What Congress Can do about Oil Now

The USA is currently consuming 20,000,000 barrels of oil per day or about 25% of the global supply. No one is in a better position to reduce consumption on a scale that matters to everyone else. And where the USA leads the rest of the world will surely follow.

The auto industry is now gearing desperately up to transition away from oil based products. Pricing alone is driving this move as consumers have been forced to forgo the pleasure of driving their mobile fuel hogs. No one seems prepared to buy a vehicle for the pleasure of parking it. I certainly expect the advent of a very inexpensive electric for short haul work. It makes eminent sense to use the SUV to haul; the kids to work while using the electric to go into work a lot further away. This is a new version of the two car family that everyone was excited about in the fifties. Yes, I remember all that.

The only problem with that is that it can only be a transitional process and may actually have little net effect on the oil supply even over several years. What is more, any attempt to legislate an outcome will be resented and paid for at the poles.

This again brings me back to the subject of diesel fuel. It represents about half of our consumption and it is primarily used by industry. It has never been very popular in the automotive industry.

It is thus possible for Congress to mandate a crash program to replace diesel with LNG or liquid natural gas. Apparently diesel engines can be converted easily over to LNG and the manufacturers are already prepared to produce LNG engines directly. That means fleet conversion and industrial conversion is possible within a very short time line of between two to five years. I would expect actual completion by the end of the five year cycle.

I would expect that the first two years will be needed to establish the necessary infrastructure.

LNG supplies are not in short supply, although a lot of the easiest supplies are again offshore. In any event, we have massive global supplies available to keep costs down for the trucking industry. It is also the cleanest possible hydro carbon and will go a long way to cleaning up the atmosphere.

California has seen the light and is already well down this road.

What Congress can do today is to mandate a swift conversion of the nation’s diesel consumption over to LNG ASAP.

This can release a possible ten millions of barrels of oil per day back into the global market. And our industry is even using a cheaper fuel.

Gallons of Oil per Barrel

U.S. Crude Oil Production
5,102,000 barrels/day
Texas - 1,088,000 barrels/day
U.S. Crude Oil Imports
10,118,000 barrels/day

Top U.S. Crude Oil Supplier
Canada - 1,802,000 barrels/day

U.S. Petroleum Product Imports
3,589,000 barrels/day

U.S. Net Petroleum Imports
12,390,000 barrels/day

Top U.S. Total Petroleum Supplier
Canada - 2,353,000 barrels/day

U.S. Total Petroleum Exports
1,317,000 barrels/day

U.S. Petroleum Consumption
20,687,000 barrels/day

Crude Oil Domestic First Price (2007 wellhead price)

Motor Gasoline Retail Prices (2007 U.S. City Average)

Regular Grade Motor Gasoline Retail Prices (2007 U.S. City Average)

Premium Motor Gasoline Retail Prices (2007 U.S. City Average)

U.S. Motor Gasoline Consumption
9,253,000 barrels/day (388.6 million gallons/day)

U.S. Average Home Heating Oil Price
$2.37/gallon (excluding taxes)

U.S. Refiners Ranked Capacity (1/1/2006) #1 - Baytown, Texas (ExxonMobil) 562,500 barrels/day Top
U.S. Petroleum Refining States #1 - Texas 4,337,026 barrels/day
U.S. Proved Reserves of Crude Oil as of December 31, 2006
20,972 million barrels

Top U.S. Oil Fields (2005)
Prudhoe Bay, AK

Top U.S. Producing Companies (2006)
BP - 827,000 barrels/day

Total World Oil Production (2005)
82,532,000 barrels/day

Total World Petroleum Consumption (2005)
83,607,000 barrels/day

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