CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Wednesday, April 28, 2010
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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19 Comments:
anyone have an explanation for the big jump in foreign consumption post clinton?
i had not realized there was such a big jump.
Fun correlation... probably no causation. Just looks like an exhibit for an argument about peak oil.
"anyone have an explanation for the big jump in foreign consumption post clinton?"...
Yes, Democrats...
Pelosi blocks offshore drilling vote GOP wants
August 01, 2008
Senate Democrats Block Bid for Drilling in Refuge
December 21, 2005 15:10 EST
In Slap at Bush, House Votes to Bar Oil Drilling in Great Lakes
June 29, 2001
@juandos: "anyone have an explanation for the big jump in foreign consumption post clinton?"...
[juandos' response about not expanding drilling in the U.S.]
Or one could be honest, as opposed to trotting out partisan talking points:
The U.S. economy grew faster than US oil production can (while understanding that even expanded U.S. annual oil production is not capable of keeping up)
Not increasing CAFE standards
Not pushing harder for alternatives to oil as a transportation fuel
Not provinding a long-term national plan for massively increased public transportation
Not increasing oil-use taxes that would rationalize demand
Expanding use of the DoD, the nation's largest oil consumer
Or any of a million contributing factors to the result.
But by all means, continue to think that domestic drilling will solve all U.S. oil problems.
This is an inevitable result of America's oil production decline that has spanned decades. It's not surprising. Indonesia was a founding member of OPEC but recently has became a net importer. Britain not long ago was a net exporter of crude but has turned to imports because of declining N Sea production (which is producing less than half the oil it was 10 years ago). China was a net exporter before it became a huge importer. Mexico's Cantarell was producing 2 mbpd six years ago but is currently down to the 400,000-something range.
As we like to say in the oil industry, "America was the Saudi Arabia of oil long before Saudi ever got that title."
Well Steve, while usage is up, oil production in the US is actually down. From about 250 million barrels per month in the 80's, to about 150 million bpm now. It had reached 300 million bpm around 1970.
Usage went from about 360 million bpm in the mid 80's to about 480 million bpm recent peak, to around 440 million now.
With a 100 million bpm decline in US production, in the face of about 80 million bpm increase in usage, is it a given that it was due to a usage increase?
If oil production had just been flat at 250 million bpm, we'd still be getting more than half the usage domestically.
http://tonto.eia.doe.gov/dnav/pet/pet_sum_crdsnd_k_m.htm
One correction. I should have said 100 million bpm production decrease and 120 million bpm increase in usage. The 80 million bpm increase was relative to now, but the recent peak is probably more representative of usage.
Republican presidents average an 8.7% increase in foreign dependence and Democratic presidents average 4.6%.
Big increase in oil use due to two foreign wars.
While US oil production has dropped and use has risen, we should keep in mind that what leads American companies to purchase foreign oil is price. Not all oil is created equal. Some just shoots out of the ground (like La Brea Tar Pits), other needs to be carefully drilled for an pushed out.
Most of the cheaply producible US oil is pumped, what is left is more expensive to produce (offshore, Bakken Shale, etc.)
Even if the US decreased its use of oil, we may still find it cheaper to import than produce domestically.
we may still find it cheaper to import than produce domestically.
And why shouldn't we? Use up everyone else's first.
We might have to add the cost of oil wars to othe price, but until then......
"Or one could be honest, as opposed to trotting out partisan talking points"...
Or in your case Steve you could attempt to get a grip on reality...
But you're still into social engineering I see: "Not pushing harder for alternatives to oil as a transportation fuel"...
Your tripping into the liberal fantastic doesn't stop: "Not provinding a long-term national plan for massively increased public transportation"...
And of course what's a liberal who doesn't make it up as he goes along: "But by all means, continue to think that domestic drilling will solve all U.S. oil problems"?
"Republican presidents average an 8.7% increase in foreign dependence and Democratic presidents average 4.6%."...
New York Times or the DNC?
As this is an economics website, and people versed in economics are versed in the benefits of international trade and comparative advantage, I am quite sure none of us accept this hobgoblin of "foreign oil dependency" to begin with. Eh?
"NPR told listeners that the public has supported drilling offshore because they objected to the country's dependence on foreign oil and the wars in the Middle East.This is very interesting because it shows how badly the media have reported on this issue. There are no projections that show drilling offshore will have any noticeable effect on U.S. dependence on foreign oil. The media (including NPR) have horribly misrepresented the potential impact of offshore oil so that tens of millions of Americans actually believe that it has anything to do with dependence on foreign oil."
"It would have been interesting to report the attitudes towards offshore drilling among those who know that it will not have any noticeable impact on U.S. dependence on foreign oil or the price of gas."
- http://www.cepr.net/index.php/beat-the-press/does-the-public-think-that-drilling-for-oil-in-environmentally-sensitive-areas-is-an-end-in-itself
"There are no projections that show drilling offshore will have any noticeable effect on U.S. dependence on foreign oil"...
Well Steve do you have a credible source?
National Propaganda Radio just won't do...
Figure 2. America’s Endowment of Solid and Liquid Fuels Resources
Let's try some of this stuff out first before having to depend on some questionable 3rd world country for a portion of our energy needs...
Diz,
Years ago when oil supply was ample and production could readily be ratcheted up, it wasn't a problem for importing nations to cheaply purchase ample supplies of petroleum. The problem we have now is that oil fields are drying up, discoveries haven't kept pace, and more and more developing nations want a larger cut of a stagnate oil pie - one that will soon be dwindling in the years ahead. That is the problem.
Juandos,
What needs to be looked it is not how much oil is in the ground, but how readily, cheaply and abundantly it can be produced, along with the exhibited quality.
Just because one has a field that's been worked on for 40 years, but still has 70% of its oil in place, doesn't mean it's going to readily spit up volumes of crude it once did. Sure, higher prices may encourage somebody to slap on next generation CO2 injection, or try new surfacants, but, (while they will help by extending the field's life span and possibly slow decline) this doesn't mean production's going to increase (and when you start running into metals, you know the oil is bad).
When I first entered the oil industry in the early '80s, America (which still producing the majority of her needs), thanks to the high oil prices, embarked on a massive drilling binge that far surpassed anything before the '70s. Despite feverant investment and better technology, we still didn't halt sliding production. We today produce 5 million-some barrels of crude from over 500,000 officially recognized wells.
Diz,
Years ago when oil supply was ample and production could readily be ratcheted up, it wasn't a problem for importing nations to cheaply purchase ample supplies of petroleum. The problem we have now is that oil fields are drying up, discoveries haven't kept pace, and more and more developing nations want a larger cut of a stagnate oil pie - one that will soon be dwindling in the years ahead. That is the problem.
That is *a* problem of allocating scarce resources to human needs and as such just the sort of problem economics teaches us will be solved via -what- -what- price signals.
Right now the price signals generally say import oil from overseas.
I don't remember ever taking any economics course where *goodness* was defined as not having imported something.
I have no doubt that the vast majority of those complaining about US dependence on foreign oil don't support our country when you have a clear choice. Where was your car made, until you support your country you have absolutely no right to be complaining.
It all about national security. Even if you eventually go nuclear, you need oil to win a war. Therefore, it is in our national interest to use up most foreign oil sources before we exhaust our own. This has not changed since WWII.
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