Facts and information about the world's oil supply,
Fifty-one years after it was first released, Bob Dylan's song "The Times They Are a-Changin'" is relevant to the conditions that exist in today's world. Skyrocketing energy demands, global warming, and rapidly diminishing oil supplies were unknown or of little concern in 1964. But today these issues are of primary importance to our country because we must do something now, we can't wait! The times truly are "a-changin". (Dylan's song >>
the present worldwide economic and political turmoil is the current
focus of attention, history has shown it will pass. And when it
does, oil will once again be our main concern. Right now, due
to the oil shale boom, the U.S. is producing more oil than it
has for several decades. As a result, oil prices have declined
from over $100.00 a barrel at the beginning of 2014 to a low of
$39.00 in September 2015. Likewise, gasoline prices during this
period have dropped from around $4.00 a gallon to less than $2.00
in some states! But, this will not last because oil shale wells
have a short life. The depletion rate is very high in these wells
(you are literally squeezing oil from a rock). Depletion can be
on the order of 80 to 90 percent over a couple of years. So you
have to constantly keep drilling new wells to meet the production
quota. And, like other fossil fuel sources, the oil shale resource
is limited. Experts estimate that the reserves of shale oil will
start declining in as little as seven (7) years!
I started this page in 2004 to stress the need for America to take advantage of our ability to supply our energy needs without importing oil. In spite of all the many alternatives available to us, we still depend on oil to fuel our economy.
With respect to alternative energy, we are about where we were when I started this page.
The economy is not running at a healthy rate right now, at least not in Europe and the United States.
And oil prices are fluctuating widely. So we hate to think what will happen if and when we finally do see a vigorous economic recovery. Thus, until the economic situation stabilizes, some charts and data included here (based on 2008) will continue to be more normal and more definitive than current data that reflects the temporary economic downturn and spurt of domestic oil production. The fluctuating price reflects day-to-day events, but the long-term trend is up, up, and away. Crude oil is the blood of our economy, but it is a limited resource and unless we start replacing it with oil products from other sources such as algae, biomass, coal, oil shale, tar sands, etc. we are in for catastrophic consequences! Algae, biomass, and similar sources are renewable and permanent, while coal, oil shale, and tar sands will eventually be depleted.
This website has been created as a public service to make you aware of oil's future, and how it will impact your life and the lives of our children and their children. If you don't believe the "official" excuses for the previous upward trend of oil prices and its effect on our economy, the stock market, and related issues, read on to discover the real reasons. You will be rewarded with a wealth of knowledge and viewpoints. All of the information presented here is free, publicly available on the internet, and you are encouraged to click the links, read the info, and draw your own conclusions. For your convenience, links are presented where appropriate or at the end of each section. These links will open in a new window so you can return here, when you're ready, by closing that window. (TIP: Bookmark interesting links so that you can easily return to them later.)
Although global warming should be on our list of priorities, global warming falls well below other problems. At the top of the list is our dependence on imported energy that has caused immense social, political and economic impacts on our nation. If we start immediately replacing imported energy with technologically available domestic sources, and then target eventual replacement of fossil fuels with renewable, sustainable substitutes, we can solve all the problems including global warming.
When faced with adversity, one of the strengths of America is our freedom and ability to unite as a people, taking action as needed to guarantee that freedom. It is hoped that this website will generate enough interest for people to think, talk to each other, and take action to change the future.
Thanks, in advance, for taking the time to read this information. If you find it helpful, please tell others about it, and send this page to at least 10 people - Click here to send Email. You can also send a letter (see sample) to your representatives in Congress and the Senate, even though the present administration seems hell-bent on ignoring Congress!
OK, what's the top problem?
Oil is the problem. Oil is a finite resource. Although recent news articles have predicted that new methods of oil and gas drilling (fracking) will produce huge quantities of oil, the Massachusetts Institute of Technology (MIT) published a report indicating that hydraulic fracturing to recover the oil in shale will boost U.S. production, but it won't bring energy independence. The MIT report further predicts that, at present rates of consumption, the reserves of shale oil will begin to diminish in as little as seven (7) years! Using new drilling techniques (fracking), the United States overtook Russia as the top producer of natural gas last year and surged past Saudi Arabia this year as the world's biggest oil producer. Some companies, however, worry that an Environmental Protection Agency (EPA) study on fracking could lead to added regulations that will crimp America's energy bounty. Currently, fracking is largely regulated by states, rather than the federal government. An EPA study due next year could be used by the Obama administration to justify clamping down on these drilling techniques (fracking) that have sparked a surge in U.S. oil and natural gas output. Furthermore, the Obama administration and the EPA intend to enforce much stricter regulations and taxes that will effectively curb any benefits from the new technology. Obama is expected to tighten rules and regulations governing energy exploration, actions that may add billions in costs for oil and gas companies. Consequently, the temporary drop in the price of oil will probably disappear when the new regulations kick in. To make matters worse, the administration intends to increase the tax on gasoline and diesel by 12 cents per gallon. So, the added oil production is just another opportunity for increasing taxes.
Well, even though it's expensive, we won't run out of oil.... right?
Think of it this way. Imagine an enormous tank, big enough to hold all the oil in the world. It took millions of years for nature to fill that tank, and nature has almost stopped making oil. So whatever is in that tank is all we've got. Each year, we keep pumping more and more oil out of that tank, and eventually it will all be gone.
Yeah, but we've got hundreds of years left, right?
Wrong. Experts can't agree on how much oil is left in the tank. It all depends on their estimates of how much oil has been found, how much oil is "undiscovered", and how much can ultimately be recovered. But all the estimates indicate that the tank is about half empty, and that we will run out of recoverable reserves before the end of this century! "Peak Oil", once considered a novel theory, has now gained widespread acceptance. There is ample evidence from the Energy Information Administration that we have already reached the peak of world oil production, and demand will rapidly exceed supply in the near future!
In 2008, the world was consuming oil at a rate of 31.4 billion barrels per year, but total world oil production was only 30.8 billion barrels per year. In 2014 the world was consuming oil at the rate of 32.6 billion barrels per year, and total world oil production had increased to 32.9 billion barrels per year. With production outpacing consumption, you would expect the price of oil to decline according to the laws of supply and demand. In 2008 the price of crude oil was $96 per barrel. In spite of the increased production, by January 2014 it was selling for $105 - $107 per barrel. And, as mentioned previously, the current drop in prices is temporary. Based on the forecasts above, the "Pessimists" believe we will exhaust our reserves in 50 to 60 years, the "Probable" estimate is 80 years, and the "Optimistic" forecast is about 100 years. After world oil production peaks, it will decline rapidly as recovery becomes more difficult. By the end of this century, world oil production will be about equal to what it was in the years 1940 to 1950. If you want to check this out for yourself, you can read an assortment of articles by petroleum geologists, the Department of Energy, and other experts. Just click here for World Oil Predictions. To read about the profound effects of peak oil, see "The Oil Crash and You".
What about conservation, electric cars, and such?
These measures will definitely help to delay the depletion of the world's oil, but the optimistic forecast (above) includes savings from these initiatives. Currently, about 70% of the petroleum we consume is used for transportation. Light duty vehicles and freight trucks take the largest share while aircraft take less. However, from the standpoint of fuel efficiency, aircraft are the least efficient while light duty vehicles are the most efficient. Projections by the Energy Information Administration (Dept. of Energy) to the year 2035 show overall fuel consumption increasing by almost 7 million barrels per day with only slight changes in the distribution of use.
So, what does this mean?
It means that electric cars and hybrids will have a significant effect on petroleum consumption. All-electric vehicles powered by rechargeable batteries will help most to reduce oil consumption, because only 2% of our electricity is generated from oil. The Chevy Volt and other electric cars are in production and are available for purchase. Though there may be some technology improvements in diesel-powered freight trucks, it is unlikely that we will see them powered by electric motors. Unless some huge improvements are made in aircraft power plants, they will continue to consume a large share of petroleum (2 million barrels per day) in the future. The Energy Information Administration is a good source of data in this area, especially their Petroleum Quick Stats. Their Energy Statistics is a particularly useful reference for all energy sources.
Where does our oil come from? Don't we have a lot of oil production in this country?
Yes, we are currently producing a lot of oil, but more than half of our known oil reserves are gone. Estimates of undiscovered oil, as cited in Chapter 5 of the U.S. National Energy Policy, amount to 39.1 billion barrels including reserves in the Arctic Outer Continental Shelf, the Alaska National Petroleum Reserve, the Arctic National Wildlife Refuge, and the restricted areas of the Lower 48 States. At our present rate of consumption, these reserves would supply our needs for a little over 5 years! The U.S. is a good example of what is going to happen to the rest of the world.
Not only is the U.S. exhausting its reserves with increased production of crude oil, but the following graph shows that the world's liquid fuel supply is also dwindling rapidly. This Energy Information Administration projection shows that total world supply will drop from 86 million barrels per day (BPD) in 2012 to 43 million BPD in 2030. During the exact same period, world total consumption is projected to increase from 88 million BPD to 106 million BPD. The deficit in production will have to be met by (as yet unidentified) projects such as biofuels and synthetic fuels.
In the U.S. our peak oil production occured in 1970. At that time we were producing 9.6 million barrels of crude oil per day. By 2008 our production had dropped to 4.9 million barrels of crude per day, a loss of 49% in 38 years. Our present spurt of oil production will not change the overall downward trend. Based on data published for 2008, we consumed about 19.4 million barrels of petroleum per day (7.1 billion barrels per year), roughly 25% of the world total. Since 2008 we have increased both our production and consumption of crude oil, but while our consumption will continue to increase, our production will diminish as described above.
In 2008, here's where our crude oil supply came from:
In 2014, here's where our crude oil supply came from:
And here's where it went........
So, we are still depending on other countries to supply us with 46% of the oil we need. And to make matters worse, U.S. refinery capacity is strained to the limit causing us to import refined products as well as crude oil. For details, and to see more data, click here.
The chart above shows that our total petroleum consumption has been steadily increasing while our production has been steadily decreasing. As a result, our total imports have been sharply increasing to make up the difference. Since 1993, every year we have imported more petroleum than we produced. And in 2014 we still imported nearly 50% of our crude oil supply!
Wow! What if some of those countries got mad at us and cut off our oil?
That would be pretty bad. We've been stockpiling oil in the U.S. Strategic Petroleum Reserve, and we have about 700 million barrels stored there. If all of our imports were cut off, the reserve would last us about 40 to 50 days at our current rate of production and consumption. But, it's unlikely we would lose all of our supply at once, so our reserve might last much longer. Military needs and critical civilian use would take priority. The Arab Oil Embargo of 1973-74 showed us what can happen when our oil supply is interrupted. And the docudrama "Oil Storm" showed the devastation that can occur to our economy with even a small interruption of our oil supply. Oil prices can double or triple very quickly with changes in supply or political events. To see these effects, click here. And finally, if you're concerned about terrorism, think about this: the greatest terrorist threat we face is disruption of our oil supply. Nearly everything we use in our daily lives depends on oil in one form or another, from plastics to transportation fuels, clothing (synthetics), home heating oil, food production and delivery, and so on. The economic effects on our stock market would be equally as disastrous plunging the nation into a severe depression. The price of crude oil has a very significant impact on the stock market. As shown in the chart below, steep increases in crude oil price correlate with a slowdown in the advance of the Dow Jones Industrial Average (DJIA). This five year comparison illustrates that during periods of small changes in crude oil price ($5 - $7 per barrel), the DJIA grew steadily (June 2002 to October 2003 and October 2005 to June 2007). However, from October 2003 to October 2005 oil prices rose from $30 per barrel to $63 per barrel, and the DJIA stagnated around an average of 10,100.
OK, I see the problem, it looks pretty grim.........
It doesn't have to be, there is a solution, and it would create thousands....maybe millions....of new jobs right here at home. The solution is biofuels (see below) and synthetic or alternative fuels.
Really? Tell me about it!
The answer has been here all along. Back in the late 70's and early 80's we had a government sponsored synthetic fuels program. Because we have enormous resources of coal and oil shale, we developed or improved technologies for making petroleum products from coal, oil shale, and tar sands. A lot of the technology is fully developed. For example, the Canadians have been extracting petroleum from tar sands for many decades. During World War II the Germans made gasoline from coal, and today South Africa is producing oil products and gasoline from coal. Worldwide, the oil shale resource base is conservatively estimated to be 2.6 trillion barrels and is located in about 26 countries. This oil shale is not amenable to hydraulic fracturing (fracking) and the oil must be recovered by retorting. About 2 trillion barrels, including both eastern and western deposits, is located within the U.S. That's about 77% of the worldwide resource. At 13 million barrels/day (current total imports) it would last more than 500 years! If we only recovered 20% of the resource, it would still last 100 years! Many U.S. companies have prepared detailed plans for utilization of our vast oil shale deposits in Western Colorado and Utah. They even built facilities to develop and test their shale-oil processes, and from the start, the synthetic fuel industry was designed to be environmentally friendly with no adverse effects.
Pennsylvania's Governor Ed Rendell announced that his administration has cleared the path for construction of the nation's first commercial plant that will convert waste coal into zero-sulfur diesel fuel and home-heating oil. Similarly, Montana is actively pursuing development of coal-to-liquids technology as a means of converting our significant coal reserves into synthetic gasoline and other fuels. At 120 billion tons, Montana's coal is, in liquid terms, one quarter the size of the entire Middle East oil reserve, enough fuel to power every American car for decades. And that's just Montana...total U.S. coal reserves are much larger! Proposed synthetic oil production has been competitive with world crude oil for more than five years. An article in the Wall Street Journal published in 2006 confirmed that oil prices then (about $50-$60 per barrel) had made oil-from-coal economically attractive. Since then, oil prices have risen dramatically to $150 per barrel! (Depressed prices due to the current economic situation are temporary and will skyrocket once again when the economy improves.)
But, the most promising technology is biofuel, an alternative renewable diesel, gasoline, or jet fuel made from algae. Biofuels can be burned in existing engines without any major modifications....just substitute biofuels for petroleum-derived fuels when filling your tank. Although biodiesel can be made from almost any vegetable feedstock (soybean, rapeseed, mustard, jatropha, palm oil), the highest yield feedstock for biodiesel is algae, which can produce 250 times the amount of oil per acre as soybeans. A great deal of research and study has been done on creating algae farms in desert areas of the U.S. such as the Sonora desert in the southwest and the Salton Sea in California. Sapphire Energy is a California-based company that is aggressively pursuing its goal of replacing imported oil with biocrude from algae. They have successfully demonstrated their technology by producing gasoline, diesel, and jet fuel for full scale testing. LiveFuels Inc. located in Menlo Park, California, is a national alliance of labs and scientists dedicated to transforming algae into biocrude. To date, the company has established pilot operations across the U.S., generated extensive intellectual property and is well on its way to producing an economically feasible and sustainable algal fuel. Solix Biosystems, based in Fort Collins, CO, is developing a cost-effective photobioreactor to optimize algae growth and oil yield. Photobioreactors can be used for CO2 removal from power plants to reduce greenhouse gases. Aurora Biofuels has successfully operated a pilot plant since August of 2007 that has consistently produced ASTM quality biodiesel. Aurora has operated a pilot-scale algae cultivation facility in Karratha, Western Australia, since May 2011, successfully demonstrating production of up to 15 tonnes of dried algal biomass per month. A quick summary of the benefits of using algae for energy conservation, using inexpensive open ponds to grow the algae, can be found here. To learn more about widescale biodiesel production from algae, click here.
Today, in the United States, transportation consumes 69% of our total petroleum supply and 28% of our total energy requirements. Just two initiatives, biofuels from algae and gasoline from coal could satisfy all of our current transportation needs and make us energy independent. This solution is greenhouse gas neutral since the CO2 generated from coal-to-gasoline facilities could be used to grow the algae feedstock for biodiesel.
So, what happened? Why aren't we doing it!
Well, these synthetic fuel plants are very expensive! They cost billions of dollars to build and operate. The initial product oil price would be in the range of $60 to $80 per barrel, but could be as low as $40 to $50 per barrel as the technology matures. (Click here for current crude oil prices!) In 1980, when we faced a situation similar to today, the government established the Synthetic Fuels Corporation. Then Exxon, Chevron, Texaco, Union, Oxy, Mobil and others responded with huge investments in coal gasification, coal liquefaction, oil shale, tar sands, and other syncrude projects. Exxon even built a town to support its future oil shale workers. The government was ready to provide subsidies to allow these plants to compete with imported oil. Just when it seemed we were on the verge of going ahead, the world oil price was lowered, and the synthetic fuel program wasn't important anymore. So, President Reagan effectively ended the program in 1984. Not only did he cut the funding in half, but his bill required that synthetic fuels be competitive with world oil prices. The oil companies immediately abandoned their projects. Oxy kept going on oil shale for a few more years, but then was forced to quit because the price of oil remained low. If you look at the chart above, you'll see that our consumption and imports of petroleum decreased substantially while the synthetic fuel program was active. Since the end of that program, imports have steadily climbed as our domestic production has steadily declined.
OK, that's history, what can we do now?
Well, for one thing, we should continue with efforts to conserve, replace, or reduce consumption of petroleum. We could also use coal and oil shale to replace crude oil and to make petroleum products. To do that we would probably have to restart the synthetic fuels program and provide government subsidies as needed to get production started. We could then use naturally occuring oil mainly for petrochemicals and plastics, and stop wasting it on electricity generation and transportation fuel.
If we stop generating electricity with coal and oil, what would replace it?
We could increase the use of nuclear power for electricity generation, and replace older coal-burning power plants with nuclear. It's been proven to be safe! (Click here for safety statistics.) New reactor designs, such as the pebble bed reactor currently under construction in China, have virtually eliminated all possibility of nuclear accidents. You can read more about the pebble bed reactor here. For more information on safe nuclear energy click here. In 2002, the U. S. generated 20% of its electricity with nuclear power. During that same period, the U.K. generated 22% with nuclear. Germany generated 30% with nuclear, while Japan generated 35%. France generated 78% of it's power with nuclear, and Lithuania generated 80%. And since there are no greenhouse gases from nuclear power, we would greatly reduce the environmental impact. This link gives a complete breakdown of world nuclear power generation including capacity in megawatts. Or, you can click here for a graph of world nuclear generating capacity. And, if you want to learn about current methods of nuclear waste disposal, or plans for future handling of radioactive wastes in the U.S., click here.
In summary, biofuels and synfuels are the best large-scale solution with the potential to completely replace imported oil. All the energy needed to produce synfuels comes from the raw material oil shale or coal, and we have the world's largest supply of oil shale as well as very large coal reserves...enough to supply our needs for several hundred years. Environmental issues are controllable, and as the technology matures, these issues will be negligible. Finally, we must also pursue every other option to become energy independent including wind, solar, tidal, E-85, hybrid vehicles, electric cars, conservation, and increased nuclear electric generation.
What about global warming, won't fossil fuels make it worse?
Global warming is real, but it is NOT a climate crisis. There is no scientific basis for concluding the climate is doing anything unprecendented or dangerous. Experts in scientific forecasting procedures have found flaws in the models used by IPCC scientists to make their predictions of "dangerous manmade global warming". Climate is always changing... it has been continuously warming and cooling for the last 4,500 years! Any additional contribution of fossil carbon into the atmosphere over the next 40 to 50 years would be insignificant compared to the present levels. We are not going to die from global warming....we may be uncomfortable....but we won't die. However, if we don't stop importing our energy needs we will die.... soon...... economically, politically, and from wars waged to protect our foreign energy sources.
I see how this problem affects me, but what can I do about it?
The first thing you could do would be to learn as much as you can by reading all the publicly available information. For example, the American Energy Independence website is an excellent reader-friendly source. Then, talk about it with your family, friends, neighbors, and anyone else who will listen. You can send this website address to everyone on your e-mail list. We need to spread the word and make everyone aware of the problem. (According to "The Oil Crash and You" by Bruce Thomson, 2009 was predicted to be the year when global oil supply first fails to meet global demand.) But, we also need to let everyone know that THERE IS A SOLUTION! Using technology and resources that already exist in this country we can satisfy America's immediate energy needs so that:
Ultimately, by the time fossil fuels are depleted, we will have perfected the use of permanent, renewable sources of energy to meet ALL of our energy needs, and we will be completely energy independent!
But, we must start now! Contact your representatives in Congress and the Senate and tell them we want to be free of dependence on foreign oil, whatever it takes. (Click here for a sample letter you can copy.) We're spending billions of dollars to protect our sources of foreign oil. Why not spend those billions of OUR DOLLARS on development of our own independent energy supply?
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