Dean Esmay has posted a breakdown of U. S. oil imports by country and sums it up:
Roughly 14% of our petrolum intake is Saudi in origin. That’s big, no question about it, but the notion that we’re in thrall to the them is highly questionable. Indeed, considering that oil is their only export, it would seem to me that the Saudis are more dependent on us than we are on them.
As I noted in the comments whenever someone bemoans our dependence on foreign oil I generally ask them what they have against Canada.
I thought it might be instructive to examine France’s oil imports for 2004:
| Country | MBarrels/Day | Percent |
| Kuwait | 0.034 | 5.40 |
| UAE | 0.032 | 5.09 |
| Saudi Arabia | 0.257 | 40.86 |
| Libya | 0.152 | 24.17 |
| Algeria | 0.090 | 14.31 |
| Nigeria | 0.060 | 9.54 |
| Venezuela | 0.004 | 0.64 |
| Total | 0.629 | 100.00 |
As you can see, all but a tiny fraction of France’s oil comes from the Middle East or North Africa. Kind of gives an interesting picture to “It’s all about the oil”, doesn’t it? The picture is similar for all of the Continent, Japan, and China.
This is one of the reasons that I opposed the Gulf War, by the way. Why should the United States commit lives and money to defending European, Chinese, and Japanese access to oil? You’d think we’d be able to buy much better friends for the kind of money we’re spending.
If I may, a little market literacy is needed.
Why imporant: Because, the market is, without irony, liquid.
It doesn’t bloody matter what percentage you get from a particular producer in the medium term (although because of refinery issues in the short term it can cause problems), what matters is aggregate world production. Any given source is a near perfect substitute for another and aggregate global demand versus global supply is the key price driver.
Period.
Shipping lanes and the convenience of buying from nearer sources (in terms of delivery flexibility and short term demand) will of course bias any given country towards geographically closer suppliers. But the price is going to be driven by (ex short term discontinuities such as refinery outages, need to switch between ‘grades’) total supply versus total demand.
The US going to war over protecting the Persian Gulf supplies makes emminent sense, given the percentage of total supply that the Gulf represents, whatver market illiteracy about US getting X percent from KSA or not.
Now, that does not mean the last war with Iraq made sense on this basis (it did not in my not so humble opinion), but analytically the Gulf is absolutely of deep strategic interest to any country dependant on hydrocarbon imports (or in a free market) because import prices and overall market prices are very much set based on that supply.
Oil is certainly a fungible commodity, which is why the Saudis are important; they’re one of the few large suppliers with excess capacity and as such can raise or lower their exports in order to jigger world prices. And they can do this not because they have more oil than anyone else, by the way, but because they are an oppressive autocracy.
Nevertheless it’s wrong to say that a country’s suppliers are irrelevant to its economy. If supply lines are disrupted we have problems and have to look elsewhere. At the moment, and for some time now, Middle Eastern oil has only been a small part of our national supply lines, which is what these numbers demonstrate–and why they aren’t irrelevant.
Simply put, we are not slavishly devoted to or addicted to Middle Eastern oil. Given than the Middle East is made up of despotic regimes who happen to control something like a quarter of the world’s oil supply, they are a security concern. But this is far and away from the picture of America as dependent on the Saudis–we aren’t.
Correction: given THAT the Middle East is…
Well I’m not a math wizz and will have to work with this for a while and see if I can arrange it to apples and apples.
Dean is using the top 15 countries for the US but it’s probably close to 100 percent. You supposedly are using all countries for France’s imports, but leave out Bahrain, Iran, Iraq and United Arab Emirates. Still with those omissions you manage to come up with 100 percent.
If the source cited at the U. S. Department of Energy is incorrect or I misinterpreted it, I’ll be happy to make a correction but, if you look at the citation you’ll see that I’m just repeating the numbers used there.
BTW note that even if (for whatever) reason Bahrain, Iran, Iraq were restored to the French import figures since all three of those countries are Middle Eastern it would not alter the final conclusion that if the country from which you import your oil is important, then France imports a much larger proportion of their oil from the Middle East and North Africa than does the United States and such a conclusion would presumably be more important for the French.
Dean seems to be under the mistaken impression that there are other sources of oil that we can readily tap for import. Mr. Lounsbury is absolutely correct in his assessment of the situation. If there were other sources for import we would be importing zero Saudi Arabian oil and zero Middle East oil. Why? Because it’s cheaper to transport as Mr. Lounsbury points out.
Dean goes on to make this non-sequitur statement:
Oil is certainly a fungible commodity, which is why the Saudis are important; they’re one of the few large suppliers with excess capacity and as such can raise or lower their exports in order to jigger world prices. And they can do this not because they have more oil than anyone else, by the way, but because they are an oppressive autocracy.
Huh? Dean please tell me about all those countries that can substantially (more then a few hundred thousand barrels per day) raise their output of oil. Name a few? I can only think of three, Saudi Arabia, Kuwait, and Iraq. Even Russia’s much discussed reserves would take substantial investment to increase output over a long period of ramp up time and would not yield enough (at the right grade) to keep pace with growing demand. This is all before we get into a discussion of the prominent grade of crude that could be produced. Most of our refining capacity requires Light Sweet Crude, something even the Saudis are having trouble supplying.
And the Saudi ability to raise and lower production levels has zero, zip, nada to do with the fact that they are an oppressive autocracy, perhaps Dean forgot (if he ever knew in the first place) that oil production in this country was under strict quotas put in place, not by the federal government, but by the oil producers themselves until the domestic production peaked in 1971.
Dean is so woefully ill informed on this issue that any petroleum geologist or energy economist would die of laughter over his insistence that the US in not particularly beholden to Middle East oil. The fact is that the Saudis (and the other Middle East oil producers) have us (actually they have everyone) by the balls and after we drain ANWR it will be that much worse.
And this idea that France is more “beholden†to Middle East oil producers then we are is non-sense; they are simply doing what we do in reverse, getting oil from the producers closest to them. Hell if Canada and Mexico had the ability to produce unlimited amounts of oil, we would never have to go anywhere else. Venezuela is to France What the Middle East is to us, but since the Middle East producers have more excess and reserve capacity they are the ones that ever single industrial nation on earth has to deal with. As capacity shrinks in marginal exporters there will be only one place to go.
As for having anything against Canada, I don’t but since their production in decline and their economy expands they will have less and less to sell to us. Which means we will have to get the oil from … you guessed it, the Middle East.
Dean’s pronouncement that we have no huge reliance on Middle East oil in general or Saudi oil in particular seems to be actually gaining traction among those who simply don’t understand the importance of oil in industrial economies and how the world oil market operates. It is a reckless statement that sounds logical on the surface but it is 180 degrees wrong.
Oh bloody hell.
You know, the American Right, for all its supposed penchant for free markets is almost as bloody ignorant of market mechanisms or indeed real markets as the droolingly stupid Left idiots.
First Mr Esmay’s comment which is moderately less painfull than the rest.
Oil is certainly a fungible commodity, which is why the Saudis are important; they’re one of the few large suppliers with excess capacity and as such can raise or lower their exports in order to jigger world prices. And they can do this not because they have more oil than anyone else, by the way, but because they are an oppressive autocracy.
As I am a financial man by training and penchant, I am going to leave aside silly scare words like “oppressive autocracy” (phrase really) and get to the econonomic meat.
Primo, KSA has (had) “swing capacity” in regards to shut in productive capacity (although as of 2005 this is history) because: (i) their ‘extractive authority’ – the government when one strips away the layers – can invest in excess capacity without near term regard to returns, (ii) KSA fields to date have a very low cost of production – among the lowest in the world if not the lowest – due to physical characteristics, (iii) KSA sees a strategic return in having “swing” production and thus in the short term (and indeed to a lesser extent, the medium term) an ability to control/ substantially influence price.
Now, one item is clear, KSA learned from the late 1970s and the 1990s price collapse that demand management over a long term is key to their interests. It is not in the interest of KSA to see too much variation, nor excessive pricing that might drive substittion to other energy sources.
Nevertheless it’s wrong to say that a country’s suppliers are irrelevant to its economy. If supply lines are disrupted we have problems and have to look elsewhere. At the moment, and for some time now, Middle Eastern oil has only been a small part of our national supply lines, which is what these numbers demonstrate–and why they aren’t irrelevant.
Simply put, we are not slavishly devoted to or addicted to Middle Eastern oil. Given than the Middle East is made up of despotic regimes who happen to control something like a quarter of the world’s oil supply, they are a security concern. But this is far and away from the picture of America as dependent on the Saudis–we aren’t.
Oppressive autocracy has fuck all,/b> to do with this analysis, other than it makes idiots able to spin other analyses better advancing other non-market agendas, and the fact that non-market driven control of the resource enables KSA to take, vis-a-vis external national interest, a longer term view than pure commercial interest.
One can use scare words all one wants, but that does not change reality.
Moving on, Esmay says;
Nevertheless it’s wrong to say that a country’s suppliers are irrelevant to its economy.
No one said that, I would hope that the moderately literate can read actual joined up writing for actual comprehension.
What was said, just for the information of those with an impaired level of reading comprehension (as perhaps understanding of market economics) was that in general the price of oil and related hydrocarbon products is set based on global production and ex very short term supply or processing ineffiicencies, any given producers exit from or reduction of production changes the price for ALL GODDAMNED MOTHERFUCKING CONSUMERS REGARDLESS OF SPECIFIC MOTHERFUCKING SOURCES YOU ECONOMICALLY ILLITERATE DROOLING GITS. Now, if you have vaguely understood this basic principle of the market, then you will understand the only real important issue for a hydrocarbon importer is total demand versus supply.
The rest is motherfucking illiterate contemptible goddamned idiotic whanking by ideologues, morons, illiterates and fucking slimebags.
If supply lines are disrupted we have problems and have to look elsewhere. At the moment, and for some time now, Middle Eastern oil has only been a small part of our national supply lines, which is what these numbers demonstrate–and why they aren’t irrelevant.
Aggregate motherfucking demand, my dear idiot.
Any given disruption, in a free and liquid market, reduces supply. Given a liquid market, any given buyer can buy from any given supplier.
In case you are too dim to understand (which is evidently the case) if Kuwait goes offline for a period of time, it doesn’t bloody well matter if the United States buys Kuwait oil or not, because the majority buyers (of Kuwait oil) will start buying Venezuelan etc.
Aggregate motherfucking supply versus demand, you illiterate git.
Simply put, we are not slavishly devoted to or addicted to Middle Eastern oil.
Simply put, you are a fucking illiterate whanking on without any fucking clue as to the market, or indeed actual exchanges, but merely yet another semi-literate American pseudo-free market ideologue-whanker.
Fucking moron.
Given than the Middle East is made up of despotic regimes who happen to control something like a quarter of the world’s oil supply, they are a security concern. But this is far and away from the picture of America as dependent on the Saudis–we aren’t.
Yes, you motherfucking are, you idiot.
As to 7 Deadly Sins;
Speaking of the cheese eating surrender monkeys, guess who’s really under the Saudi Sword of Damocles? That sure explains a whole lot about their recent behavior…
Well, I suppose in the United States of Drooling Ignorance, the slimiest and most idiotic of national bigotry remains en vogue. Else, look to market economics you stupid ignorant twit.
As a closing item, what is clear to me is that while the Right in the US of A pretends to have some attachment to market economics, the majority of said … advocates have but the most passing acquiatance with the same.
Such topics, I confess, pain me for revealing the depth of idiocy that reigns in these areas.
Lounsbury – About ten years ago, I was working in a small office during a nasty ice storm. The ground froze to such a degree that the sewer exploded and the offices were filled with a truly horrific reek that was beyond shit and beyond filth – with an odd afterscent of peanut butter. Once you come into contact with something that awful, you never, ever forget it.
Which is why it was so easy for me to remember you and your comments, way back in Novemeber 2003, on Roger Simon’s site.
You wrote under the name of Collounsbury. You had the same attitude, the same overblown pomposity – if you had any sense of irony, you would be a caricature, but you don’t so you’re not. It’s not what you say (although your arguments are easily disputed) it’s how you say it.
As I remember, the commenters on Roger’s site were so put off by your attitude, they kicked your ass around the block. And these are nice, reasonable people. How do you do it?
One person said:
“Collounsbury, were you slapped around as a child on the playground for being a smartass know-it-all? You are obviously an educated, well-read person who hasn’t the slightest idea how to persuade people to a point of view. Anyone with an unformed opinion would get two inches into your post and spit. Of course, maybe you aren’t very educated after all. To dismiss citations for their obvious “Israelo-Jewish Islamophobia” exposes you as a fool. The funniest bit of all was the suggestion to go search on the “bloody Beeb”. Just where I go for objective reporting!”
Or, as another said…”Why, I’m starting to get the idea that our friend Collounsbury is a well-read, well travelled, sophisticated and cosmopolitan type of chap. Women want him. Men want to be him. I wonder what jet-setting adventures he could be on now. I can see him now, twirling his brandy snifter, contemplating whether to exclaim “bah” or “poppycock” next . . .”
Your language skills appear to have degenerated. Now you contemplate whether to call someone a tit or a git. Proving that, no matter how awful something is, it can always get worse.
Well, Mary is it then? Still traumatised I see.
I am sure for those with an ordinary level of intelligence, and even some sub-standard people, it is fairly evident collounsbury and lounsbury are part of the same name. A little variation as it were, and my most unprofound apologies if the little seasonal variation caused pain to your gray matter.
Now, the Roger Simon site, well, …. your recollection is most interesting as it rather appears to me there was, as is usually the case, much howling and ad hominem attacks against me personally (not that I am particularly against ad hominem attacks as such, although they really are merely pedestrain and uninteresting on their own – really far better as spice on a substantive retort) and very little of anything else.
I had quite forgotten about that little putrid mess of phobics, like yourself, all blithering on in profound ignorance but it would seem rather joyfully in your uninteresting phobia with respect to Islam. You’re the one with the made up “statistics” there, as I recall, but whatever. Once again comment on myself (the ad hominem) without any real substance as to the subject at hand (oil markets).
Well, although I do regret your panties are still quite wet over all this, all I can say is, well, you’re boring me.
In your dreams.
I didn’t argue the issues you raised because I agree with most of the points you made. Like this:
“Nevertheless it’s wrong to say that a country’s suppliers are irrelevant to its economy. If supply lines are disrupted we have problems and have to look elsewhere. At the moment, and for some time now, Middle Eastern oil has only been a small part of our national supply lines, which is what these numbers demonstrate–and why they aren’t irrelevant.
Simply put, we are not slavishly devoted to or addicted to Middle Eastern oil.”
Most of the people reading this would agree with those simple points, if they weren’t covered in an attitude that’s pungent as shit. How do you manage to repulse people who would normally agree with you? It’s a memorable characteristic, but hardly a mark of intelligence.
Any given source is a near perfect substitute for another
Actually, Lounsbury, this is seriously incorrect and if you do indeed follow the oil market you should know that.
Different grades of oil, from different countries, are processed in refineries that are tailored specifically to their chemical characteristics. The result is that as a practical matter only one or a few sources of oil can supply each refinery.
Given the huge commitment of time and capital needed to construct a new refinery or to modify an existing one to process a different sub-grade of oil, there are in the short- and mid-term substantial dependencies on specific suppliers. A lessor, but real, issue is the dedication of port facilities to a given grade of oil so as to minimize contamination with elements that a specific refinery is not optimized to remove.
Loundsbury also ignores transport costs and risk factors
It is not necessary, and would be obnoxious of me, to reach back into my training as an MBA from a top business school to use the academic jargon from market theory here – but of course it could be done.
Well, leaving aside the whinging little idiot, and getting to something more substantial if still illiterate:
If you reread for comprehension above you will note that I specifically noted the issue of refineries having to retool for specific grades as an immediate term issue. I do note I am not a petroleum economist, by the way.
However, relative speaking any given source is a near perfect substitute for another over effectively, as I already noted, the long end of short/medium term, i.e. more than say (ceteris paribus) 9 months. Not cost free, but hardly the same cost as switching entirely to another fuel source. In short, while there are conversion costs with respect to refinery rejiggering, this is nothing that would serve as a real market barrier except in the very short term – something that is rather clearly reflected in how the global oil market reacts to production anywhere in the globe being shut down.
Worst case scenario, you buy refined products.
As for transport costs, I didn’t bloody fucking ignore them you illiterate idioti, I noted the issue of nearness and the like in every bloody post. Did I specifically highlight added cost of longer shipping distances? No, I rather think that most people of ordinary intelligence who are not drooling morons can eke out that bit themselves without my fucking holding their motherfucking hands.
Fucking illiterate git.
Oh by the Mary, you’re not quoting me you idiot.
I think the origina analysis leaves out a very important factor: The percentage of energy use by a country that is based on petroleum.
France relies exceptionally heavily on nuclear power for its electricity generation. That is not the case in the US.
France’s oil imports, I would hazard to guess, are used chiefly to supply automobiles and its chemical industries. In the US, in addition to those, oil imports fuel factories of all kinds as well has homes and offices.
This means that the US is more dependent upon oil, from whatever source, than France.
Lounsbury: Your comments are both informed and informative. Your tone, however, is exceptionally off-putting, encouraging one to simply skip over them, thus wasting your effort.
Burgess:
That is quite right with respect to hydrocarbon intensity. I believe on a per unit of GDP basis the US economy is also more energy intensive than most EU zone economies, although this is by memory and I can not say I am entirely sure that is accurate.
With respect to France, I also note that EdF and Med basin EU use more Nat Gas than is typical, per my understanding, of North America. Algerian and Russian gas being important in elec generation.
Regardless, with respect to hydrocarbons overall, if there is an impact on For. Pol. it probably will be driven by the relative efficiency of the given economy tied to of course the political power the country. The US is, again if my recollection is correct (and this would likely be partly due to its geography in part), a relatively inefficient energy user by unit of GDP (relative to G7), and one might guess slightly (slightly only) more sensitive to immediate price changes. Certainly the bleating one hears from the US for even the slightest price changes suggests that.
Now, as to my tone, well …. I don’t really care actually.
The effective key point is that the original observation is profoundly market-illiterate and the responses effectively the same with much absurd and ill-informed market-iliterate nationalist posturing to boot. A salutory slap up the side of the head to the stupid and the whankers has the benefit of education and amusement as compensation.
Thanks, John, for your contribution. You’re right, of course, and I don’t know offhand how oil figures in France’s total energy picture. It’s a good point.
And I also agree with you about Lounsbury. I genuinely value his contributions. He’s helping and teaching me. I wish he’d moderate his tone a little since it reduces rather than enhances the perceived value of his observations but I’ve a fairly thick skin and take the bad with the good.
Well, just so I am not accused of being entirely unhelpful and abusive, here is what I was thinking of with respect to energy intensity, done by the very helpful and non-abusive American Department of Energy Energy Information Agency (a fine set of people I may add, having had the occasion to get drunk with some of the MENA staff….).
OECD & G-7 OECD Development Trends
You will find if you scroll down the page that in G-7 terms Canada and the United States are relatively energy intensive per unit GDP. Certainly this must be in part attributed to purely geo-climatic reasons for Canada and to perhaps a lesser extent the US. One might also suspect that they may have been less aggressive than the rest of G-7 in working on energy efficiency.
My memory then was uncharacteristically accurate, and this despite me not being an energy economist.
This aside I also note the France profile confirms in part my recollection with respect to Nat Gas sourcing (although I had not realised or recalled Norway’s exports), and reading quickly the elect. profile suggests my vague recollection that France’s thermal elec units are gas fired is not wrong at least.
http://www.eia.doe.gov/emeu/cabs/France/NaturalGas.html
http://www.eia.doe.gov/emeu/cabs/France/Electricity.html
(hmmm, I see Charles is no longer in MENA)
There, some information without whacking people up side the head, for the novelty value.
Bloody hell, forgot to note that indeed France’s petrol consumption is almost entirely in the transport sector.
This means that the US is more dependent upon oil, from whatever source, than France.
A fact that most environmentalists should hear. Not that it would change their minds about anything.
Oh by the Mary, you’re not quoting me you idiot.
By the Lounsbury, your tone isn’t your only problem. If you hadn’t screwed up the HTML in your comment, it would have been readable.
Boo fucking hoo.
Someone with something approaching an ordinary level in reading comprehension should have been able to parse despite the minor html error. I may add there is no ‘problem’ here except illiterates and dimwits, else those who are paying attention should have learned something.
Now, as an added bonus before I fuck off, a fine little graphic for those interested in a quick look at relative energy efficiencies. From the wikepedia even: http://en.wikipedia.org/wiki/Image:Gdp-energy-efficiency.jpg
Somewhat large but gives a view on energy efficiency (in this case it would seem to be overall total efficiency).
And I also agree with you about Lounsbury. I genuinely value his contributions. He’s helping and teaching me.
Well, he’s teaching you a lot about how bullies operate. They bully because they can.
Oh cry a bloody river. This is a bloody comment board on a bloody blog. Bully, you don’t know fucking bullying until you sit in an executive meeting where the Managing Director runs a fit and throws his pen at the second on the project. Merely being unkind as to factually unsupportably idiocies is not “bullying” in any non-pants wetting world.
Get a fucking spine.
Now, stripping away thing namby pamby whinging and weeping, what do we have?
We have facts and we have errors. The facts are that Esmay had not a single clue as to what he was talking about and fucking blithered on like your usual economically illiterate axe grinder, Left or Right.
Then came series of comments, my own and others pointing this out, along with some comments by whingers merely pissing their pants about ‘tone’ and other doily sort of pants wetting obs, and illiterates who could not read proper joined up writing.
Simple as that.
Were the facts otherwise, I am sure you, Mary the whinging little idiot, would be crowing, but since you have nothing to say, you merely whinge on.
Frankly, my dear idiot, you can fuck off.
you don’t know fucking bullying until you sit in an executive meeting where the Managing Director runs a fit and throws his pen at the second on the project.
Oh, my, were you there when this happened? It sounds positively horrific. Did you lose any limbs?
But you’re right, I am a doily sort who always shies away from a debate. Feel free to criticize my blog posts anytime.
You do not rise to the level of being so interesting as to make it worth my while even to mock your blog.
But as to the meeting, it actually was (i) quite amusing, (ii) very typical of the sector I work in.
Bullying indeed, bloody whinging pants peeing twits.
You do not rise to the level of being so interesting as to make it worth my while even to mock your blog.
Chicken
I really don’t like the tone he used (condescension is likely to harden your opponent’s position, and not bring them around), but for what it’s worth, I do agree with lounsbury’s explanation (and Rick DeMent’s too). How much oil we get from any specific producer is far, far less important to us than how much the Sauds are able to affect the price of oil. Indeed, I don’t think anybody is really contesting that point.
I recently drove across Britain and discovered the country is in the process of erecting a large number of wind-powered generators. Is there any economic analyis underpinning this investment? Perhaps a large array on the east coast could at least protect the country from bird flu? 🙂