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Claude Salhani

Claude Salhani

Claude Salhani is the senior editor with Trend News Agency and is a journalist, author and political analyst based in Baku, specializing in the Middle…

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US to Become Less Dependent on Foreign Oil -- be Careful What you Wish for

The US Energy Information Administration released on Tuesday an early version of its Annual Energy Outlook for 2014.  The main item being that the United States will continue to develop its own oil and to press for more efficient cars in order to reduce demand on oil.

The report from the federal government forecasts a rise in US oil production of another 800,000 barrels per day for the coming two years, but sees a rise by 2016 with the US reaching about 9.5 million barrels per day.  The previous high was attained in 1970 when production had reached 9.6 million bpd.

Predictions are that the oil boom is temporary and is expected to level off around 2020, but by then there should be a lot more fuel efficient cars on the roads that the drop in production will not be felt.

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Another major change is that the federal government report expects that as oil production begins to decrease natural gas will rise, according to the EIA by as much as 56 percent by 2040 reaching 37.6 trillion cubic feet per year.

This news should please the environmentalists as well as politicians who want to see the United States turn away from the Middle East, its oil and its problems.

For the first group, the good news is that the total reading of U.S. energy-related emissions of carbon dioxide by 2040 will be 7 percent under 2005 levels in 2040.

The reduction in consumption will come about as the result of greater importance being given to focus on more energy efficiency in every aspect of our lives; from automobiles to buildings that require less heating to street lighting.

While this new development will no doubt be welcomed by most Americans it will bring additional joy to those who are fed up with the stagnation and violence that is perpetuated in the Middle East and will welcome this news amid hopes that the US will be less dependent on that turbulent part of the world for its fuel, thus less prone to the region’s unstable politics.

But here there is the need for a word of caution. Being less dependent on Middle Eastern oil does not mean the United States should become a political recluse, retrench inside fortress America and damn the rest of the world and their problems.

In the region of the Gulf, for example, the US counts many allies who are becoming extremely nervous at a USA hoping to step back from the region while across the waters they face a more powerful Iran with ever-growing political/religious ambitions. Up until now countries in the region felt somewhat protected largely because of their oil. Case in point was when Kuwait was invaded by Saddam Hussein in 1990 the US raised a powerful multinational coalition to throw him out of the oil producing state.

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But recent events, such as the distancing of once extremely close US-Saudi relation have started to cast doubts in the minds of the oil rich sheiks of the Gulf who are truly questioning America’s resolve in the region.

The added danger for the US is the resurgence of Russia as a power to be reckoned with and now China, too.  The United States could be fooled into a false sense of security inside Fortress America and start to lose more and more of its influence.

Indeed, the exploitation of American oil for American consumption may well bring about much wished for independence from foreign oil and foreign intrigue. But one should be careful what one wishes for.

By. Claude Salhani
 
Claude Salhani is a political analyst and senior editor at Trend News Agency in Baku, Azerbaijan. You can follow him on Twitter @claudesalhani.com.




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  • steve from virginia on December 19 2013 said:
    The energy giants don't want to build a pipeline from Bakken to rest of the country but prefer truck- and rail transport, why?

    Pipelines are costly and the same giants do not think there is enough crude longer term to meet these costs.

    http://www.bloomberg.com/news/2012-11-28/oneok-shares-fall-after-bakken-pipeline-canceled.html

    The 'sweet spots' in Bakken, Eagle Ford and Permian Basin are already identified and being 'produced' ... EIA believes another 1.6mbpd is going to be extracted from these same sweet spots ... in two years?

    Using the North Dakota Department of Mineral Resources data, to gain additional 1,600,000 barrels per day at today's rate of extraction -- 132 barrels per well per day -- the companies would have to drill 115 thousand new wells! With current drilling infrastructure the companies can complete 4,800 in two years. Who will drill the other 110 thousand?

    Extraction-per-well decreases because of infill drilling- closer well spacing.

    Shell dumped its Texas Eagle Ford leases ... why? Because it did the math and discovered it would not make any money on the play.

    http://online.wsj.com/news/articles/SB10001424052702303918804579105631879283264

    Decline rates in LTO plays are @ 60+% in first year, by ten years the wells are closed in b/c of non-production and unsuitability as stripper wells (fracked wells cannot be fracked a second time). Per-well extraction rates in Bakken peaked in 2010. Q: how are new wells going to keep up with declining legacy wells?

    https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf

    More wells are drilled yet less oil per well, how do drillers intend to keep pace w/ depletion? There is a limit to how many wells can be drilled at a time, how much infrastructure built in; these things are not infinitely expandable processes.

    This is more like a science fiction story where the space man goes to Mars without having to use any fuel to get there.
  • john on December 24 2013 said:
    The author is nuts to see a bad side to the USA being independent on foreign oil. Does he not remember the 70s when OPEC had us by the short hairs and threw our economy into a series of recessions?
  • Kevin on December 25 2013 said:
    IMHO I would suggest that, given 60% foreign ownership of our US Treasury bonds, much of that owned by Middle East oil exporting nations, the wary concern for US energy independence is well-placed. Suppose we were to become energy independent as we see such suggestions in the media, then what of all those middle eastern buyers of our treasury debt? First, I believe that in our zeal for "US energy independence" we will also - foolishly - see little regard for US defense of our Middle East "allies," as we have called them. They, in turn, will have little interest in our treasuries; might they go so far as to dump their treasury holdings onto the market? Such a flood of assets would lead to massive devaluation of treasuries and skyrocketing interest rates. Ballooning interest rates and collapsing asset values would inevitably lead to financial crisis in the US, being that our staggering debt - now exceeding $16 trillion - rests on the premise of forever ultra-low interest rates, and hence ultra-low debt payment servicing.

    Any person who fails to appreciate our relationship with the Middle East countries - Saudi Arabia, Kuwait, Bahrain, Egypt, etc, is simply not paying attention. "They" are not the enemy. The enemy is us.

    The only way out of the trap - that is the continuing ballooning US debt crisis = worldwide energy crisis - is for us to very quickly get a serious handle on the debt, but not through this snake oil called US energy independence.

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