US Oil Outlook Time to Get Serious About Reducing Demand
The United States is the world's largest consumer of oil and currently imports almost 60% of its oil from foreign countries. Most of these imports come from OPEC countries, six of which are in the volatile Middle East. Currently the U.S. consumes almost 25% of the world's oil while producing only 4%. According to Energy Secretary Spencer Abraham, the energy sector in this country is strained to capacity and is facing its most serious shortages since the Arab oil embargoes and gasoline lines of the 1970's.
For forty years our energy demand has grown at a sustained rate of 2 percent annually to a current estimated usage of 18 billion barrels of oil per day. According to the U.S. Department of Energy, our energy demand will be 30 percent higher by 2020.
Today, the U.S. finds itself in the position of financially supporting both itself and its enemies. This is a consequence of the U.S.'s growing dependence on oil, particularly as a transportation fuel. It is estimated today that as much as $15.00 per barrel can be attributed directly to the cost of terrorism. As the U.S. continues to purchase oil from the Middle East these economies continue to promote anti-American ideas and feelings.
The U.S. needs to get serious about reducing the demand for foreign oil. The steeply rising demand for oil today means that any disruption in petroleum supplies immediately causes oil prices to rise. Political upheavals (not just war), terrorism, weather (such as hurricanes shutting down production in the Gulf of Mexico), supply and demand factors, and refiner and pipeline outages all greatly influence what goes on at the trading floors on Wall Street and at other markets around the world. We ran out of $2 oil in 1973, then $8 oil, then $15 oil in 1985, then $25 oil and NOW we have run out of $50 oil.
To complicate the matter, China and India, two of the largest and fastest growing economies, also are experiencing increased demands for transportation fuel. China will likely enter into Middle Eastern politics to meet their demand. Oil output in country after country is in decline and demand continues to grow. Goldman Sachs's, an investment firm, has forecast that oil could hit $105 a barrel.
John Browne with The American Oil and Gas Coalition, Inc. was one of the most vocal executives to predict our current struggle. After 9/11 he stated that within the next five years we would see $3.00 for a gallon of gasoline and $5.00 for a gallon within the next three to five years beyond that. He feels that, while alternatives such as ethanol and the extraction of tar sands may relieve some pressure, we are at least a decade away from relief. Mr. Browne points out that tar sands are a legitimate play, but the environmentalists will bleed time and money from corporations pushing in that direction. As a result, Mr. Browne feels that the Goldman Sachs estimate is conservative at $105 a barrel and we are more likely to be around $120 a barrel.
We now find ourselves in desperate need of a "Set America Free Plan" that will increase exploration of our own reserves and investigate alternate energy sources. Our dangerous reliance on foreign oil can only be diminished by increasing our domestic production as much and as quickly as possible.
Prudent investment in sound, well researched oil and gas drilling programs, though still considered a risk, may offer a significant monthly cash flow from the sale of production from oil and gas wells.