The Wall Street Journal
March 15 ? In Venezuela, American energy companies have invested billions of dollars to pull up once-worthless, nearly solid crude oil and turn it into gasoline and jet fuel. In Canada?s northern Alberta province, U.S. and Canadian companies are drawing new oil from gravel-like ?tar sands.? And in Russia, Soviet-era oil-production facilities have sprung back to life after years of neglect.
DEPENDENCE ON Middle East oil for decades has been a central concern of U.S. diplomacy, national-security policy and domestic politics. In the wake of the Sept. 11 attacks and President Bush?s declaration of war on terrorism ? much of which emanates from the Middle East ? the danger of disruption of Persian Gulf supplies has risen. But while fear of this risk caused prices to soar to nearly $30 a barrel in the days immediately after Sept. 11, they soon fell back, in large part because of the proliferation of petroleum sources in recent years. This week, oil is trading at about $24 a barrel.
President Bush and other advocates of increased production in places such as Alaska?s Arctic National Wildlife Refuge invoke the cause of greater U.S. energy independence. But politics and national security haven?t driven the little-noticed reduction in reliance on the Middle East. Instead, the energy industry?s search for ready supplies and profits has powered the trend. In the case of Russia, relative political stability since 2000 has spurred new investment in previously mismanaged Soviet-era facilities.
In the short term, decreased dependence means that President Bush can consider limited military action against Iraq without serious worries of panicking oil markets or severely boosting prices at U.S. gas pumps. It also helps that OPEC has some seven million barrels of readily available spare capacity which could make up for any loss of Iraqi oil. If an American attack evolved into full-scale war, however, it could set off an oil crisis.
When the Organization of Petroleum Exporting Countries gathers today in Vienna, a giant topic will be Russia, which, for the moment, ranks as the world?s leading producer. Russia increased output last year by 500,000 barrels a day, while OPEC cut production to prop up prices.
The Middle East, to be sure, holds a dominant two-thirds of the world?s proven reserves, and the region will retain considerable influence even if production elsewhere continues to grow. Saudi Arabia has 25% of the Middle Eastern reserves, or 250 billion barrels. Together, Saudi Arabia, Iran and Iraq are responsible for about 20% of world production.
Still, as the recovering U.S. economy rekindles oil demand and pushes up prices, countries outside of the Middle East will produce a growing share of the world?s crude oil.
The U.S. imported 23.5% of its oil from the Persian Gulf last year, down from 27.8% in 1977. This decrease is significant because the U.S. is increasingly looking for oil abroad but has still managed to reduce its reliance on the politically unstable Middle East. American domestic production has steadily declined as oil fields are depleted, while U.S. consumption is back up to the level of the late 1970s. (U.S. imports from the Middle East dropped as low as 16.9% in 1996 but have crept up more recently as Gulf War sanctions on Iraq were eased, allowing it to boost exports.)
Mexico for the moment has displaced Saudi Arabia as the No. 1 exporter to the U.S. because of the OPEC production cuts. Canada and Venezuela, the only Latin American OPEC member, are close behind. Today, 48.6% of U.S. imports come from the Western Hemisphere, compared with 34.5% in 1980, according to the research arm of the U.S. Department of Energy.
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March 15 ? In Venezuela, American energy companies have invested billions of dollars to pull up once-worthless, nearly solid crude oil and turn it into gasoline and jet fuel. In Canada?s northern Alberta province, U.S. and Canadian companies are drawing new oil from gravel-like ?tar sands.? And in Russia, Soviet-era oil-production facilities have sprung back to life after years of neglect.
DEPENDENCE ON Middle East oil for decades has been a central concern of U.S. diplomacy, national-security policy and domestic politics. In the wake of the Sept. 11 attacks and President Bush?s declaration of war on terrorism ? much of which emanates from the Middle East ? the danger of disruption of Persian Gulf supplies has risen. But while fear of this risk caused prices to soar to nearly $30 a barrel in the days immediately after Sept. 11, they soon fell back, in large part because of the proliferation of petroleum sources in recent years. This week, oil is trading at about $24 a barrel.
President Bush and other advocates of increased production in places such as Alaska?s Arctic National Wildlife Refuge invoke the cause of greater U.S. energy independence. But politics and national security haven?t driven the little-noticed reduction in reliance on the Middle East. Instead, the energy industry?s search for ready supplies and profits has powered the trend. In the case of Russia, relative political stability since 2000 has spurred new investment in previously mismanaged Soviet-era facilities.
In the short term, decreased dependence means that President Bush can consider limited military action against Iraq without serious worries of panicking oil markets or severely boosting prices at U.S. gas pumps. It also helps that OPEC has some seven million barrels of readily available spare capacity which could make up for any loss of Iraqi oil. If an American attack evolved into full-scale war, however, it could set off an oil crisis.
When the Organization of Petroleum Exporting Countries gathers today in Vienna, a giant topic will be Russia, which, for the moment, ranks as the world?s leading producer. Russia increased output last year by 500,000 barrels a day, while OPEC cut production to prop up prices.
The Middle East, to be sure, holds a dominant two-thirds of the world?s proven reserves, and the region will retain considerable influence even if production elsewhere continues to grow. Saudi Arabia has 25% of the Middle Eastern reserves, or 250 billion barrels. Together, Saudi Arabia, Iran and Iraq are responsible for about 20% of world production.
Still, as the recovering U.S. economy rekindles oil demand and pushes up prices, countries outside of the Middle East will produce a growing share of the world?s crude oil.
The U.S. imported 23.5% of its oil from the Persian Gulf last year, down from 27.8% in 1977. This decrease is significant because the U.S. is increasingly looking for oil abroad but has still managed to reduce its reliance on the politically unstable Middle East. American domestic production has steadily declined as oil fields are depleted, while U.S. consumption is back up to the level of the late 1970s. (U.S. imports from the Middle East dropped as low as 16.9% in 1996 but have crept up more recently as Gulf War sanctions on Iraq were eased, allowing it to boost exports.)
Mexico for the moment has displaced Saudi Arabia as the No. 1 exporter to the U.S. because of the OPEC production cuts. Canada and Venezuela, the only Latin American OPEC member, are close behind. Today, 48.6% of U.S. imports come from the Western Hemisphere, compared with 34.5% in 1980, according to the research arm of the U.S. Department of Energy.
the rest of the article