Dependence On Oil Essays

America’s Dependence On Foreign Oil Essay

The United States has had several scares throughout its history in terms of oil, most turn out to be over exaggerations of a small event. However, these scares highlight a massive issue with the U.S. and that issue is the U.S.’s dependence on foreign oil. Why does it matter that our oil should come from over seas? In a healthy economy this probably wouldn’t be as relevant, but the U.S.’s economy is not exactly healthy at the moment. There are 4 things that I would like to address: what the problem is, how it affects us, what some solutions are, and what solutions I feel are best.

Every year the demand for oil grows, and the amount the U.S. produces decreases while the amount of oil America imports increases. In 1994 the oil imported from OPEC members was about 1,400,000 thousand barrels in 2008 it was about 2,200,000 thousand barrels. The amount of American oil imported from non-OPEC members was roughly 1,700,000 thousand of barrels to 3,000,000 thousand barrels. According to eia.doe.gov the U.S. imported roughly between 4,000,000 and 4,500,000 thousands of barrels of oil in 2010. All this boiled down means that the U.S. imports more than half of all its oil. And at the current rate the U.S. spends roughly $13 million dollars on oil per hour. Furthering its impact on our economy the NRDC found that roughly 1/5 of our trade deficit stems from imported oil. Every day the U.S. loses $390 million to foreign oil, money that could be spent on the United States’ infrastructure, or helping to get the U.S. out of its recession. This is money that is most likely not going to be reinvested in America and will only further our deficit. Another problem outside our spending is the fact that we are importing from some highly unstable nations. A perfect example of this is the recent retaliations in Libya that have caused gas prices to increase. Many of the nations we import from could be, or are, strongly opposed to America due to fundamental socioeconomic differences between each other. OPEC poses another great challenge in terms of oil. OPEC is a conglomeration of several of large, mostly Middle Eastern, countries that collectively holds 77% of the world’s crude oil reserves and 44% of global crude oil production. With these resources at their disposal OPEC shows a dominate hand in controlling oil prices and production thus making them very powerful and somewhat controversial. The largest problem with this is Americans are so dependent on foreign oils in everyday life that it is hard for them to not spend money on gas resulting in the inability to influence the market in a great way. In a normal business one is at the whim of consumer demand, but since OPEC accounts for such a large portion of U.S.’s oil, about 25% of our daily intake and oil is so essential they control the prices rather than the consumer, leading to inflated prices. As a side not OPEC is expected to control 46% of American oil imports by 2025.

What this means for the U.S. economy on...

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The importance of oil to the modern world is unique in character and incredibly far-reaching in scope. It is a singularly autonomous variable in the world economy, just as, if not more potent and influential than Federal Reserve decisions, the Euro-Dollar exchange rate, conditions in the U.S or stock market indexes. Oil availability and price affect the output capacity, rate of growth and level of inflation throughout the world. In the modern world, oil affects transportation, heating, production and the military. One would be hard pressed to find a substance or phenomena in world history that has held a comparable position.

Petroleum is a nonrenewable fossil fuel. It is the product of a multi-million year geological process in which…show more content…

The arrival of the automobile at the turn of the century provided a new use and market for petroleum products. Home, businesses and militaries found increasing uses for oil as a source of energy. Oil was becoming more and more interwoven with everyday processes and it found new uses and markets. The first half of the 20th century was marked by the rise of `the Seven Sisters', 7 companies that would overwhelmingly dominate the oil industry until it centennial anniversary and remain huge agents in the industry today. They were Exxon, Gulf, Texaco, Mobil, Socal, B.P. and Shell. All were western companies, 5 American, one Anglo-Dutch and one English.

The last 50 years have seen the importance and influence of oil, and the world's dependence on it, continue to increase and the balance of industry power to change. Producer nations that contain voluminous reserves have gained the spotlight and made themselves the most dominant players in the world petroleum trade. This trend was both represented and organized by OPEC, the Organization of Petroleum Exporting Countries. This organization would become the most vital force in the petroleum market, crucial in production and price determination. It would direct unprecedented power and prestige to heretofore-backward nations and regions and make the Middle East a crucial factor in world politics. (see graph 1&2)

Being perhaps the largest industry in the world, the production of oil is literally and symbolically `big

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