There are sound forecasts that natural gas supply constraints
_ if not a shortage _ are looming and gas prices are rising. But,
what's going on with oil?
Of course, there hasn't been talk of an oil shortage for 20
years, and none now. But, the oil picture is cluttered with
imports, you see. As long as we have oil imports, a dialogue
about shortage seems rather synthetic to most people. Besides,
the Middle East could supply the world with oil for many
Yes, there are natural gas imports into the United States,
too, and they are expected to rise significantly in the coming
years. But the dilemma in the natural gas market will not be
confined to the U.S., either. It will be a North American
quandary: Canada is limited to the volume of gas it can ship to
the U.S., although there are expansion projects under way; and
Mexico is eager to vastly increase its use of environmentally
benign natural gas, with a huge chunk of the new supply
anticipated to come from the U.S. Also remember that Canada's
drilling rig count has been as depressed as the United States'.
Natural gas doesn't ship across the seas as well as oil, you
see; liquefied natural gas is brought in by tanker, but that is a
much more expensive gas when the processing costs are considered.
Oil is easily transported across the oceans, and safely for the
So, just what is going on with oil?
It used to be that U.S. politicians, and the general public,
were outraged at 32 percent to 38 percent oil import levels of
the late 1970s and mid-1980s. It's been at 50 percent in the last
two years _ during which time we went to war in the Middle East,
partially to secure oil supplies _ and is now between 45 percent
and 50 percent. But, there's a conspicuous calmness and quiet
among Americans regarding oil imports.
Of course, gasoline lines would quickly reverse the silence.
There is credence to accepting that we cannot do away with oil
imports all together. For many years it has been widely known
that the United States is no longer the oil giant it once was.
U.S. oil production peaked in 1970 and has been falling ever
But this year U.S. oil production is running at a 31-year low,
and new drilling is at a 21-year low.
Domestic oil production for the first half of 1992 fell 3.3
percent from the first half of 1991 to an average 7.2 million
barrels a day _ the lowest since the first half of 1961,
according to the American Petroleum Institute.
It was down by about 250,000 barrels a day from the daily
average of 7.5 million barrels in the first half of last year.
At the same time, U.S. deliveries of petroleum products _ a
key measure of demand _ rose 1.6 percent in the first half of
1992 from the first half of 1991, reported the trade group for
major oil companies and large independents. Demand averaged 16.7
million barrels a day in the first half of the year, compared
with a daily average of 16.4 million barrels in the same six
months of last year. …