Here in the USA, we use more oil than we currently produce. In late 2012, the US Energy Information Administration (EIA) reported that the US produced around 7.03 million barrels of crude oil per day and imported about 7.58 million barrels per day, for a total of 14.61 million barrels of oil per day. As of 2013, the United States consumed an average of 18.89 million barrels of oil per day. So, as you can see from simple mathematics, the US is using more oil than we currently produce and import. This creates a demand for oil in the United States. This is also the contributing factor for why we are paying so much per gallon of gas at the pump, as gasoline is refined oil. Oil is priced by the barrel (42 gallons) and as of July 2014, the price per barrel of oil is over $100. In retrospect, in the late 90s, when gas was only $.99 per gallon at the pump, the price of oil was between $8 and $15 per barrel.
As America becomes more dependent on oil exporting countries such as Canada, Saudi Arabia, Mexico, Venezuela, and Russia, which are the top 5 countries the US imports oil from, our foreign relations become increasingly vital to the price we pay per barrel. One of the leading organizations that affects US and global oil prices is OPEC (Organization of the Petroleum Exporting Countries). OPEC is an international organization and economic cartel whose mission is to coordinate the policies of oil producing countries. The member countries are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela. As of late 2012, the OPEC countries’ share of world crude oil reserves was 81%. That equates to over 1.2 trillion barrels of oil in reserves. Political risk factors affecting the price per barrel of oil in the US can be a result of political relations, international security concerns, international agreements, and domestic oil booms such as US shale discoveries. For example, the price of oil may increase when certain countries such as Iran pledges to increase its production and OPEC’s informal leader, Saudi Arabia, does not agree. The escalated tensions create speculation that OPEC leaders will restrict import quantities to the US, which will result in upward pressure on oil prices. Conversely, as the US begins to discover new production trends and proven reserves, such as the US shale boom, this creates downward pressure on oil prices.
In order for the US to become more independent from foreign oil, domestic oil companies MUST drill and produce oil to increase proven reserves and daily oil production. In addition to lucrative returns, American investors owe it to themselves to support domestic oil exploration. How many American generations should be dependent on foreign oil?