A review of U.S. data shows that in 17 of 18 months dating to January 2007, crude-oil imports from the Organization of Petroleum Exporting Countries exceeded U.S. production levels.
The figures shine a spotlight on the main points of the long-overdue debate over energy policy in the world's biggest oil consumer. The Bush administration wants to open up coastal waters to oil drilling again, and Democratic leaders are willing to consider it, with some restrictions.
The new data, though, also help puncture a popular political myth that the U.S. can gain energy independence, even in the long run, despite the sloganeering of the current presidential campaign season.
"It might be pleasing to the audience" to hear such pledges, but "energy independence is not a logical goal. It is never going to happen," said Robert Ebel, a senior energy analyst at the Center for Strategic and International Studies in Washington, D.C. The U.S. accounts for nearly a quarter of world oil demand and holds just a fraction of global reserves.
With most of the world's oil reserves lying under the sands of the volatile Middle East, where political disputes sparked global oil-price shocks, cutting dependency has been a table-thumping theme well before oil prices tripled in recent years to a record high near $150 a barrel last month.
But with domestic output and production from non-OPEC producers failing to keep pace with rising demand from the developing world, U.S. reliance on OPEC and Middle East imports has climbed along with prices. What's more, the higher reliance on imported oil has come as U.S. oil demand has slumped under the weight of high prices. Saudis Pump Up The Volume U.S. President George W. Bush twice this year directly lobbied Saudi King Abdullah for increased oil supplies. Only after prices surged further did the king agree to push output to 9.7 million barrels a day, the highest level since 1981. Lost amid the scramble to try to cap gasoline prices from rising much above $4 a gallon was yet another pledge to cut dependence on Middle East oil.
Data from the Energy Information Administration show that U.S. crude-oil imports from Iraq in June averaged 693,000 barrels a day, topping Alaska North Slope output of 667,000 barrels a day.
For the first six months, U.S. imports of Iraqi crude are up 42%, giving Iraq a 6.9% share of U.S. crude imports, compared wth 4.7% in the first half a year ago. That's the biggest percentage share for the first half of any year since 2002. The 674,000 barrels a day volume was the most for the period since 1999. Back then, under Saddam Hussein, Iraq was exporting limited volumes of crude under the U.N. oil-for-food program, which has since been shown to have been abused to enrich the Iraqi regime.
The jump in Iraqi imports may continue, as Iraq's State Oil Marketing Organization said it aims to surpass the May postwar record of exports of 2.11 million barrels a day in the second-half of 2008, with average exports of 2.14 million barrels a day.
Along with Iraq, crude-oil imports from Saudi Arabia, the world's largest oil exporter, rose 8.2% from a year earlier in the first half of 2008. Imports from Saudi Arabia of 1.523 million barrels a day in the first half were the strongest for the period since 2005.
U.S. imports of crude oil from all Persian Gulf suppliers jumped to 24.8% of total imports in the first half from 20.7% in the year-earlier period and marked the highest first-half share since 2003. Back then, ironically, imports from Iraq surged to nearly 1 million barrels a day a month before the March 2003 invasion and May 2003, with Iraqi flows essentially crippled, imports from Saudi Arabia hit a record level of 2.24 million barrels a day. OPEC Flow Tops U.S. Output EIA data show U.S. oil output in the first half of 2008 was virtually flat with the year-ago period, at 5.13 million barrels a day. But U.S. imports from all OPEC members have climbed 3.9% to average 5.56 million barrels a day.
The gap between domestic output and U.S. imports of OPEC crude doubled in the first half, compared with the 2007 period, to more than 425,000 barrels a day. The sharp gain came even as Venezuela, the fourth-biggest supplier to the U.S., cut off sales to Exxon Mobil Corp. (XOM) in February in a dispute over nationalization of resources. Venezuela's exports to the U.S. fell 8.9% from a year earlier in the first half 2008.
Between January 2007 and June 2008, U.S. imports from OPEC topped domestic production in 17 of 18 months, by an average of more than 350,000 barrels a day. The figure speaks to declines in U.S. output but also to inclusion of oil imports from Angola and Ecuador to the OPEC side of the ledger, from the start of 2007 and 2008, respecctively. But even excluding Angola, imports from OPEC exceeded domestic output in three months of 2007.
With new output from an Exxon project, Angola's production output has topped 2 million barrels a day, dethroning Nigeria as Africa's biggest oil producer. U.S. crude imports from Angola, at 636,000 barrels a day in June, were the most since May 2007. But first-half imports from Angola lagged behind the year-earlier period by 12.7%, as the country emerged as major supplier to China, the world's second-biggest and one of the world's fastest-growing oil consumers.
OPEC meets Sept. 9 to review output policy and the market will be watching to see how the group responds to the 22% drop in crude prices over the past month to the lowest level since May 1. Mexico Volumes Slump EIA data show that since 2003, non-OPEC supplies have lagged behind growth in global oil demand, and that trend is expected to continue through 2009. This year, global demand is expected to rise by 780,000 barrels a day, nine times greater than the expected rise of 90,000 barrels a day in non-OPEC supply.
EIA expects U.S. demand to drop 480,000 barrels a day, while Mexico, the No. 3 crude-oil supplier to the U.S., warned the steep decline in its oil output will deepen next year. With a 20% drop since 2004, state oil company Pemex has failed on its goal of holding output at 3 million barrels a day, due to the decline of its huge Cantarell field. Mexico's output, seen at 2.85 million barrels a day this year, is expected to drop to 2.7 million-2.8 million barrels a day next year. U.S. imports of Mexican crude have fallen 18% in the first half compared with the year-ago period.
New deepwater projects in the U.S. Gulf will modestly lift output in coming years and alternative fuel use and vehicle-mileage improvements will shave 2 million barrels from U.S. demand by 2030, EIA projects.
But by then, U.S. dependence on imports of crude oil and petroleum products only will shrink to 54% of daily needs from 60% now, EIA said.