By Radio Green Earth Correspondent Chris Cherniak
Interesting trends are occurring with respect to oil in this country. Domestic oil production is increasing while U.S. consumers are using less. As a result, oil companies are importing less and exporting more. What gives? Are we inching towards oil independence? And if so, what will that look like?
Starting with production, according to the U.S. Energy Information Administration (EIA), domestic drilling and extraction of oil has increased approximately 10% over the past three years. Two reasons cited by analysts include: 1) Increased onshore drilling for shale-based oil in places like North Dakota and Montana; and, 2) Increased drilling in both the shallow and deep waters of the Gulf of Mexico (GOM).
That’s right, despite stories to the contrary, more deep water rigs are operating now in the GOM (about 40) than before the Deepwater Horizon incident (37). In fact, according to James Noe, Senior VP with Hercules Offshore, Inc., the GOM is responsible for 28% of the daily oil production in this country, compared to just 14% back in 2005.
The Gulf of Mexico in 2008
This increasing production is anticipated to continue through the remainder of the decade, but only if crude oil prices remain high in order to make these expensive recovery methods cost effective. U.S. oil is out there, but it’s farther offshore, deeper underground and in “tighter” formations that require greater time, energy and money to extract and pipe to refineries for processing.
Yet, while domestic production increases, consumption of oil within the U.S. transportation, heating and power grids have decreased over the past few years. At its peak in 2006 the U.S. consumed nearly 21 millions of barrels per day (mbpd). That number is now down to near 18.5 mbpd, a 12 percent decrease. Some of this is due to a slow economy, but some analysts say that a large part of this decrease is due to three factors: 1) Conservation; 2) Efficiency; and 3) Technology.
Individuals are changing their behavior and making a difference by simply driving less, using mass transit, driving fuel-efficient vehicles, and purchasing all-electric, bio-diesel or natural-gas powered cars and trucks. Additionally, businesses and municipalities are recognizing the cost-savings in doing the same as they reduce wasteful habits and shift their fleets to more fuel-efficient and alternative vehicles.
Homes and businesses in the northeast are replacing polluting and inefficient oil-fired heating units with natural gas ones as the cost of home heating oil continues to rise and the availability of natural gas systems improves.
Finally, electric utilities are recognizing the same cost-savings and environmental advantages as they retire and swap-out their remaining primary and backup oil-burning boilers with less expensive and cleaner burning natural gas and renewables.
A single individual, business or municipality acting to reduce their oil consumption can’t make much of a difference, but millions of individuals, thousands of businesses and hundreds of cities and towns acting collectively can. And that’s what we’re beginning to observe.
We’re chipping away at foreign oil from both the supply and consumption sides. And with oil solidly above $100 per barrel, these trends should continue during 2012. But what’s the ultimate goal? Can we increase our domestic supply of oil while reducing our consumption, ultimately achieving zero barrels of foreign oil? And is that a good idea? That discussion in Part II.
