The headlines say the United States is becoming “energy independent”.1 A wave of new gas and oil production will carry the country to the broad sunlit uplands of energy independence… Or so the pundits tell us. If we take a hard look at the numbers, however, we see a very different story. The United States produced 6.5 million barrels of crude oil every day in 2012. But we still consumed 18.6 million barrels per day, the lowest rate in 16 years.2 So imports in 2012 were something like 11 or 12 million bpd, depending on how much refined product were exporting. To achieve independence means we will have to increase oil production by another five or six million barrels per day. Is that something that can be achieved without recourse to Unconventional Resources? Probably not.
According to the US Energy Information Administration, US oil output increased from 5 million barrels per day in 2008 to 6.5 million bpd in 2012.3 That is a stunning success and represents a reversal in decline that dates back to 1986. This has caused a great stir in the world of oil and there are breathless headlines about the US exceeding Saudi Arabia by 2020.4 The good news includes significant reductions in demand for oil. In the EIA’s Reference Case oil demand in the US is projected to decline until 2019.5 This combination of rising production and declining demand will result in net oil imports falling to as low as 33% of our supply. Under the EIA’s projections for the Reference Case out to 2040 the US will still depend on imports for 37% of its oil supplies. This is a great improvement over the 60% level we experienced in 2005, but it is still a long way from Independence.
It is highly probable therefore that the US will still be dependent on imports of 5 or 6 million barrels of oil per day for the foreseeable future. Filling that gap will require a large contribution from Unconventional Fuel sources like oil shale. A huge oil shale industry might produce 1.5 million bpd, which would still leave a large gap of 3.5 or 4.5 million bpd to be filled by other Unconventional Fuels or more conservation, etc. Therefore our conclusion here at IEP is that our efforts to produce oil from oil shale and other Unconventional sources will still be essential work for decades to come.
1Oil mogul says U.S. is close to energy independence, By John Ingle, Times Record News, April 25, 2013.
2U.S. Oil Demand Falls to 16-Year Low, API Reports, By Moming Zhou, Bloomberg, Jan 18, 2013
According to the Statistical Abstract of the United States 2012, Table 938, total domestic oil production in 2010 was only 5.5 million barrels per day and imports were 11.75 million.
3U.S. Energy Information Administration, Energy Outlook 2013, Dept. of Energy, Washington, D.C., April 2013, p. 2.
4U.S. To Become World’s Largest Oil Producer, Exceeding Saudi Arabia, By 2020: International Energy Agency, By PABLO GORONDI , Huffington Post, Posted: 11/12/2012.