Peak Oil is You

Donate Bitcoins ;-) or Paypal :-)

Page added on September 27, 2013

Bookmark and Share

The myth of US energy independence in the global world of oil


No man is an island, not even a man who has grown his oil and gas production exponentially.

Case in point: the US, which in the past five years has boosted oil production by around 35%, changing the discussion of its “energy independence” from a “what if” to a “when” scenario.

If that’s the case, then why should the country care so much about peace and stability in the Middle East and the protection of global energy supplies and maritime transit corridors?

“We absolutely have to care,” said Carlos Pascual, the US State Department’s special envoy and coordinator for international energy affairs.

There is a “fundamental point” the US takes into account when looking at its global energy priorities: “Oil and increasingly gas are global commodities,” Pascual said this week at an event sponsored by Columbia University’s Center on Global Energy Policy.

That means the price of oil outside the US impacts the price of oil within the US, and that can have a knock-on economic effect.

“When we see disruptions in [global] markets, when we see disruptions in maritime transit, it has a direct impact on the price that we pay in the US for energy, the price that we pay at the pump, it has a direct impact on our economic productivity,” he said.

Pascual noted the “inelastic” nature of oil supply and demand: “If you have a major disruption, the potential for a huge price increase is huge.”

The key is to keep enough spare capacity around. That’s the amount of production that can come online within 30 days and sustained for 90 days.

“You have to work with those countries that are the big producers because if they don’t sustain the production it has an impact on the vulnerabilities in the overall marketplace,” said Pascual.
In addition, “we have to work with those countries which are the potential big new suppliers coming into the market,” he said. “Countries like Iraq become absolutely essential swing factors that can go on the one side to very sharp increases of production or if they have disruptions bring the market down. If you can’t maintain stability in that base production, then you’re putting pressure on that spare capacity.”

He noted China’s growing importance to US oil price interests. In the past, US diplomats would say China was not on their priority list, but times have changed.

“Today we have a changing environment where we have to take that into account,” said Pascual. “It puts us into an interesting situation, that China’s ability to satisfy its demand becomes in the national security economic interest of the US.”

“There is no one stop shop in assuring energy security and price stability,” said Pascual. “You have to work across the range of these markets.”


5 Comments on "The myth of US energy independence in the global world of oil"

  1. BillT on Sat, 28th Sep 2013 3:11 am 

    When you are importing 10,000,000 barrels per day and using 18,500,000 barrels per day, you are NOT independent and never will be. Facts are from the E.I.A. websites: and

    China now rules the world economically, and that is the most important change in the last 40 years. They control the fate of the USSA and they know it. Between Russian control of Europe and mega resources and Chinese control of the rest, the US is done.

  2. Cloud9 on Sat, 28th Sep 2013 5:21 pm 

    We are not done, but we are in for a phase shift. we can feed ourselves. We have plenty of expensive oil to run our military. And, no one can invade us. Except of course for los amigos.

  3. rockman on Sun, 29th Sep 2013 12:27 am 

    BillT – it always odd to me they continue to use the phrase ‘energy independence’ since they must know they are describing ‘import independence’. They certainly understand that distinction but I don’t think I’ve seen one correct use. Maybe it just gross sloppiness but it’s just seems so universal.

    But all that aside, it does tickle me that increasing production from a rapidly depleting source implies any sense of independence especially when you consider the increase in domestic production is the result of high oil prices. High prices that have forced US consumers to pay over $400 billion per year more for their oil consumption then before we started on our path to “energy independence”. Yeah…we’re paying almost a half $trillion a year more for oil in our push to “independence”. Can’t wait till I croak and become oxygen independent. LOL

  4. BillT on Sun, 29th Sep 2013 3:04 am 

    Cloud9, you don’t need to be invaded. Your controllers are already in place. They are the TSA and the NSA. You live in a Police State worse than East Germany after the war. You can still leave the US, but you cannot take much with you and you will be monitored for the rest of your life no matter where you go unless you renounce your citizenship and hide.

  5. Gray T on Sun, 29th Sep 2013 10:20 pm 

    Fracking = Kicking the can down the road,,, hope it holds for a few years but im not holding my breath.

Leave a Reply

Your email address will not be published. Required fields are marked *