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.