US Thirst for Oil Harder to Slake Domestic Production Is Declining, and the Nation Is Increasing Reliance on Foreign Sources. ENERGY: OIL CONSUMPTION

By Amy Kaslow, writer of The Christian Science Monitor | The Christian Science Monitor, May 9, 1990 | Go to article overview

US Thirst for Oil Harder to Slake Domestic Production Is Declining, and the Nation Is Increasing Reliance on Foreign Sources. ENERGY: OIL CONSUMPTION


Amy Kaslow, writer of The Christian Science Monitor, The Christian Science Monitor


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 source."

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 again.

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 option.

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 domestic production."

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 nearly one-fourth."

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. …

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