Jason J. Churchill, October 25, 2000
Revised and submitted November 13, 2000  

Retrieved 052805 from http://maps.unomaha.edu/Peterson/funda/Sidebar/OilConsumption.html

Oil Consumption in North America

Outline

1. Oil Consumption in North America
2. U.S. Oil Production
3. Oil Reserves
4. Importing
5. Misconceptions about Fossil Fuel Resources

Oil Consumption in North America

Currently, the United States consumes 19.6 million barrels per day, of oil, which is more than 25% of the world's total..  As a result, the U.S produces one fourth of the world's carbon emissions.  Despite predictions that the U.S. will exhaust it's supply of oil in as little as forty years, the demand is on the increase, and is predicted to continue increasing, because of the ever increasing population.  Increase in resource consumption is caused by three factors: population growth, new uses found for a resource, and increase in demand for a resource to increase living standards.  The rate of consumption for oil is increasing at a rate of about 2% yearly. 

U.S. Oil Production

The United States produced enough oil to supply its own demand until 1970, (Youngquist paragraph 6). In that year the U.S. had to start importing oil to meet the demand.  The oil production for 2000 is expected to average 5.8 million barrels per day of crude oil.  The production for 1999 was 5.9 million barrels per day.  After the oil price collapse of 1985/1986, U.S. oil production declined dramatically.  Oil production in 2000 is down by 24% from 1985. However, according to the Energy Information Administration (EIA), oil production is expected to increase by 70,000 barrels per day, or 1.1% in 2001.  There is little to no chance of discovering any significant new onshore oil fields in the U.S.  There is a good possibility of discovering major deposits of oil offshore, but offshore drilling has been banned in many areas.  There are several good prospects far offshore that are open to exploration, but these are usually in very deep waters, and are extremely expensive to drill. The U.S. produces 12% of the world's oil, and this production is concentrated onshore, and offshore along the Texas Louisiana Gulf Coast, extending inland through west Texas, Oklahoma, and eastern Kansas. There are also significant oil fields in Alaska along the central North Slope.

Oil Reserves

According to the EIA, the United States has 21 billion barrels of proved oil reserves as of January 1, 2000.  The U.S. uses about 6.6 billion barrels per year.  That is only enough oil to last the U.S. about three and a half years without importing oil from other countries.  84% of the reserves are concentrated in four states.  Texas has 25%, both onshore, and offshore.  Alaska has 24%, California has 21%, and Louisiana has 14% onshore, and offshore.  Since 1990, U.S. oil reserves have dropped about 20%.  New oil discoveries made in 1999 were made almost entirely in the Gulf of Mexico, and Alaska. (321 million barrels).  All other discoveries were extensions of existing oil fields, or new reservoirs discovered in old fields. (404 million barrels).

Importing

The demand for oil in the United States is increasing slightly every year but domestic oil production is decreasing.  The U.S. is expected to consume an average of 19.6 million barrels per day of oil in 2000.  It is estimated that the U.S. imported 10.9 million barrels per day of oil in the first eight months of 2000, (E.I.A. Paragraph 9).  At this rate, the U.S. is currently importing about 57% of the oil that is being consumed.  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).  The U.S. has energy sanctions against Iran, Iraq, and Libya, all major oil producers that prohibit U.S. companies from doing business with them.

Misconceptions about Fossil Fuel Resources

With few exceptions, 16,000 feet is the maximum depth at which oil is found.  Below that depth, only gas exists, because of the temperature of the earth.  The United States has large areas of oil shale deposits, which are sometimes misconstrued as being a readily available resource. However, oil shale deposits are not the same thing as conventional oil fields.  There are no effective methods for extracting crude oil, from oil shale.  A variety of processes have been tried, and all have failed.  Oilsands, which is another kind of oil deposit, are found in large quantities in Canada.  It has been estimated that the oilsands contain 1.7 trillion barrels of oil, but this oil cannot be recovered by standard methods of well drilling, and has to be strip mined.  After it is dug up, the oil is removed by a water flotation process.  Then, the waste sand has to be safely disposed.  The strip mining process now being used takes the energy equivalent of two barrels of oil to produce one barrel.  In other words, the price to produce it is double the price for which it can be sold.  Another problem with the oilsands, is that much of it is too deep to be reached by strip mining.  Other methods of removing the deeper oil are being experimented with, but they are all very costly.  Canada's oilsands will probably not be produced in large amounts until the world's supply of conventional oil is nearly depleted.

Conclusion

If the natural resources of the world continue to be exploited at such a staggering rate, there will be nothing left to exploit. Conservation strategies have been implemented, especially at times when an energy shortage has occurred, but these strategies are all but forgotten when the shortage passes.  Unfortunately, conserving resources at this point will only temporarily postpone the inevitable, which is total energy resource exhaustion. Unless the lifestyles, and transportation habits, of the ever-increasing population that demand more, and more resources are dramatically changed, or new energy sources are discovered, conserving won't save us.
 
 

Bibliography:
deBlij, H.J., and  Peter O.Muller.
     Geography Realms, Regions, and Concepts. 9th Edition

Rowntree, Lewis, Price, Wyckoff. Diversity Amid Globalization.
     Prentice-Hall, Inc.

Wheeler, Jesse H. Jr., and Trenton J. Kostbade.
     World Regional Geography

 GeoDestinies. Myths and Realities of Mineral Resources. Youngquist, Walter Ph.D..
     National Book Company. 1997. <http://dieoff.org/page132.htm>.

 Energy Information Administration, (EIA).
     <www.eia.doe.gov/emeu/cabs/usa.html#OIL>.

 Oil & Gas Journal Online - petroleum, energy news.
     <http://ogj.pennnet.com>.

Jason J. Churchill, October 25, 2000
Revised and submitted November 13, 2000

Retrieved 052808 from http://www.worldwatch.org/node/5666

Oil Consumption Continues Slow Growth

by Joe Monfort

Global demand for oil reached 85.7 million barrels per day in 2007, a modest 1-percent increase over the 84.9 million barrels consumed daily in 2006.¹ (See Figure 1.) This marked the third straight year in which oil demand grew at an annual rate of less than 2 percent.² Despite the slow growth in demand, oil prices rose from just above $50 in January to near $100 at year’s end—close to the all-time inflation-adjusted price record that was reached in the early 1980s.³

The United States continued unchallenged as the world’s single largest oil-consuming nation in 2007, using almost one fourth of the global total at a rate of 20.7 million barrels daily.⁴ But U.S. oil consumption was virtually unchanged for the third year in a row, as rising oil prices discouraged demand despite three years of steady economic growth.⁵

China increased its petroleum consumption by 5.5 percent in 2007, up from 7.3 million barrels per day in 2006 to 7.7 million barrels.⁶ It now accounts for nearly 9 percent of the world’s total oil use.⁷ Over the past decade China has nearly doubled its oil consumption, and the share of global oil used by all nations that do not belong to the Organisation for Economic Co-operation and Development (OECD) has increased from 37 percent in 1997 to almost 43 percent in 2007.⁸ Other top consumers in 2007 were OECD-Europe at 15.4 million barrels and Japan at 5 million barrels daily.⁹ (See Figure 2.)

The crude oil spot price in the United States averaged $72 per barrel in 2007, a 9.5-percent increase over the 2006 average of $66 and nearly triple the average price in 2002.¹⁰ The price of oil averaged over $90 a barrel in the final two months of 2007 and the first two months of 2008, nearing real dollar prices not seen since April 1980. On March 3rd, prices closed at $102.42, having set a new inflation-adjusted record high earlier during intra-day trading.¹¹ (See Figure 3.) The U.S. Energy Information Administration (EIA) projects an average of $87 a barrel for 2008 as a whole.¹²

These high prices in the face of slowing demand growth have contributed to increasing recognition that limited spare oil production capacity has fundamentally changed world oil markets over the last several years.¹³ World crude oil production (without the natural gas liquids included in the consumption figures cited earlier) actually fell from 73.8 million barrels per day in 2005 to 73.2 million barrels a day in the first 10 months of 2007, according to EIA.¹⁴ This makes 2005 the peak year for world oil production so far, though it is too early to know if this will turn out to be the all-time high.¹⁵

In 2007, crude oil production declined in some of the world’s largest producers—including Indonesia, Mexico, Nigeria, Norway, the United Kingdom, and Venezuela—due to a combina­tion of geological and political factors.¹⁶ Saudi oil production continued to fall in 2007—a voluntary pullback to accommodate a softening market, according to Saudi officials.¹⁷ By late 2007, however, Saudi production was 8 percent below the peak level reached in 2005, despite the fact that oil prices had risen roughly $20 per barrel since then.¹⁸ Uncertainty over the condition of Saudi oil fields and their ability to increase or perhaps even sustain current pro­duc­tion levels is the single largest unknown facing world oil markets.

Meanwhile, crude oil production rose in 2007 in Angola, Brazil, Canada (mainly from tar sands), China, and Russia, which surpassed Saudi Arabia to become the largest producer.¹⁹ But production growth continues to slow in Russia, an ominous sign since that nation has been the most important source of production gains over the past decade.²⁰

The fact that the world is having a hard time expanding oil supply fast enough to keep up with even modest growth in demand is begin­ning to be accepted in some corners of the oil industry. The CEO of Royal Dutch Shell and the U.S. industry–dominated National Petroleum Council have both stated that supply con­straints are likely to put continued pressure on world oil markets in the years ahead.²¹ Although the dreaded phrase “peak oil” is still used mainly by oil industry mavericks like Matthew Simmons and T. Boone Pickens when discussing what lies ahead, their views—if not their language—do appear to be spreading to the mainstream.²²

Political instability contributed to supply disruptions and price volatility throughout many of the world’s oil-producing regions in 2007. Iraq reached its highest level of oil production since the U.S.-led invasion in 2003, but this still remains below prewar production levels.²³ In 2007, Iraq raised its production 5 percent over the 2006 figure, with gains in the latter half of the year coinciding with the 2007 “troop surge.”²⁴ Overall, though, tensions in the Middle East remain highly charged and continue to factor heavily into world supply and price activity.

In Nigeria, despite a ceasefire signed by the government and eight rebel groups in Decem­ber, the Movement for the Emancipation of the Niger Delta and other factions continue to wreak havoc on oil operations in the oil-rich southern delta.²⁵ As a result of pipeline sabo­tage, kidnappings of foreign workers, and other risks, Nigerian oil production has decreased 15 percent from its summer 2005 peak to an average production of 2.1 million barrels per day in 2007.²⁶ In Algeria, terrorist attacks targeting, among other sites, a United Nations office have also affected world markets and sparked con­cern among foreign oil companies operating in North Africa—a region considered crucial to future oil production.²⁷

Thanks to skyrocketing oil prices, many oil companies again enjoyed record profits in 2007. Chevron Corporation posted a company-best $18.7 billion in profit, while Royal Dutch Shell PLC reported a near-best $31.3 billion.²⁸ Exxon­Mobil Corporation, the world’s largest publicly traded oil company, posted a 2007 net income of $40.6 billion, the single largest annual profit in U.S. corporate history.²⁹

The long-term future of oil companies may not be so bright, however. ExxonMobil reported a decline in oil and natural gas production in 2007, and many companies are finding it hard to replace their reserves.³⁰ Not only have the largest oil fields already been developed, most of the promising prospect areas are controlled by state-owned oil companies, which hold 80 percent of the world’s proven oil reserves.³¹