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U.S. Oil Reserves Counterpoint

 

The question is what are the facts concerning the present U.S. oil reserves? What are we as a nation able to produce? What are the present U.S. proven oil reserves, and the annual usage? Can the U.S. proven oil reserves be increased?

 

Since writing this article the economy has changed. Read this article about “Low oil prices force oil drills to a halt.


The U.S. proven oil reserves is a little less than 21 billion barrels in 2006 according to the Energy Information Agency (EIA). U.S. crude production peaked in 1970 at 9.6 million barrels per day, and had declined to 5.1 million barrels per day by 2006. This represents about an 11year supply of oil reserves at current rates of production. United States crude oil production has been declining. Over 2.3 million wells having been drilled in the U.S. since 1949, and oil consumption is nearly four times as high as oil production. A May 2008 assessment by the EIA estimated a massive oil deposit could increase U.S. reserves by 10 fold and potential cumulative production of the Arctic National Wildlife Refuge to be a maximum of 4.3 billion barrels from 2018 to 2030. This estimate is a best-case scenario of technically recoverable oil during the area’s primary production years if legislation were passed in 2008 to allow drilling. Expected oil rich basins are unexplored and undeveloped. The social, environmental, and economic aspects of development will be challenging.

 

The United States maintains a Strategic Oil Reserve at four sites in the Gulf of Mexico, with a total capacity of 727 million barrels of crude oil.

 

U.S. Petroleum Basic Statistics (2007):

U.S. petroleum consumption                                                   20,680,000 barrels/day

U.S. motor gasoline consumption                                             9,286,000 barrels/day

U.S. crude oil production                                                          5,064,000 barrels/day

State ranking (Texas) of crude oil production                         1,087,000 barrels/day

U.S. crude oil imports (5,980,000 barrels/day from OPEC) 10,031,000 barrels/day

Number of U.S. operable petroleum refineries                                                     150

U.S. proven oil reserves                                                            20,972,000 barrels

 

According to the EIA, oil production in the U.S. comes mainly from Texas (25% from shore and offshore), Alaska (24% onshore), California (21% shore), and Louisiana (14% from onshore and offshore).

 

According to the EIA, the main suppliers of oil to the U.S. at this time are; Canada (1.68 million barrels per day), Saudi Arabia (1.49 million barrels per day), Venezuela (1.46 million barrels per day), and Mexico (1.35 million barrels per day). 

 

What is running low is oil in fields that have already been tapped and are in production — in other words, the relatively easy-to-get stuff, which oil companies have proven exists and can get at with current technology. Those reserves are clearly being drained. It is from this same tapped and leased land of the present Democratic Congress provision requiring oil and gas companies to develop on already leased lands before obtaining new leases would curb future U.S. production. Besides taking time to dig more wells, it would only deplete the existing U.S. oil fields quicker, leaving the U.S. more dependent on foreign oil.

 

A point that is not commonly pointed out, despite the U.S. being “the world’s largest importer of oil and refined products, the U.S. also exports fossil fuels. As of March, the latest data available, U.S. oil refiners were exporting more than 1.8 million barrels a day of crude oil, gasoline, diesel, jet fuel and other refined products. The top five destinations for U.S. fuel were Mexico, Canada, the Netherlands, Chile and Singapore.” “What this proves is that the market for oil and fuel is global, it doesn’t matter where it came from. What matters is where the seller can get the best price. This proves that a quick short time fix of rearranging the existing oil reserves will probably have little effect in reduction of oil price.”

 

Of interest are the candidate’s views on technological issues: Energy, Climate change, Space program, skilled worker shortage, and technology.

 

From the facts, the proven U.S. oil fields and the global oil market are declining. Unless something happens the cost of oil will continue to rise. Since the U.S. must start to lead, maybe it is time to allow the offshore oil drilling or drilling at the Bakken Formation in North Dakota. More oil at the present time is not necessarily the answer; it is how to control the oil.

Price of Oil Counterpoint

 

Oil prices have passed $143 a barrel for the first time. The reason for the sharp increase has been speculated:

 

  1. Supply concerns-tight oil supplies
  2. Fragile global economy-the FED won’t raise interest rates
  3. Tensions in the mid-east (Iraq, Iran, Israel)
  4. Global demand
  5. The large oil companies interests
  6. Speculation led investors to seek higher yielding investments 

In the 1970s, Big Oil companies controlled 80% of the world oil reserves, but now those numbers are reversed, with local government-owned oil companies holding 80% to 94 % of the block. Within recent years, independent oil and gas companies have become the companies providing a wide range of technology, project management, and developing new technologies, rather than Big Oil.  The break-even price (the amount of money it takes to extract 1 barrel of oil) is the first thing oil companies establish in order to determine if drilling a new well makes financial sense.

 

Who are the “largest oil companies”, what are their interests, who do they represent, and how are they ranked?

 

How much oil is produced in each country?

 

Is a large price of today’s oil price pure speculation of a large financial market? Some say it is driven by large trader banks and hedge funds that control the oil and its price. A June 2006 US Senate Permanent Subcommittee on Investigations reported, “…there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices.”

 

Others say, “Blame governments, not speculators for high price of oil.” An increase of oil imports results in the increase of oil costs.

 

A tabulation of global oil production and consumption is tabulated here.

 

The EIA (Energy Information Agency) lists the annual oil market chronology of 1970-2006.

 

The WTRG (West Texas Research Group) gives an oil price history and analysis.

 

The Econbrowser web site gives an analysis of current oil conditions and policy.

 

The Wikipedia web site gives oil price increase facts since 2003.

 

The New York Times article suggests, “As oil prices soared to record levels in recent years, basic economics suggested that consumption would fall and supplies would rise as producers drilled for more oil.”

 

These three articles suggest that oil gas prices will drop:

 

  1. CNN web site, “Why oil prices will tank.”
  2. Reason Online- “Oil Price Bubble?” Supply is up, demand is down, yet the price is soaring. Here’s why.
  3. CATO Institute web site, “Get ready for the oil price bubble.” 

Of interest are the candidate’s views on technological issues: Energy, Climate change, Space program, skilled worker shortage, and technology.

Conclusion:

 

After reviewing the above articles, history and analysis the following is noted:

 

  1. Today there are not tight oil supplies.
  2. The global economy doesn’t appear to be in as bad a shape as reported.
  3. There are tensions in the mid-east, but it is under somewhat control without effecting oil.
  4.  There is a global oil demand, but today it is adequate.
  5. The large oil companies are willing to provide enough oil.
  6. Speculators and government’s regulations appear to be the ones causing higher prices for oil.