Whose Oil Are We Addicted To?

If one were posed the question, "Where does the United States get the most oil from?", I'm sure the responses would tend to gravitate to "the Middle East" and "Saudi Arabia". It is true that we get a lot of oil from Saudi Arabia; Saudi oil accounts for 7.2% of daily consumption in the United States (based on 2004 data *Excel file*). We imported 1,495,000 barrels from Saudi Arabia per day in 2004 and consumed 20,731,000 barrels daily, so you do the math ...

Now I am pretty sure this comes as quite the shock to many of you who for so long believed we were "dependent" on Middle East oil, but that fact is far from the truth. One and a half million barrels is quite a lot of oil, but 7.2% of total consumption is not nearly as dramatic. Just to make this a little more representative, the Middle East accounts for one-fifth of the top fifteen exporters of oil to the United States: Saudi Arabia, Iraq, and Kuwait. Out of these fifteen nations, the amount of oil exported from the three Middle Eastern nations amounts to just over one-quarter, or 26%, and 11.5% of total consumption.

The biggest surprise will assuredly lie in the next piece of information. The Middle East does not represent the largest exporter of oil to the United States, and it does not represent the next to largest exporter as well. Saudi Arabia is the third largest, Iraq is the seventh largest, and Kuwait is the ninth largest exporter of oil to the US. That, I'm sure, was unexpected news!

Actually, the United States imports the most oil from none other than our North American neighbors to the north and south -- Canada (1.616 million barrels/day in 2004) and Mexico (1.598 million barrels/day). Another stunner is the fact that we have more to worry about from mixed relations with Hugo Chavez and the dicey situation in Nigeria, because Venezuela and Nigeria are fourth and fifth on the list of oil exporters to the US and account for another quarter of total exports from the top fifteen nations.

My conclusion from this information is simply this; the United States and its oil consumers have very little to fear from OPEC and other unfriendly oil exporting nations. There lies, several hundred miles north of the Canadian border, one of the largest oil deposits in the world and perhaps the largest in the Western Hemisphere! Furthermore there is plenty of untapped wilderness in Alaska where we have the ability to release ANWR's potential on the marketplace if only Congress would ignore the environmentalists and their cries against the proposition.

The area already accounts for 25% of our approximately 6 million barrels/day output and has the ability to provide much more. If we consume around 20-21 million barrels of oil every day in America in years to come, we could produce half of that domestically. In the entire 2004 calendar year, the United States exported only 9 million barrels of oil, all of which went to either Canada or China. Increased domestic oil production and decreased oil consumption could eventually lead to increased exportation and decreased importation of oil as well as stronger relationships with our trading partners and a decreased trade gap.

I will only say this once because it hardly bears mentioning; the United States will never be independent of oil. The most environmentally conscious and alternatively minded nations don't consume more than 10% alternative energy versus total energy consumption. Worldwide alternative energy consumption is estimated to stick to about 8% of worldwide energy consumption while oil will decrease slightly from 39% to 38% over the next few decades. Half of worldwide energy consumption comes from natural gas and coal, which each account for about a quarter.

The graph of world energy consumption by fuel type shows that apart from nuclear energy, renewable energy use is increasing at the slowest rate of all. Even with a massive boost in consumption of renewables, it could never eclipse a 10% share of world energy consumption because it simply doesn't have the ability for mass production in the way that oil, natural gas, coal and nuclear power do.

Strong words from the leader of the free world will not change this fact. As much as we would like to move towards "energy independence", there is a good reason why the term is an oxymoron. No nation will ever be entirely independent in its consumption of a product. This bears the name of "protectionism" and always leads to severely decreased economic freedom (see North Korea and the former Soviet Union). The United States wandered into its realm while rolling, at increasing speed, toward the Great Depression when Congress passed the Smoot-Hawley Tariff Act that placed a 60% tariff rate on imported goods. Foreign nations were discouraged from doing business and as a result, American consumers were most directly harmed. Indirectly, businesses at home were hurt because their customers had less money to buy with and thus the cycle kept churning as more people became unemployed and the nation sunk deeper into the valley of recession.

There is, of course, a moral to be learned here -- never seek to be completely independent. Whether in life or business, one's needs will always be met with outside help or not at all.