Carpe Diem

Energy charts of the day

1. Thanks largely to the recent significant increases in the domestic production of fossil fuel energy (oil and natural gas), the U.S. was more energy self-sufficient in 2012 than at any time in the last two decades.  Based on data for the first nine months of 2012, the U.S. last year produced more than 83% of the energy it consumed for the first time since 1991 (see chart above).

2. From the article “Economics of the Bakken Oil Boom: What the Rest of the Nation is Missing,” in today’s Canada Free Press:

The Bakken development in North Dakota should be an example for the nation, indicating what could be accomplished with the right energy policies to decrease unemployment, raise government revenues, increase per capita income, decrease poverty, and help produce the nation’s major energy source.

So far, the hydraulic fracturing revolution that has created these positive economic developments is largely confined to production on private and state lands, due to governmental policies reducing opportunities on federal lands and a punitive federal regulatory environment. Even though there are massive shale oil and oil shale resources on federal lands, federal policies are choking off any production increases. Here’s one illustrious example: it takes the federal government 307 days to process a permit to drill, but it only takes North Dakota 10 days (see chart below).

22 thoughts on “Energy charts of the day

  1. Mark.

    First of all, aren’t we looking at a 10% decline in use of petroleum since the contraction began? Why is that great news?

    Second, shale gas has been one of the reasons why the US is less dependent on imports. But shale gas is an economic loser as the producers have to sell their product at a loss. Why is that good news?

    From what I can see shale gas is a bubble that is very similar to the dot.com and housing bubbles.

  2. This is a completely fascinating trend. I wonder how long it can continue?

    I suspect demand will fall further in years ahead.

    It may be within 10 years o less that a plug-in hybrid car is not only technically viable, but a commercial winner.

    lithium batteries are getting better and better and cheaper and cheaper…..

    • It may be within 10 years o less that a plug-in hybrid car is not only technically viable, but a commercial winner.

      lithium batteries are getting better and better and cheaper and cheaper…..

      The laws of thermodynamics have not changed and will not change. Hybrid cars are still a dream for all but a few niche applications.

    • Unless we’re willing to change our long held belief in what “infinity” means, I will have trouble discussing temperatures beyond infinity.

      • Unless we’re willing to change our long held belief in what “infinity” means, I will have trouble discussing temperatures beyond infinity.

        I’ll get around to the articles on absolute zero being violated after I find my cold fusion articles I left lying around a few decades ago.

        • I’ll get around to the articles on absolute zero being violated after I find my cold fusion articles I left lying around a few decades ago.

          I have a feeling somebody writing that article didn’t understand what they were being told, and made stuff up instead.

          • I have a feeling somebody writing that article didn’t understand what they were being told, and made stuff up instead.

            The state of science reporting is pathetic. Look to the IPCC and the AGW scam as the perfect example. Had I ‘adjusted’ my data the way that NOAA, GISS, UEA, etc., do I would have failed out. Had a financial analyst done the same he would have gone to jail. But you do that when you work for the UN and you get a Nobel Peace Prize.

  3. If only 16% is imported, surely we can rely on imports from Canada + Mexico, and nowhere else.

    US natgas is not replacing imported ME oil nearly as fast as it should.

    1) Build Keystone pipeline.
    2) Allow easy conversion of cars to LNG

    Done. No more oil imports from the ME, Venezuela, Nigeria, or anywhere else except Canada and Mexico.

    • Toads

      Done. No more oil imports from the ME, Venezuela, Nigeria, or anywhere else except Canada and Mexico.

      Since oil is a global commodity, that plan wouldn’t work. If US importers were required to buy only from Canadian and Mexican companies, the increased demand on those companies would not only allow them to raise the prices they charge, but would require them to buy more oil on the world market, which includes all those countries you don’t like.

      Your argument is political, not economic, and would only result in higher prices for US consumers.

      • Not true. While WTI Oil prices would not change, if the US completely replaces imports from any place outside of North America, the huge indirect costs of that go down.

        Not only will US imports be lower, but the trade deficit will only go to Canada and Mexico.

        • Toads

          Not true. While WTI Oil prices would not change, if the US completely replaces imports from any place outside of North America, the huge indirect costs of that go down.

          Think about this: First of all, the US doesn’t buy oil, oil companies buy oil. Oil producers sell oil for the highest price they can get – globally. Buyers buy at the lowest price they can get – globally.

          If US oil companies could buy only Canadian and Mexican oil cheaper than on the global market, they would already be doing so, which means it must not be cheaper.

          The price of WTI is a benchmark price used only for convenience in reporting, and is not like the sticker price on the food you buy at the store. WTI varies continually based on global supply and demand.

          What do you think would happen to the price of WTI if US imports were restricted, while demand remained the same? Please tell me you believe that the price would rise.

          Not only will US imports be lower, but the trade deficit will only go to Canada and Mexico.

          You must mean to Canadian oil companies and Mexican oil companies. They would still have to redeem those dollars for US goods and services or US assets just like everyone else. The trade deficit is a bogie man politicians use to scare their children. It’s of no consequence. No one is “sending US wealth overseas”. There is only an exchange of dollars for oil which makes both parties better off. Once the trade is complete, the oil belongs to the buyer, and the dollars belong to the seller.

          The notion that the US should be self sufficient in ANY good or service is contrary to sound economic principles. We, as consumers are better off getting the things we buy for the cheapest price we can get, as it makes us wealthier, with more money left over for other things.

          You probably have a serious trade deficit with your barber, as I do, but I don’t know of anyone who considers it a problem.

          The US isn’t self sufficient in aluminum, bananas, coffee, chocolate, and millions of other items, and no one tears their hair about it. Why is oil any different? Nothing bad is going on.

          • You must mean to Canadian oil companies and Mexican oil companies. They would still have to redeem those dollars for US goods and services or US assets just like everyone else.

            Good argument. As you go on to say, “the trade deficit is a bogie man politicians use to scare their children.”

            It’s of no consequence.

            Even though the first part is very true this part is not true. Now don’t get me wrong. It would be true in a normally functioning economic system so many of the general arguments are right.

            The trouble is that the system is not functioning as it used to during those great decades in the 19th centuries where goods crossed borders easily and the Classical Gold Standard provided ample controls to keep things working. That is not the case today. The current system is being manipulated by central banks and governments. As such, the feedback mechanisms that kept things from getting out of control during the days of the gold standard no longer exist.

            What you are missing my friend is the fact that the low rates in the US are hindering capital formation and encouraging consumption. Your foreign trading partners are using dollars to prop up their own monetary expansionary plans and have no trouble with using the cash their citizens earn to buy more useless USTs that fund your foreign wars and unsustainable welfare programs. Some nations have seen a massive influx in capital as they build new infrastructure, factories, mines, plantations, mills, smelters, etc. In the end, when the fiat collapse comes our way they will also be badly hurt but after the dust settles your trading partners will find themselves with factories, bridges, airports, mills, mines, plantations, roads, etc., that can be used to create wealth and improve the standard of living. When the dust settles out here what will we find?

          • Vangel

            Even though the first part is very true this part is not true. Now don’t get me wrong. It would be true in a normally functioning economic system so many of the general arguments are right.

            I agree, but didn’t think additional discussion of the issue would help make my point, that point being that buying foreign oil no more a bad thing than buying foreign bananas, and doesn’t make Americans poorer.

            Let me correct my comment a little bit.

            It’s of no consequence.It would be of no consequence in a normally functioning economic system.” :)

    • Done. No more oil imports from the ME, Venezuela, Nigeria, or anywhere else except Canada and Mexico.

      Oil is fungible. The stuff that you are not buying from the ME will simply go to the customers that used to buy from Mexico and Canada. As for Mexico, it is not as far away from becoming an oil importer as many might imagine. Cantarell is dying quickly because all those enhanced recovery techniques used to produce $22 oil borrowed from the future. Fortunately for Mexico it should have plenty of cheap natural gas reserves but to get them developed it will need to let foreign companies in as partners or learn how to use the services companies a lot more effectively.

  4. While it is pathetic that it takes 10 months to get a permit on Federal land…

    …. OK, so after 10 months the oil should be flowing nonetheless, correct?

    Bakken’s huge ramp started in 2011 and grew through 2012. If Federal permits were filed in 2012, the oil should start flowing pretty soon, now?

    • …. OK, so after 10 months the oil should be flowing nonetheless, correct?

      No, that means that after 10 months the proud new permit holder can begin thinking about bringing in some equipment to help determine where they might want to do some test drilling. Oil flow, if any, comes much later.

      • That is incorrect, because the apples-to-apples comparison between Federal land vs. ND or OH is just 10 months.

        So what you described to happen after the permit, is also true for ND and OH.

        But apples-to-apples, there is a 10-month lag.

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