PRODUCTION of oil in the United States is declining so rapidly
that energy experts now say the US is potentially more susceptible
to the disruption of its energy supplies than it was during the oil
embargo of the 1970s.
Former Energy Secretary James Schlesinger says that "increased US
imports have counted for more than half the growth of OPEC exports.
... As opposed to battling over shares of a shrinking market, OPEC
is now in the happy position of allocating growing shares in an
expanding market. The Gulf remains a worrisome and questionable
Given present trends, he cautions, by the mid-1990s the US will
be 65 percent dependent on foreign imports, and the Strategic
Petroleum Reserve - "our chief surviving element of protection
against a cutoff" - will shrink in real terms from 100 days of
imports to 60 days of imports.
There are several factors contributing to the decline of US
supplies. Most prominent are the environmental regulations that
prohibit drilling where there is a risk of ecological damage, both
on- and offshore. These have been enforced even more rigorously
since the Exxon Valdez disaster in Alaska.
Domestic production spots
Current production levels from the country's largest oil field,
Alaska's Prudhoe Bay area, which supplies 25 percent of US
consumption, have reportedly peaked and are now in decline. And,
according to many, only when the price of oil reaches a
cost-effective $25 a barrel will US firms begin drilling for oil
Alaska's Arctic National Wildlife Refuge (ANWR) is "the best
prospect in all of North America in terms of onshore drilling," says
Joseph Lastelic, spokesman for the American Petroleum Institute
(API). He notes that Congress has imposed moratoriums on leasing and
drilling in California and Florida. The Gulf of Mexico is also an
Legislation to open the Arctic refuge to drilling will not be
considered until later this year, says Richard Bechtel of the
National Wildlife Federation. ANWR is the only part of the Arctic
coast that has not been developed for oil, he says. "The best
estimate is that there is only a 19 percent chance that there's oil
there. But it means a lot of potential income," he says.
Environmentalists say the US must find alternate methods to
reduce dependence on foreign oil. "If OPEC embargoes us in 1993 or
1994, we will probably start drilling in prohibited areas again,"
says Peter Miller of the Environmental Defense Fund. "Continued
conservation and efficient energy consumption could more than
satisfy our increased energy demand," he contends.
Conservation reaps important benefits, but not nearly enough to
meet demand, counters API's Mr. Lastelic. "The answer is more
There was a 6.8 percent drop in overall domestic production in
1989 over 1988, says Lastelic. And, according to the Oil and Gas
Journal, "the drop in US output of crude oil last year exceeded
declines in Canada, noncommunist Europe, and Communist Europe by
Frustrated domestically, a number of major American oil firms are
selling off their domestic inventory to finance prospecting
operations abroad, particularly in the Suez and the Arab Gulf, says
Mr. Schlesinger. The net effect of this, he says, is a "weakened
aggregate demand for increased drilling in the US."
US producers paring down
Chevron Corporation has announced, for example, that it is paring
down its domestic operations - through an ongoing program of
property production sales. By midyear it expects to sell an
estimated 50 million barrels of oil to Freeport-McMoran Resources
Partners for roughly $150 million. …