Does America have enough oil?
The Truth about our energy Resources
The United States is one of the largest producers of oil in the world. In fact, America is producing at a rate that rivals countries like Saudi Arabia and Russia. However, it’s not just about how much oil we have but rather how quickly oil can be extracted and at what cost. To remain a top player in the energy market, we should understand the US oil production and consumption patterns. Is America running out of oil? Do we have enough natural gas to meet demand? Are renewable energy sources a viable long-term solution? Unbeknownst to many, there is an ongoing debate about whether or not America has enough natural resources for future growth and development. The truth lies somewhere between yes and no. Let’s take a look at the facts and explore some common misconceptions about America’s energy resources.
Crude Oil Supply:
How much Oil does America produce?
The United States is the largest oil producer in the world (counting crude oil, petroleum liquids, biofuels, and refinery processing gain), more than even Russia and Saudi Arabia. In fact, Texas alone produces about 40% of all American oil. New Mexico, North Dakota, Oklahoma, Alaska and California also produce significant amounts of hydrocarbons. These seven states account for approximately 74% of all American oil production and yield approximately 8.5 million barrels of crude oil each day. Current crude production from shale plays total over 7.5 million barrels of crude per day. Crude oil production is forecast to increase to 12.6 million barrels per day (note – we are currently producing over 12.2 mmbopd or million barrels of oil per day). Many analysts attempt to forecast crude oil production, but the fact remains that sharp increases/decreases in price provide a more wide variation of forecasts. If the price for crude oil is $50-60/barrel, crude production in the US might shrink to 8 mmbopd. On the other hand if crude oil is $100+, crude oil production might grow to 15 mmbopd.
Let’s take a quick look at the largest 10 oil producing countries:
Country | Million barrels per day | Share of world total |
United States | 18.88 | 20% |
Saudi Arabia | 10.84 | 11% |
Russia | 10.78 | 11% |
Canada | 5.54 | 6% |
China | 4.99 | 5% |
Iraq | 4.15 | 4% |
United Arab Emirates | 3.79 | 4% |
Brazil | 3.69 | 4% |
Iran | 3.46 | 4% |
Kuwait | 2.72 | 3% |
Total top 10 | 68.82 | 72% |
World total | 95.57 |
Crude Oil Demand:
How much oil does America consume?
Contrary to popular belief, the United States is not one of the top consumers of oil in the world. In fact, America only ranks 22nd in terms of oil consumption per capita (interesting names ahead on per capital – Saudi Arabia, Kuwait, Luxembourg, Singapore, Bermuda, Greenland, Canada). The average American consumes approximately 22 barrels of oil each year. This number is expected to drop in years to come due to increasing investments in renewable energy technology and sustainable development strategies. Singapore leads the pack with 87 barrels of oil consumed per person per day. Saudi Arabia is in the top 10 with 37 barrels of oil consumed annually per person and the United Arab Emirates with 35. Many people believe that America consumes an absurd amount of oil each year.
Let’s take a quick look at the top 10 oil consuming countries:
Country | Million barrels per day | Share of world total |
United States | 20.54 | 20% |
China | 14.01 | 14% |
India | 4.92 | 5% |
Japan | 3.74 | 4% |
Russia | 3.70 | 4% |
Saudi Arabia | 3.18 | 3% |
Brazil | 3.14 | 3% |
Canada | 2.63 | 3% |
South Korea | 2.60 | 3% |
Germany | 2.35 | 2% |
Total top 10 | 60.81 | 61% |
World total | 100.23 |
Natural Gas?
Natural Gas: The fastest growing resource...
Natural gas is the fastest growing energy source in the United States – consumption has grown over 30% since 2010. In fact, natural gas is expected to account for more than 26% of America’s energy production by 2030. Currently, natural gas is used to generate 38% of electricity in the United States. Natural gas is much cleaner than other carbon-based fuel sources. It’s also cheaper (until early 2022 – 😉), abundant and easier to transport. As a result, natural gas is expected to remain the main source of electricity in America for years to come. In terms of production, the United States is the largest natural gas producer in the world. As a matter of fact, the US has become one of the largest exporters of Natural Gas in the world via LNG – with the other two countries in the top three – Australia and Qatar.
Crude Oil Production Capacity:
Is America Running Out of Oil?
No, not at all. In fact, American reserves are predicted to last for another 40 years. This figure is based on daily consumption rates and does not account for rising demand. The rate at which oil is extracted from the ground varies significantly and can shift dramatically within a matter of months depending on prices and demand.. It depends on several factors including the location of the well, the type of crude oil and the amount of pressure it is under. As crude oil ages, it becomes more difficult to extract and the cost of production increases.
Reserves are one of the most contended variables as it can vary significantly based on who does the reserves analysis on the actual economic recovery of the oil. One important fact to understand is that if it costs more than a barrel is worth to extract it from the ground, it will not be counted in oil reserves – which can vary significantly due to price swings. At the end of 2020 – here is where the market “believes” the reserves stand by country:
Rank | Country | Reserves | % of World Total |
1 | Venezuela | 303.8 | 17.50% |
2 | Saudi Arabia | 297.5 | 17.20% |
3 | Canada | 168.1 | 9.70% |
4 | Iran | 157.8 | 9.10% |
5 | Iraq | 145 | 8.40% |
6 | Russia | 107.8 | 6.20% |
7 | Kuwait | 101.5 | 5.90% |
8 | United Arab Emirates | 97.8 | 5.60% |
9 | United States | 68.8 | 4.00% |
10 | Libya | 48.4 | 2.80% |
What about renewables?
Where do renewables fit in?
Renewable energy sources such as solar and wind are expected to produce about 44% of America’s electricity by 2050. This projection is based on current production rates and expected technological advancements. These sources of energy are growing in popularity because they are cheap and environmentally friendly. They also require little to no maintenance. However, renewable energy sources are not expected to meet all of America’s energy demands. This is because certain areas of the United States are not suitable for solar and wind farms due to climatic conditions.
The jury is still out on if renewables solve the dependence on oil & gas. The majority of energy experts agree that renewable energy technologies are here to stay. They are expected to contribute significantly to America’s power generation in the near future. However, there is no consensus on whether or not renewables will replace conventional energy sources such as oil and gas. Experts do agree that the two sources will form a symbiotic relationship in the years to come. As renewable energy technologies continue to evolve and improve, they are expected to meet more and more of America’s energy demands. But they will likely never replace conventional sources of energy.
Renewables will have a direct impact on crude oil and natural gas demand. However, when we look at each product – there is an amount of demand that simply can not be replaced by renewables (at least with today’s technology). Crude Oil is used to make products made from wood, plastic, clothing, computing, etc. – there is a certain amount of crude oil demand that will simply be needed as long as we use monitors, tvs, cell phones, clothing, furniture, etc. On the Natural Gas side, it is important to realize that when the wind dissipates or the sun is hidden behind clouds, Natural Gas is our likely back up fuel. This reinforces a viewpoint of needing ALL OF THE ABOVE in our energy future.
Conclusion:
So what is the bottom line?
America is not running out of oil but it is becoming more expensive to extract as reserves age. There are plenty of ways to reduce this dependency by switching to renewable energy sources. However, doing so will take time and require significant investment. In the meantime, we can take steps to reduce our reliance on oil and gas by creating a more sustainable way of life. This can involve investing in public transportation, increasing energy efficiency and developing better regulations to curb carbon emissions.
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