About 2013, for the first time in over 20 years, the gap between our consumption and production began narrowing, rather than widening. There are two reasons for this. Production is up due to the fracking boom and of equal importance consumption is down due to the poor economy. That is good as a snapshot but means little for the future.
As the economy slowly recovers our usage will rise. At the same time the fracking boom has a limited lifetime. A University of Texas study showed that production of natural gas from three of the largest shale plays; Fayetteville, Haynesville, and Barnett have already peaked. Similar performance is expected in oil from shale fracking. In a few short years we should be back on our inevitible decline in production. Without reduction in consumption we will resume an upward trend on importing oil, currently about a third of what we use.
The danger is fourfold: exporting dollars to buy energy weakens our economy, enriches the economy of some unsavory producers such as Iran and Russia, threatens a stable environment, and impairs our health.
To a large degree all transportation and big chunk of the U.S. Economy is powered from crude oil. The oil is turned into gasoline, diesel fuel, jet fuel, heating oil and a myriad of derivative products such as plastic. Currently we are consuming about 18 million barrels of oil per day, yet we only produce about 12 million. That constitutes an energy deficit of about 7 million barrels of oil per day. Even with the price falling to near 50 dollars a bbl, this creates a trade deficit of over an eigth of a trillion dollars a year. An eigth of a trillion dollars a year that flies out of our economy on an annual basis. An eigth of a trillion dollars that is not flipped in our economy to provide jobs or buy groceries.
The oil comes from friendly and not so friendly countries. Canada is our number one supplier, some might say “pusher” at about two and a half million barrels per day. The members of OPEC, the Organization of Petroleum Exporting Countries, provide about 5 million barrels of oil per day. Iran is a charter member of OPEC and benefits greatly if indirectly from our purchase of oil on the global market. This is not a pretty picture – our dollars going to support a rogue theocracy bent on developing nuclear weapons and their support for global terrorism. Although we are currently a net exporter of natural gas, this won’t last when the shale plays are exhausted.
We even import uranium to fuel nuclear reactors. The import export balance is negative to the tune of several billion dollars a year. Generally we import low grade Uranium ore and export enriched nuclear fuel. Regardless we are operating at a net dollar loss.
The only fuel that we don’t have to import is coal; however, as society becomes more aware of the risks of damage to human health and the environment, it will become less useful in our economy.
There is no easy answer to this bleeding of cash from our economy. We will not drill our way out of the problem because the oil and gas are just not here. We must adopt energy from clean indigenous sources as the only long term, sustainable answer. The bonus for home produced sustainable energy is the money stays home and cascades through the economy.