UNITED STATES DEPENDENCE
ON PERSIAN GULF OIL
CAN WE REDUCE IT?
John Bush
May 5, 2006
POSSIBLE REASONS TO BE
CONCERNED ABOUT OUR ENERGY
FUTURE
A. Belief that the wasteful and dangerous ways we
are using non-renewable energy resources is
causing unsustainable environmental damage.
B. Concern that carbon dioxide emissions are
causing severe, deleterious, perhaps
cataclysmic, climate change
C. Prospect that we are approaching the peak of
oil production as global demand is rapidly
growing thus imperiling our economic future
D. Concern that our dependence on petroleum
from the nations of the Persian Gulf endangers
our national security
OIL FOR TRANSPORTATION
• Were it not for our dependence on oil for
transportation then D and E would be negligible
concerns
• The US has ample potential resources in coal,
uranium, solar and wind energy on which to
base an electric or hydrogen economy--given
enough time and resource commitment
• Our national security seems to require that we
secure from potential disruptions whatever
supply of liquid fuel for transportation that we will
require
FOR WHAT DOES THE US USE OIL?
EIA Annual Energy Review 2004
• Residential:
• Commercial:
• Industrial:
–
–
–
–
Asphalt & Road Oil
Distillate Fuel Oil
LPG
Chemical Feedstock
• Electric Power:
• Transportation:
– Distillate (diesel)
– Jet Fuel (kerosene)
– Motor Gasoline
1.57 Quads
0.79 Quads
9.57 Quads
1.24
1.19
2.19
3.29
1.20 Quads
27.00 Quads
5.91
3.36
16.93
1 Quad = Quadrillion (E 15) Btu/yr
US PETROLEUM BALANCE
Domestic Net
Production Imports
•
•
•
•
•
2001
2002
2003
2004
2005
AAG
19.0 Q
19.0
18.6
18.4
17.5
-1.1%
22.6 Q
22.8
23.8
26.0
26.3
+3.6%
Total
Demand
41.6 Q
41.8
42.4
43.9
43.7
+1.3%
WHERE DO THE US CRUDE OIL
IMPORTS COME FROM?
(2006)
-Mexico
-Canada
-Saudi Arabia
-Nigeria
-Venezuela
-Angola
-Iraq
-Ecuador
3.75 Q
3.62
3.00
2.84
2.49
0.98
0.95
0.47
Total 21 Q 78% of US imports
-Brazil
-Algeria
-Kuwait
-Colombia
-UK
-Chad
-Eq. Guinea
0.47 Q
0.34
0.32
0.27
0.17
0.16
0.15
SOME DEFINITIONS
(EIA)
• Persian Gulf: Bahrain, Iran*, Kuwait*,
Qatar*, Saudi Arabia*, UAE*
(*Also members of OPEC)
• OPEC: Algeria, Indonesia, Iraq, Libya,
Nigeria, Venezuela
WORLD PETROLEUM TRADE
2002
North America
W. Europe
Asia/Pacific Rim
Rest of World
Total
TOTAL
IMPORTS
FROM
PERSIAN GULF
28* Q
37
34
18
117
6Q 21%
6
16%
18
53%
5
28%
35
30%
*US 23 Q
EIA International Energy Outlook 2005
WORLD PETROLEUM TRADE
2025
North America
W. Europe
Asia/Pacific Rim
Rest of World
Total
* Est. US 38 Q
TOTAL
IMPORTS
FROM
PERSIAN GULF
45* Q
40
74
24
183
12 Q 27%
10
25%
43
58%
10
42%
75
41%
US “NATIONAL SECURITY” GOAL
• Reduce Persian Gulf crude oil imports by
about 5Q (by 2008?)
• Reduce Persian Gulf crude oil imports by
about 8Q (by 2025?)
TWO QUESTIONS
• What would we have to do to attain these goals?
• If we attained these goals would this enhance
our national security?
– Suppose only the US were denied Persian Gulf oil in
2008 and we had achieved our goal by then:
rationing could probably deal with the shortfall
– Suppose the world were denied Persian Gulf oil?
• In 2008
• In 2025
WORLD PETROLEUM TRADE
2025
North America
W. Europe
Asia/Pacific Rim
Rest of World
Total
* Est. US 38 Q
TOTAL
IMPORTS
FROM
PERSIAN GULF
45* Q
40
74
24
183
12 Q 27%
10
25%
43
58%
10
42%
75
41%
WHAT CAN WE DO ABOUT OIL
SUPPLY SECURITY?
• Increase US domestic production
• Increase imports from secure sources
• Displace petroleum from non-transportation
uses
– Electricity
– Industry
– Residential/Commercial
• Reduce transportation oil usage
– Increase efficiency of light vehicles
– Reduce usage of light vehicles
• Provide alternative fuels
INCREASE DOMESTIC
PRODUCTION
• On-shore production declining 1.1% per
year and likely to continue
– Alaskan Nat. Pet Res. 1 Q by 2016
– Alaskan Nat. Wildlife Refuge 1.9 Q by 2015
– If we do these, domestic production is
expected to peak by about 2016
• Deepwater Gulf of Mexico
• Offshore California / Florida
IMPORT FROM SECURE SOURCES
• What is a secure source?
• North America: Canada tar sands
• Long term guaranteed delivery not very
likely except at very high prices
• Military conquest??!!
INDUSTRY
• Chemical feedstocks from coal—potential
of 3-4Q but requires retooling
• More efficient heat recovery: potential
perhaps 0.2 Q
STOP ELECTRICITY GENERATION
FROM OIL
• In 2004 used 1.12 Q
• Suppose we could retire these units at
15% per year starting in 2007?
• Reduction in oil imports:
– 2008
– 2015
0.2 Q
0.8 Q
RESIDENTIAL/COMMERCIAL
• 2004 used 2.36 Q
• Conservation/solar heating/district heating
• Near term potential maybe 0.1 Q (a guess)
TRANSPORTATION
• Need at least another 5 Q by 2015
• Increased light vehicle efficiency
– 2010 Base Case--Total 30.7 Q: Light vehicles 18 Q, Freight
trucks 5.4Q, Aircraft 3.3 Q
– Suppose 25% of light vehicles had 40 mpg performance by
2010: 2 Q reduction
– By 2015 a 4-5 Q reduction might be possible
• Decreased light vehicle usage
– Economics will operate to achieve a reduction in the long run but
people have to be convinced that prices will remain high
– May require substantial rebuilding of US residential and
commercial infrastructure
INCREASE VEHICLE MILEAGE
•
•
•
•
•
•
•
Mandate fuel efficiency
Build lighter vehicles
Diesels
Hybrids
Plug-in hybrids
Fuel cells
Better maintenance through
information/enforcement
REDUCE MILES DRIVEN
• Increase fuel taxes
• Reduce subsidies for petroleum fueled
vehicles
• Encourage mass transit
• Encourage centralized development
PROVIDE ALTERNATIVE FUELS
•
•
•
•
•
•
•
•
Ethanol
Biodiesel
Natural gas
Electricity
Hydrocarbons from tar sands
Hydrocarbons from oil shale
Liquid fuel from coal
Hydrogen
MY (TENTATIVE) CONCLUSIONS
• By 2015, with substantial improvements in
vehicle mileage, sufficient supplies of alternate
fuels and policies that reduce mileage driven we
could achieve “security” from a short-term, USfocused Persian Gulf oil supply interruption
• There is almost nothing we can do before 2010
• There will necessarily be some major disruptions
in the American economy and probably life style
• Achieving this goal will likely accomplish at least
some carbon dioxide reduction and prepare us
to face a global shrinkage of the oil supply