Monday, April 28, 2008

Domestic vs. Foreign Oil

As you can tell by now, the primary point of this series is for us to understand the present oil and gasoline situation, so that we can better know what to do about it. Though demand is slightly dropping, prices are climbing dramatically. Barring any government interference (which is a post for a later time), the only remaining culprit is a dwindling supply.

We have all heard political talk about reducing our dependence on foreign oil, but what exactly does that entail? Presently 34% of the U.S. oil supply is from within. That means 66% is imported from other countries. Also, contrary to popular belief, only 21% of that amount comes from the Persian Gulf region. To remove our dependence on foreign oil entirely, we would have to eliminate 2/3 of what we presently use! That means, from here on out, every American drives only 2 days per week, all truckers need to carry the same amount of material but drive 2/3 less miles, and any other use of oil you can think of also needs to be reduced by the same amount.

As you can see, eliminating foreign oil supplies is an impossible task with our present level of demand. However, many are trying to tackle the problem from the other end by increasing domestic supplies, so that foreign nations do not have as much influence on our situation. One of the more popular proposals is drilling in the Alaska National Wildlife Reserve. A similar effort in Prudhoe Bay (just to the west of ANWR) was quite successful; however, both pose significant environmental concerns. In fact it is this very struggle that has lead to a stagnation in domestic oil supplies. While further drilling might put a dent in prices, all proposed locations raise some environmental concerns. Therefore, our desire to be "green" has left less "green" in our pockets.

So, which issue is more important? Your price at the pump, or the protection of Alaskan Wildlife? This is just one of the questions we must deal with if we are to change our domestic oil situation.

5 comments:

  1. Mr. Anit Tree-Hugger Man11:37 AM

    Freaking tree huggers!

    ReplyDelete
  2. If you had done your homework you would have realized that it actually costs more to produce domestic oil than to export foreign. Drilling in Alaska would only raise prices further.

    ReplyDelete
  3. You have a good point. It is true that it is more expensive to produce domestic oil than foreign oil. Therefore, if we are replacing foreign oil with domestic oil then prices would go up. However, if we are just supplementing our foreign oil supplies, then it would drop prices slightly.

    It is also more expensive to refine oil that comes from North America, as it is not as pure as the "Sweet oil" from the Middle East.

    ReplyDelete
  4. Anonymous11:28 PM

    FOREIGN WARS OR DOMESTIC OIL

    If the US Government spent a trillion dollars over 8 years on domestic oil production from known reserves in the Gulf of Mexico, the Continental Shelf and coal gasification instead of War in Iraq gas would be $2 a gallon or less. America could quit sending billions to countries that sponsor terrorism. And reducing our trade imbalance keeps jobs in America. Every billion of trade deficit costs 13,000 jobs. $400 billion for oil last year: do the math.

    America has 1/4th the coal on planet earth. South Africa is producing 300,000 barrels of gas and diesel a day from coal. And synthetic fuel from coal is cleaner burning than gas. And it can be produced cheaper than from $100+ a barrel crude oil.

    Harness your anger at the pump. Call you're US Senators and demand domestic production in this decade. If you don’t raise your voice the oil companies and politicians will assume you are ready to pay even more.

    ReplyDelete
  5. deedoe12:49 AM

    Michael, it's imperative to understand what, exactly, we have, and how quickly it can be extracted. Put simply, there is not a way to extract enough domstic supply - even with ANWR at full pump - to supply 50% of our needs.

    Second - ANWR extraction, if we mandate it tomorrow, will take 10 years to ramp up to a significant output. You can check the EIA report on the effect of ANWR on crude pricing, and the rate of supply provided. ANWR can't cut it. Go to http://www.eia.doe.gov/oiaf/servicerpt/anwr/index.html

    ... by the way, these are the folks who advise The President, so you know where any bias will be. ;)

    Consult the facts on 'oil shale', too - you'll see that there isn't yet one oil company that has announced a way to turn this material - actually a kerogen that needs significant infusion with hydrogen to be in the same class as crude oil - into something that can be commercially produced and sold. This is the case at today's prices! Not only that, but it is estimated that it would take three decades before this resource could provide even half of our domestic supply as measured by today's standards. Read about 'shale oil' here - http://www.rand.org/pubs/research_briefs/RB9143/

    The current rage is to claim that simply 'drilling more and everywhere' is going to save the day. It can't. All you need to do, as an educated individual, is decide to look at the facts of production and supply yourself to realize that there are some folks out there handing you some bad information because it suits their interests to do so... as opposed to those facts that help decide what is truly better for this nation. Oil cannot do the job alone - we need to investigate and deploy alternative strategies.

    The moral path is clear on this one.

    ReplyDelete

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