752 outside of North America. the 65% is of the. 85 00:07:25,752 --> 00:07:32,952 of the oil that's being imported. So, you multiply that times about 60% of 86 00:07:32,952 --> 00:07:39,702 the total import oil that is imported. And you get about 40% of the oil that we 87 00:07:39,702 --> 00:07:43,570 use. Is coming from outside of North America. 88 00:07:43,570 --> 00:07:50,177 well, why we import from those particular countries is a complicated story, and 89 00:07:50,177 --> 00:07:55,902 there's no one factor that determines that, but it's useful to look at the. 90 00:07:55,902 --> 00:07:59,457 Nations of the world that are exporting oil. 91 00:07:59,457 --> 00:08:05,887 Saudi Arabia is exporting more oil for sale to other countries than any other 92 00:08:05,887 --> 00:08:09,377 nation. At about 21% of the total oil that's 93 00:08:09,377 --> 00:08:15,897 exported for purchase on the open market, that they don't, is not consumed within 94 00:08:15,897 --> 00:08:20,782 the producing countries is coming from Saudi Arabia. 95 00:08:20,782 --> 00:08:24,733 Russia's next. I mentioned Russia is becoming another 96 00:08:24,733 --> 00:08:30,691 big player in the world oil market about 18% of the world's oil that is exported 97 00:08:30,691 --> 00:08:34,984 is coming from Russia. That's available for purchase. 98 00:08:34,984 --> 00:08:38,171 Iran. And you can see why Iran is a major 99 00:08:38,171 --> 00:08:42,409 player, and one that's hot on our, our radar screen. 100 00:08:42,409 --> 00:08:48,435 UA Emirates, Kuwait, Nigeria, Iraq, Norway, or, Angola, Venezuela. 101 00:08:48,435 --> 00:08:54,753 Venezuela, with Chavez. Is, we don't have very friendly situation 102 00:08:54,753 --> 00:09:00,248 with, with that country. so there are a lot of countries on here 103 00:09:00,248 --> 00:09:03,540 that are not necessarily our best friends. 104 00:09:03,540 --> 00:09:08,932 That, and when we choose among these countries about where we are going to get 105 00:09:08,932 --> 00:09:13,469 our oil from, imported from. It's primarily dependent on price. 106 00:09:13,469 --> 00:09:18,811 These, the oil that's imported is bought by private companies like Exxon and 107 00:09:18,811 --> 00:09:21,606 Chevron. And they buy the oil from the cheap 108 00:09:21,606 --> 00:09:25,671 resource they can get it. Whoever can deliver it to their refinery 109 00:09:25,671 --> 00:09:30,813 at the least cost is where they get their oil from and where they purchase it from. 110 00:09:30,813 --> 00:09:36,111 So it's price that is the primarily term. So of course, their price to their dock 111 00:09:36,111 --> 00:09:41,396 is determined by how far it has to be shipped, so Canada and Mexico have an 112 00:09:41,396 --> 00:09:46,631 advantage in that it doesn't have to be shipped very far, so there's less 113 00:09:46,631 --> 00:09:50,040 shipping cost. So that helps them and hurts the 114 00:09:50,040 --> 00:09:53,742 countries that have to ship it by, by ocean tanker. 115 00:09:53,742 --> 00:09:57,786 So that's the available. oil supply on the market. 116 00:09:57,786 --> 00:10:03,278 By the way, on interesting thing, there's a significant percentage of the oil is 117 00:10:03,278 --> 00:10:08,136 pumped out, put on a tanker, and the tanker is in the middle of the ocean 118 00:10:08,136 --> 00:10:12,236 before it's actually sold. So people don't really care, but 119 00:10:12,236 --> 00:10:17,577 corporations, big companies don't really care where their oil's coming from. 120 00:10:17,577 --> 00:10:22,142 If there's a tanker out there that's. That'll sell it them cheaper than 121 00:10:22,142 --> 00:10:26,042 somebody else and anybody else. That's where they'll get it from. 122 00:10:26,042 --> 00:10:30,562 So they're obviously some long term contracts too but the, the, the last 123 00:10:30,562 --> 00:10:35,122 barrel that's sold is the on the margin is the one that determines the price of 124 00:10:35,122 --> 00:10:37,763 oil. And we'll talk about that more. 125 00:10:37,763 --> 00:10:43,405 so we see that, Saudi Arabia is, producing the largest amount of oil on 126 00:10:43,405 --> 00:10:48,214 the world market for export. And I think it's interesting that they're 127 00:10:48,214 --> 00:10:51,682 actually producing more oil than we're producing. 128 00:10:51,682 --> 00:10:56,139 They're producing about 10. 10 million barrels a day and we're 129 00:10:56,139 --> 00:11:01,358 producing about 7 million barrels a day. And in order to get that 7 million 130 00:11:01,358 --> 00:11:07,072 barrels a day, we, you, right now have about 1,400 oil rigs that are actively 131 00:11:07,072 --> 00:11:10,449 drilling for oil. That's an interesting number. 132 00:11:10,449 --> 00:11:14,665 1,400, that's a lot of rigs. Guess what Saudi Arabia had? Well as 133 00:11:14,665 --> 00:11:18,640 shown there, it's 50 rigs to get more oil than we are getting. 134 00:11:18,640 --> 00:11:23,542 They're producing 10,000,000 barrels a day with 50 active drilling rigs. 135 00:11:23,542 --> 00:11:28,997 Compared to 1400 rigs in which we're, have producing only seven. 136 00:11:28,997 --> 00:11:35,762 And this is fairly consistent over time. We're, we've explored our country for a 137 00:11:35,762 --> 00:11:40,042 hundred years now for oil and it's similar to the. 138 00:11:40,042 --> 00:11:44,650 The analogy I like to use is like you've got beach ball, is like you've got volley 139 00:11:44,650 --> 00:11:49,069 balls and ping pong balls buried in the sand on the beach, and each one of them 140 00:11:49,069 --> 00:11:52,040 has oil in it. And you go around with a stick looking 141 00:11:52,040 --> 00:11:56,922 for oil, and you're going to find the The volleyballs first and when you find one 142 00:11:56,922 --> 00:12:00,937 is going to have a lot of oil. But not we've basically found all the 143 00:12:00,937 --> 00:12:05,837 volleyballs so now we're looking for ping-pong balls that are harder to find. 144 00:12:05,837 --> 00:12:10,852 And they, it's harder to get it out and we get a lot less oil for all the effort. 145 00:12:10,852 --> 00:12:15,723 So, that's why we have so many rigs that actually looking for oil. 146 00:12:15,723 --> 00:12:19,711 So we are, we are trying. It's not for the lack of trying. 147 00:12:19,711 --> 00:12:25,332 so conclusions; US imports are about 40% of oil from outside North America. 148 00:12:25,332 --> 00:12:28,973 Much of this oil comes from unfriendly, unstable countries. 149 00:12:28,973 --> 00:12:32,350 And the issues are economic impact of that imported oil. 150 00:12:32,350 --> 00:12:35,174 That's a billion dollars a day of imported oil. 151 00:12:35,174 --> 00:12:39,088 We're sending a billion dollars a day out of this country for oil. 152 00:12:39,088 --> 00:12:43,571 That's a huge economic impact. It has impact on jobs, on the economy On 153 00:12:43,571 --> 00:12:49,408 people's personal bank account, etc. And the other one, of course, is national 154 00:12:49,408 --> 00:12:52,938 security. And we learned about that in spades in 155 00:12:52,938 --> 00:12:58,397 the 70's when OPEC decided to embargo us and wouldn't sell us any oil. 156 00:12:58,397 --> 00:13:03,002 And, I lived through that, and it wasn't a very good time. 157 00:13:03,002 --> 00:13:08,006 Because when it takes, it, it, we just don't have any alternatives when people 158 00:13:08,006 --> 00:13:10,602 won't sell us oil and we can't get enough. 159 00:13:10,602 --> 00:13:14,998 We really don't have any short time alternatives trying to solve that 160 00:13:14,998 --> 00:13:16,190 problem. Thank you.