(MINNEAPOLIS) – The United States is not energy independent. And neither is Japan, Australia, Germany or China. And, actually, neither is Saudi Arabia.
Depending on others
Countries that export one form of energy may import another, as Australia exports coal but imports oil. That’s the situation with Saudi Arabia, which, of course, exports vast amounts of raw petroleum, but actually is an importer of certain refined petroleum products. In response to growth in those imports, Saudi Arabia is now building more refineries to keep up.
Exporting countries may strongly depend on their exports for cash, and need other countries for refining or shipping product or for workers or technology. Few indeed are the nations that could claim total independence in regard to energy.
But, of course, the U.S. is a long way from any form of energy independence.
Importing
In terms of total oil supply, the U.S. has long used far more than it produces. After WWII, production was nearly equal to consumption. Through 1970, both grew rapidly, with consumption slowly outpacing supply. U.S. production peaked in the early 70s while consumption continued to grow. The degree of foreign dependence actually dropped during the late 70s as U.S. consumption dropped, so that by 1982 the U.S. imported only 28% of its needs. That low a percentage of imports has not been matched since.
From 1982 to 2005, U.S. production slowly declined while demand slowly increased, leading to the U.S. importing 60% of its liquid fuel needs in 2005. That was the peak, and since then reductions in consumption due to the recession and expansion in supply have lowered the import percentage to 45% of our needs. That works out to importing 8.8 million barrels a day in 2010.
Can we produce what we need?
Sara Palin urged “drill, baby, drill.” Newt Gingrich paints a picture of the delights of being able to tell the Saudi’s that we don’t need them any longer. Others hope we’ll “soar” into an energy-rich paradise. Is this possible?
At its peak in the 70s, U.S. production was about 12 million barrels a day. Before the recession curbed economic activity we were using over 20 million barrels a day. So, from current situation, with no change in consumption, we’d need to nearly double our own production to become independent of imports. Is that possible?
The U.S. official estimate in 2009, for all proven reserves across the entire country is 22.3 billion barrels. If that were all just used to substitute for imports it only would provide about 7 years of oil – hardly enough to give us long term independence.
But hope for untapped reserves continues. Some point to oil finds in the Alaskan Natural Wildlife Reserve (ANWR). Recently, more hope has been placed in the Bakken formation in the upper Midwest. Some claim this find proves we have virtually “unlimited” reserves. Indeed, rising production from this field has been one of the reasons for the recent increase in total U.S. production. While this formation likely does have vast amounts of oil, it is highly dispersed and requires the environmentally difficult process of “fracking” to extract, and so the estimates by the U.S. Geologic Service of how much oil can be recovered there are not that impressive.
Three factors though, could dramatically change the expectation of what can be recovered from this and other “unconventional” sources. First, other oil basins in the U.S. and elsewhere are in slow decline. So an increase in Bakken production may just offset other declines. Alaska’s production is already in decline, so much so that reduced flow through the Alaska pipeline is threatening its future.
The second factor that could change estimates is changes in prices. Should world prices for oil increase, there will be an economic incentive to bring more of the difficult unconventional reserves to production – but the high prices are the problem we hope to solve. If high prices are needed to make the production worthwhile, we won’t get the flood of oil we need to lower prices.
Finally, there is the unknown of what future technological advances might bring. It is considered obvious to many in the U.S. that “determination,” “hope in the future” and “confidence” are all that is needed to bring about an ongoing round of technological miracles, and indeed, technology continues to advance. But technology costs money, and again, the only hope for massive investments in improved oil recovery methods depends on prices staying high.
Fuel substitution
We’ve been discussing oil. But, of course, fuels can be substituted for each other. There is natural gas, coal, and nuclear to think about as well as renewables such as wind, solar and hydro power. There are more exotic possibilities such a fuel cells and power from ocean waves. Discussing all these options would take a book.
People are getting excited about hybrid or electric cars. But what an electric car does is substitute the location of production. Instead of refining oil to gas to put in your car to burn, some fuel (gas, coal, uranium) is burned in a central power plant to produce electricity to store in a car to be used.
That can help if the entire chain of production of electricity is more efficient than using gas in your car and can certainly help with pollution, but it generally still involves using a non-renewable source.
Conservation or efficiency?
Instead of producing more, we could consume less. But consuming less, if termed conservation, has an oddly ambiguous reputation. In some quarters it is derided as assuming we’re going to live in cold houses or move back to the caves. It seems to be about retreat or living more limited lives. And some think we do need to scale back.
Call it “efficiency” instead, and the focus changes to doing more with less, or the same with less. It is an unremarked feature of recent U.S. history that we have become more efficient with our energy use. A generation has grown up with the idea of better windows, insulating houses, more efficient air conditioners and high efficiency furnaces and light bulbs. In the U.S. the amount of energy we use per person did not change from 1980 to 2000 and has slowly declined since then. A more telling statistic from the same source shows that the energy used to produce a given amount of economic output has declined by a third since 1980 and is likely to decline even more in the future.
This increase, obtained without significant social disruption, would seem to suggest that future improvements to efficiency would be at least as feasible as massive investments in production technology. If we truly want to make us less dependent on disruptions to the supply of energy, or to rapid changes in price, becoming more efficient is worth a serious look.
Source: Mint Press News