In my previous entry, I expressed some concern about why the long term global supply and demand picture regarding oil consumption. If we look at worldwide reserves, we have the following data points:
Saudia Arabia: 264.2 billion barrels and up to 1 trillion barrels of ultimately recoverable oil
Caspian Sea Region: 10 Billion Barrels and up to 233 Billion Barrels ultimately recoverable
Iraq: 112 Billion Barrels proven with an unknown quantity unproven (Potentially > 100 Billion)
Reserves, however, neglect to take in to account actual production. When we examien production, we find the following:
Saudia Arabia: 8.1 million barrels per day
Caspian Sea Region: 1.29 Million barrels per day
Iraq: 2.02 Million barrels per day
These are considered the major oil and gas regions in terms of production and exploration over the coming decade. Now, let’s take a moment to explore the supply picture. For that, let us turn to China and India, two of the most populous countries in the world, with more than 2 billion people between them. Both are undergoing rapid development, leading to a rise in the economic status of their populations. One of the growing trends in both countries is a larger middle class, and one of the most common purchases is cars and SUVs. Evidence is, in fact, abundant, judging by the articles containing auto sales and import figures.
What follows is rising consumption of oil from these two countries. In fact, the DoE numbers support this argument.
China:
China currently is the world’s third largest oil consumer, behind the United States and Japan. Consumption of petroleum products totalled 4.78 million barrels per day (bbl/d) in 2000, up from 4.36 million bbl/d in 1999. China is expected to surpass Japan as the second largest world oil consumer within the next decade and reach a consumption level of 10.5 million bbl/d by 2020, making it a major factor in the world oil market.
India:
Future oil consumption in India is expected to grow rapidly, to 3.2 million bbl/d by 2010, from 2.0 million bbl/d in 2002. India is attempting to limit its dependence on oil imports somewhat by expanding domestic exploration and production.
So, from these two countries alone, are we likely to see a demand spike of nearly 7 million bbl/d over the next ten to fifteen years. Even with rising supplies and enhanced production capability, US domestic oil production is likely to decrease. Even with the currently high price, we find that crude oil production in the lower 48 states is expected to fall by about 130,000 bbl/d in 2003, while Alaskan crude production remains flat (DoE.
This does not bode well. Declining domestic production combined with increased global competition for existing oil resources, combined with reserves that place the U.S. at only twelfth among nations while being the number one consumer, appear to take as far from the path of energy independence. And ANWR, at best, would only add less than 1.5 million bbl/d to domestic capacity, hardly keeping up with rising demand, let alone coming close to providing any resolution.
So, what should the US do?