Big Oil Wields Ultra Deep Influence
Opinions may differ on exactly when the Earth will pass its peak in oil production, but there is consensus that the day is unnervingly near: the U.S. Department of Energy and the International Energy Agency date it sometime after 2030 , while controversial “peak oil” theorists place it at 2008. In even the most optimistic scenario, humans will have extracted more than half the earth’s oil within the next three decades, after which oil production will begin its inevitable decline. Yet the world’s energy needs will be almost 60 percent higher at that time, according to the IEA.
That peak will arrive even faster in the United States, the Energy Department says. U.S. petroleum production will reach its apex at 9.8 million barrels per day in 2009, falling to 8.8 million barrels per day by 2025. Yet domestic demand will increase by almost 40 percent in that period. Similarly, demand for natural gas is projected to increase by 40 percent, while domestic production will only increase by 14 percent.
This double whammy of declining production and increasing demand is creating an even greater dependence on imported energy: Net oil imports, which rose from 37 percent of total U.S. petroleum consumption in 1980 to 56 percent in 2003, are projected to account for 68 percent of consumption in 2025. Twenty-one percent of America’s gas will be imported by that year as well.
U.S. leaders call this dependence on foreign energy a major national security concern, because of the vulnerability to supply disruptions. Insurgency campaigns in Iraq, pipeline sabotage in Colombia and civil unrest in Nigeria are just a few recent examples of supply interruptions that helped push the price of oil to record highs. Reducing U.S. energy dependency has been a chief priority of administrations dating back to the oil shocks of the 1970s.
Reducing dependency on foreign sources of energy means, above all, squeezing every last drop out of domestic ones. But America’s onshore sources are nearly tapped out: oil production from wells on land, for example, fell by 30 percent between 1986 and 1996. Luckily, the United States holds claim to one of the world’s richest oil deposits: the Gulf of Mexico.