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Thank you.
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 one 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 ten million barrels a day down to about nine 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 six percent every
year. So we're producing about seven million barrels a day. So six percent 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 four, four 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 two 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 two
countries that it's coming from are North American countries, Canada being the
biggest one of about 24 percent of the oil that we import is coming from Canada.
That's followed by Mexico and, at about ten%.
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 ten percent of
our imports from Saudi Arabia. Venezuela at about eight%, Nigeria at ab out seven%,
Russia, Russia's five%. Russia has really brought on, and
developed their oil resources and increased production considerably in the
last ten years actually. And they're becoming a, and are, a major, major oil
exporter. Iraq. Is they're up to about four percent now, Colombia in South
America, Algeria, Angola, and Brazil, and I left the rest off. They were all less
than two%. 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 eighteen percent of the world's oil that
is exported is coming from Russia. That's available for purchase. Iran. A nd 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 ten.
Ten million barrels a day and we're producing about seven million barrels a
day. An d in order to get that seven 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 prob lem.