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Sunday, January 16, 2011

US Oil production and oil imports

As seen in the attached graph, US oil production peaked in 1970, at about 10 million barrels per day, and has since declined to about 5 million barrels per day.  But consumption has continued to increase, enabled by imports.   Imports exceeded domestic production in 1993, and in 2009 provided 11.7 million barrels of our 18.8 million barrels per day consumption (EIA, http://tonto.eia.doe.gov/energy_in_brief/foreign_oil_dependence.cfm)
At $90 per barrel, we are paying over a billion dollars a day for imported oil, and as I wrote in 2001, much of it is going to people who don't like us very much.

As a sense of scale, consider that for the US population of 308 million, a billion dollars a day amounts to about $1200 per person annually, or $4800 annually for a family of four.  This is money simply removed from our economy, and not returned as paychecks, dividends or taxes.
The figure is from Wikipedia; author David Moe, using data from the US Energy Information Agency.

If GDP is a function of oil consumption, as we saw in a previous post, what will happen if oil imports decline?

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