Thursday, January 26, 2006

The Problem With Oil

People who subscribe to the oil imperialism political theory often state that we should neither deal with odious regimes who have oil, nor work to destabilize those odious regimes. Yet advocates of this more isolationist stance don’t seem to take on the hard facts about oil: how much we use, and where it comes from. In the spirit of a more open and productive debate, I present the US oil balance sheet (all figures are in barrels of oil per day):

US oil consumption (inc. US territories)......20,374,000
Petroleum Imports to US.......................12,264,386
Petroleum Exports from US......................1,026,597
Net imports to US.............................11,237,789
US production of crude oil.....................7,823,200
US crude oil refining capacity................17,339,000
US refining shortfall..........................3,035,000

Note: Figures are as of 2003, the last year with complete data for all variables.

The first thing that probably jumps out at you is that the US imports a huge amount of oil—well over half of the oil we use on a daily basis is from some other country. Any advocate of disentangling ourselves from the internal affairs of oil rich nations would need to offer a viable alternative to oil. The majority of the oil we use is for automotive fuel, home heating, and jet fuel—not for power generation, which comes by and large from other sources. We are absolutely dependent on

The second thing you might notice is that despite importing so much oil, we are also an exporter of oil. While this may strike some as odd, you have to keep in mind the fact that our oil industry isn’t nationalized and as a result oil companies have a great deal of freedom to strike what deals they wish. To keep oil companies from selling oil abroad would require a high level of governmental interference, and would serve to increase US isolation abroad as formerly friendly nations turned to other sources for their oil needs.

The third thing you should notice is that the US has a significant refining shortfall. Crude oil is useless to everyday consumers: you can’t heat your home with it, you can’t drive your car with it, and you can’t fly to a vacation destination with it—so it must be refined into the products that are useful to us. Despite this shortfall in refining, there have been no new refineries built on US soil in many years. Environmental regulations and the “not in my backyard” mentality have made it nearly impossible to even contemplate new refinery construction.

Those that would insist we isolate ourselves from odious, yet oil-rich, regimes ought to be prepared to tell us how we would make up the shortfall that would result. Any plan that would insist we quit all or even some foreign oil cold turkey is a sure recipe for economic collapse and social disorder.

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