While many Americans may believe that the U.S. gets almost all of its crude oil from overseas, that is not the case. The U.S. produces about half of the roughly 19 million barrels of oil it uses each day. And our neighbors, Canada and Mexico, are our number one and number two sources, respectively.
Every day, Canada provides the U.S. with 1.9 million barrels of oil, while Mexico sends the U.S. 1.1 million barrels each day.
What's troubling about Mexico is that it's primary oil sources are expected to be depleted by 2019.
By contrast, Saudi Arabia is the number three exporter to the U.S., sending this nation just over 1 million barrels of oil each day.
For decades, our nation's thirst for oil seemed unquenchable. However, the Great Recession and continuing economic hardship have dropped U.S. demand from 21 million barrels per day prior to the recession to the current level of 19 million barrels of oil each day, or 798 million gallons.
That amounts to 22.6% of the oil used around the world each day. And experts predict that U.S. demand will only rise over the coming decades.
But we are not alone in our increasing demand for oil.
At present, the world is using 88.20 million barrels of oil per day. That demand has been continuously growing, along with the world's developing economies. And for the world's developed economies to continue growing — a must under the perpetual-growth paradigm — oil is a requisite.
However, average annual global crude oil production has been flat since 2005. That problem is projected to worsen over the next quarter-century.
The US Energy Information Administration (EIA) has some very bad news for all of us.
The EIA projects that while world oil demand will climb to 105 million barrels per day by 2030 (a significant increase from the current level of 88.20 million bpd), the anticipated increase in conventional oil production will be just 11.5 million bpd, meeting less than half of the growth in demand.
It's also critical to note that in years recent years the EIA has been continuously ratcheting down is projections for the amount of supply that will be available in the future.
Six years ago, the agency predicted that 120 million barrels a day would be available by 2030. But it has now cut that estimate to 105 million barrels a day.
How much lower will that estimate continue to go?
The International Energy Association (IEA) says that growth in worldwide oil demand is outstripping growth in new supplies by 1 million barrels a day per year. According to the IEA, it’s getting harder to access and exploit conventional resources and, “The age of cheap energy is over.”
China and India, each with populations of over 1 billion people, are home to two of the world's most rapidly developing economies. And as such, the demand for oil in those countries is also rising rapidly.
Due to the robust expansion of these economies, the combined energy use of China and India is expected to more than double by 2035, when they will account for 31% of global energy use.
China's oil consumption is projected to rise 119% by 2025. But even then, the Chinese will still be using only about half as much oil as the U.S. will be.
With worldwide oil usage anticipated to increase to 105 million barrels a day, up from 88 million barrels today, the question most experts ask is, where will all of that additional oil come from?
Many have supposed that Saudi Arabia's giant oil fields would account for much of the supply.
But according to Matthew Simmons, the author of "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy," that is highly unlikely.
Simmons, who died last year, believed that Saudi Arabia, now producing around 9 million barrels a day, would soon begin to lose production capacity. According to his research, the Saudi oil fields have matured, leading to their inevitable decline.
As a result, Simmons concluded that worldwide oil production has peaked. Instead of increasing to the IEA's original projection of 120 million barrels a day by 2025, Simmons concluded that global production could in fact be half that rate — meaning less than what it is today.
This would be an absolutely staggering blow to the global economy. The price of oil would escalate exponentially and our way of life would be irrevocably altered.
Some have concluded that the U.S. must, in the effort to achieve oil independence, begin drilling in Alaska's Arctic National Wildlife Reserve. But unfortunately, experts have countered that such a tactic would result in 250-800 million barrels a year — the amount the U.S. currently consumes in just two to six weeks.
Obviously, that is not the answer.
Simmons asserted that the world needs to considerably reduce its consumption of transportation fuels to fend off a potential crisis, a contention other experts in the field support.
Since 70% of the world's oil is used as transportation fuel, new forms of fuel are required, as well as a reduction in the number of people and goods moved by cars and trucks.
The latter would radically alter our way of life. But it seems that such change is inevitable anyway. Why not do it on our own terms by initiating the planning and implementation immediately? Why wait for another oil shock?
Simmons called for an increase in the use of trains and ships to make shipping more efficient and to reduce worldwide oil consumption.
Obviously, the U.S. oil industry has a huge stake in seeing to it that American consumers do not decrease our gluttonous consumption of their product. But if Simmons was correct in his assertions, the clock is ticking on world oil supplies and the time to act is now.
Biodiesel, which is manufactured from vegetable oils, recycled cooking greases and oils, or animal fats, is one possibility.
Biodiesel can be used in any diesel engine, usually without any engine modifications, and is the safest of all fuels to use, handle, and store. It is also non-toxic, biodegradable and sulphur-free. Soybeans, one of the largest and most abundant U.S. crops, are one of the principle sources of biodiesel.
This fuel is already being used to power the busses and other municipal vehicles in numerous U.S. cities, such as St. Louis, Phoenix, Cincinnati, Portland, Oregon and Lexington, Kentucky.
The Department of Energy calls biodiesel the fastest growing alternative fuel in the nation, as its use has increased 5000% since 1999.
One way or the other, it's time to start exploring alternatives to crude oil for a variety of reasons: its limited, and perhaps dwindling, supply; various environmental factors; and the economic prospects that a new industry may provide, including jobs.
There are lots of good reasons to wean ourselves from our dependence on foreign oil, not the least of which is our national security. Oil imports have also created an enormous trade imbalance that is sucking billions of dollars out of the country each and every day.
So we shouldn't let U.S. oil companies stand in our way.
In fact, if they were wise, those companies would recognize the opportunities at hand and lead the way themselves.
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