
U.S. Oil Output to Overtake Saudi Arabia’s by 2020 - jackfoxy
http://www.bloomberg.com/news/2012-11-12/u-s-to-overtake-saudi-arabia-s-oil-production-by-2020-iea-says.html
======
notatoad
Thee article seems to skip pretty quickly over what, to me, is the important
point:

>Will transform the U.S. into the largest producer _for about five years_
starting in 2020

So the us is going to start pulling it's oil out of the ground a lot faster.
And then it's going to run out of oil. I think it might be better to just keep
buying from the Saudis and keep a little bit in the ground.

~~~
Arjuna
_"So the us is going to start pulling it's oil out of the ground a lot faster.
And then it's going to run out of oil."_

This does not appear to be an entirely accurate conclusion, according to the
article. For example, the article explains that:

"The desert kingdom is due to become the biggest producer again by 2030,
pumping 11.4 million barrels a day versus 10.2 million in the U.S."

That said, if the numbers and projections are accurate, then the U.S. will
still be producing, but the output will be lower, largely because of changes
in the sources of energy:

"'In the United States, low prices and abundant supply see gas overtake oil
around 2030 to become the largest fuel in the energy mix,' according to the
report, written by a team of researchers led by Birol."

On the topic of running out of oil, I have always wondered (just a theory for
discussion here): maybe oil will never physically run out, but rather what
will happen is that once all of the easily-accessible supplies have been
expended, it will simply become so cost-prohibitive to extract that we will
eventually be forced to change and adapt. Hopefully we will change sooner than
later. (Also, when I say "we", I mean all of us as humans, not a specific
country).

Edit: Thanks for responding roc and checker. You gave me a further reading
point (i.e., peak oil).

~~~
roc
It's pretty well accepted that oil will never _physically_ run out.

Long before even extraction/refining costs make remaining oil infeasibly
expensive, supply/demand will send the price spiking to uneconomical levels as
soon as oil production so much as _slows down_ relative to growth in world-
wide demand.

That's what the US increase in extraction is primarily about: trying to avoid
price shocks between now and when the economy is, or can be, substantially run
on natural gas and renewables as global demand outstrips supply. And even
then, all we'll likely have done is _smoothed_ the increase in price over the
next 20 years.

Similarly, the increased CAFE standards are much more about lowering American
dependence on oil, fleet-wide, than environmental concerns.

~~~
epscylonb
The problem with oil, is that it is an inelastic commodity. During the oil
shocks of the 70's prices had to rise by 400% before demand started to fall.

Also the notion of a country being energy independent when relying upon oil is
a silly one. In the global economy, we want everyone to have relatively cheap
energy, if not the global standard of living will fall.

~~~
mediaman
It's inelastic in the short term, because there are limits to what people can
do to change: they aren't necessarily able to immediately dump their existing
car and trade up; they still have to commute to work; cargo still has to be
transported to its destination; factories will not replace their inefficient
equipment overnight. Costs go up but behavior doesn't change, so an increase
in energy costs just replaces spending on other goods, hurting the rest of the
economy.

Over the longer run, though, if prices have risen significantly and
permanently, and that coincides with a point where a consumer decides they
need to replace their car, then oil consumption does start becoming more
elastic: the consumer is more likely to choose the more fuel efficient
vehicle. We've seen some of this in the rise in sales of small vehicles versus
trucks and SUVs lately.

This is where building a long-term steady upward price trend is important,
versus short-term price shocks, since the former allows the economy to react
appropriately by increasing efficiency.

------
edj
As other commenters have pointed out, the US only overtakes SA for a few years
before falling behind again:

"By around 2020, the United States is projected to become the largest global
oil producer (overtaking Saudi Arabia until the mid-2020s)"

So maybe that part of the story is overblown. But perhaps more interesting is
that the US will supposedly become a net exporter shortly thereafter:

"The result is a continued fall in US oil imports, to the extent that North
America becomes a net oil exporter around 2030."

Source: IEA World Energy Outlook 2012 - Executive Summary
[http://www.iea.org/publications/freepublications/publication...](http://www.iea.org/publications/freepublications/publication/English.pdf)
[PDF]

~~~
ojbyrne
US != North America.

~~~
edj
Good point. I didn't see that. When you throw in Canada's tar sands, it's a
lot less surprising that North America could be a net exporter in <20 years.

~~~
ojbyrne
I believe Mexico figures in those calculations also. According to this field
they have large reserves, though extraction is expensive (like oil shale and
tar sands).

------
ck2
All it took was $4 gas.

All the Saudis have to do is drop their price to the point where gas is $2.50
again and suddenly all the US companies go under in 12 months.

But think how much we'll save by having less than 10k troops in the middle-
east someday.

~~~
hooande
Our increased production of oil is due to the new technology of fracking
(fracturing the ground to get oil out of it). The situation is certainly _not_
"We could have been fracking 15 years ago, but we didn't feel like it because
Saudi gas was cheap". The energy sector is subject to the same process of
technological advance that any other industry is. We came up with a new way to
get oil out of the ground and figured out how to deploy it at scale. Saudi
Arabia didn't have much to do with it. Gas could be selling for $2/gallon and
people would still be tripping over themselves to get more of it out of the
ground.

Secondly, the idea that we're keeping troops in the middle-east in order to
get oil for ourselves is rather naive. There was nothing in the article about
all the free oil that the US gets just because we have troops in Iraq. The
different political factions there are fighting so hard over every drop of oil
that there isn't any left for the iraqi people, much less the united states.

There are no conspiracies here. No international intrigues. Technology
improved, so now we have more oil. The energy sector is about to go into a
boom that's going to lift the whole country's economy.

~~~
khuey
The reason that American troops are in Iraq is completely different from, say,
the reason that the Fifth Fleet is in Bahrain.

~~~
InclinedPlane
American troops left Iraq nearly a year ago.

~~~
MrBlue
Wrong. There are currently 15k to 16k Americans working in Iraq, under the
auspices of the State Department. I guarantee they aren't all working desk
jobs and God knows how many mercenaries...I mean contractors are still running
around. Just because they aren't labelled "combat troops" doesn't mean they
don't carry guns and kill people.

~~~
InclinedPlane
Those are not troops. Are Americans working or visiting, say, New Zealand to
be considered an occupying force?

~~~
thwest
Do Americans working or visiting, say, New Zealand have legal immunity from
murder prosecution? Were they imposed by an invading army?

------
_delirium
It'll be interesting to see the extent to which this ends up being good or
bad. In direct economic terms, most likely good: lower energy prices make some
industries more competitive, and direct fuel exports (like any commodity
export) are a source of income. On the other hand, technological advancements
tend to come from constraints, so the U.S. could be setting itself up for
10-30 years of easy living on cheap oil/gas, but fall behind places like
Europe, or perhaps even Asia, on R&D and production of more energy-efficient
technologies, or other sources of power generation, which might eventually
turn out to be important. Hard to say.

------
kyledrake
I think stopping the destruction of our planet's climate is more important
than becoming oil independent and having cheap petroleum, personally. This is
troubling news to me, I was hoping that peak oil would start people down the
track of dealing with these problems.

~~~
deelowe
People _are_ on track to deal with these problems (or at least are attempting
to be). There are hybrid cars all over the place now, Tesla Motors is doing
well as a company and there is a ton of research going into clean energy.
These are just extremely difficult problems to deal with. In the meantime, the
country can't just let society fail as a whole. The whole world would descend
into chaos and war.

The US has to do _something_ to protect the country and the economy. It can't
allow itself to become wholly dependent on oil produced by enemies of the
state in an inherently unstable region ran by crazy dictators and terrorists.
So what do they do? They hedge and ensure the country can keep a seat at the
negotiation table when things get tough. Given the size of the US and the
dependance on trucks, rail, and shipping to move cargo, even rather small
changes in the price of oil can drastically alter the economy.

~~~
danielweber
American cars are a teeny tiny part of world CO2 emissions. Whatever else
their pros and cons, hybrids and Teslas aren't going to matter to global
warming.

~~~
dmritard96
[http://en.wikipedia.org/wiki/List_of_countries_by_carbon_dio...](http://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions)

18.27% of global c02

[http://www.epa.gov/climatechange/Downloads/ghgemissions/US-G...](http://www.epa.gov/climatechange/Downloads/ghgemissions/US-
GHG-Inventory-2012-ES.pdf)

"Transportation activities (excluding international bunker fuels) accounted
for 32 percent of CO2 emissions from fossil fuel combustion in 2010."

almost 6% of global C02 emmisions. I think thats substantial, but you are
correct that hybrids and teslas aren't going to do much. However if we help
push electric vehicles and clean power production there is obviously a
substantial benefit to be reaped.

~~~
jdminhbg
You need one more step -- cars as a % of American transportation activities.

~~~
dmritard96
I agree. [http://climate.dot.gov/about/transportations-
role/overview.h...](http://climate.dot.gov/about/transportations-
role/overview.html) looks like maybe 82% if you include trucks with cars

~~~
jdminhbg
Good breakdown. As far as things that can be replaced by Priuses and Teslas
(original point upthread), I think you're looking at just the 34% from
passenger cars. So you end up with taking a bite out of (not zeroing) 2% of
global emissions.

~~~
dmritard96
well - I would still say that is a bit optimistic. For instance what portion
of consumers can afford a prius or tesla type vehicle?

I do think it is fair to point out that as there is more industry adoption
(starting with teslas and priuses) the tech should become cheaper and better,
affected other markets in other places. So directly, they aren't going to do
much, but in the long term, adoption of teslas and priuses could have a
substantial impact.

------
sanxiyn
I find this hard to believe. Compare <http://www.theoildrum.com/node/9584>

~~~
ChuckMcM
You can always be assured that predictions based on extrapolation in systems
like energy are always wrong. The claim (that we'll out produce Saudi Aramco
by 2020) is bogus.

You read comments like this _"U.S. oil imports will drop to about 4 million
barrels a day in 10 years from a current average of 10 million because of new
production and stricter fuel efficiency standards for cars and trucks, which
will curb demand, Birol said."_ and you want to say 'Bzzzt! And thanks for
playing' as you consider that people with better gas mileage drive more, they
don't 'not drive'. The reason is not intuitive (see the Jevon's Paradox [1])
but it is also not unexplainable either.

It will be interesting if significant chunks of our driving population
switches to electrics. That is because the electricity production facilities
are built on coal, gas, and nuclear and that could shift our consumption
needle off oil toward those other forms. But nobody is yet extrapolating even
10% electric car ownership by 2020 much less the 20 - 30% that would be needed
to move the numbers on a national scale.

So the the next question is, "OK if this is bogus, why even write it?" and if
I had to guess I would say it was a 'feel good' piece about Fracking to try to
offset the ever growing evidence that the dangers of hydraulic fracturing
require much more oversight and regulation if we want to do it safely. The
extraction companies have not shown a particular willingness to choose
'safety' over 'get it done' yet.

[1] <http://en.wikipedia.org/wiki/Jevons_paradox>

~~~
_delirium
> The extraction companies have not shown a particular willingness to choose
> 'safety' over 'get it done' yet.

I'm not as negative as most people I know on fracking, but I do have some
worry that there's a culture like this in place currently. I've been
particularly surprised by _surface_ spills/leaks of fracking chemicals in
Pennsylvania, which just seems sloppy. If you're trying to convince the public
that a fairly new technology, which people have concerns about, is safe and
won't contaminate groundwater, you should definitely be sure to get the "easy"
parts completely right, such as competently storing chemicals above ground.

------
grannyg00se
I find these oil report news pieces to be incredibly lacking almost all of the
time. First of all, this person is speaking predictions and postulations
without showing a single piece of data. Not a good sign.

I'm very skeptical, because the net return on oil reserves has been steadily
declining since the early 1900s. Shale oil is extremely expensive to
extract/process and also relatively dangerous. The production cost ratio is
less than 10:1 if I recall correctly, while in the early days of oil drilling
the ratio was in the hundreds to one. You could pretty much poke a hole in the
ground and have sellable oil gushing out with no further effort. Now it's a
struggle to get just past the "economically feasible" point.

The tarsands in Canada are a great example of this. Currently they are sitting
at a ratio of about 5:1. And that's also a very dangerous, and highly
polluting extraction process.

Another problem is oil reporting is context. They'll throw out a number like
169 billion barrels of oil. That's the current reported bitumen content in the
tarsands. Sounds huge. If you do the math, that's about five years' worth at
current world consumption. Five years. For one of North Americas largest and
most championed reserves. With the extraction ratio taken into account, we can
slice one year off of that. And if the demand trend continues it's even less.
I'm not convinced that a few percentage points of extra fuel efficiency in
consumer vehicles is really going to make a significant dent in demand.

------
zrb0529
@ChuckMcM is correct - this is an advertisement for fracking.

------
slurgfest
Even if output reaches that level, exports won't because the US _uses_ so much
more oil than Saudi Arabia. As demand grows, the US can still be a net
importer and still have the same problems related to petroleum reliance.

~~~
ry0ohki
The article addresses that, domestic use is down. We already export quite a
lot of refined oil as it is to countries that don't have refining capacity.

------
wffurr
At $110 for Brent, all sorts of odd and difficult oil supplies will get
developed. What's the net energy extracted for the economy to do useful work
with, though? The energy (and dollar) cost of extracting oil shales and
deepwater is enormous compared to the Kingdom's costs for their supergiant
fields.

This is good news, if true, for the US' balance of trade, but sustained
$100+/barrel oil will induce major structural shifts in our economy whether
we're exporting or importing.

The EROEI (Energy Returned on Energy Invested) implications of these prices
are even worse. At a certain point, the only reason to continue to drill is
because it's marginally cheaper than the energy intensive task of creating
liquid fuels from organic feedstocks (i.e. - ethanol). We'll have to have
switch at that point to something else as the primary source of energy for our
economy, but nothing else is even close to being ready.

I hope you're all ready to work like Joey Hess, netbook battery by candle
light: <http://news.ycombinator.com/item?id=4721645>

------
drpgq
I have to say I'm skeptical about this, although a Saudi Arabia decline in
production could make it possible.

------
stephenhuey
It's interesting that the IEA is also projecting 90% of Middle Eastern oil
exports will go to Asia by 2035.

[http://www.iea.org/newsroomandevents/pressreleases/2012/nove...](http://www.iea.org/newsroomandevents/pressreleases/2012/november/name,33015,en.html)

------
patrickgzill
If for some reason, coal to oil (synfuel or syncrude) were to be ramped up, it
could be quite astounding. There are only trial runs at this point, however.

Germany during the WWII era was able to produce 75% of their oil needs due to
synfuels. Once the plants were bombed or disrupted, Germany ran out of fuel
and lost the war.

~~~
ccozan
Not only trial runs. See this [http://www.post-
gazette.com/stories/business/news/south-afri...](http://www.post-
gazette.com/stories/business/news/south-africa-has-a-way-to-make-oil-from-
coal-446384/) . This is a faciltiy that works, operated by Sasol. They plan to
build a 80k barrel/day facility in China.

PS. noteworthy in the article is the mentioning of Obama, who was pushing for
such a coal-to-oil technology to be brought to US.

------
josefresco
From the article: "Iraq will be the biggest contributor to new oil supplies,
raising production to 6 million barrels a day by 2020."

So Iraq's oil is our (US) oil? Or am I misreading that statement? I guess they
could be saying that overall Iraq will see the biggest jump of all nations?
Not sure.

------
jsilence
Just a brief pointer that we are heading at 8,50$ per gallon in Germany right
now.

------
graeme
Oil is a stock resource. There is a finite amount of it.

It is treated as a flow resource. Discussion focusses on annual production,
rather than total extractable stock.

It is not impressive to run through a stock of resources at a faster rate.

------
Nux
By 2020 I hope there won't be so much need for oil (i.e. electric cars).

------
donohoe
Wonderful - we'll be living in an oil rich utopia - right?

------
prpatel
awesome! this will let us save tons of money by not forcing us to invest in
solar, wind or other sustainable sources of energy! DRILL BABY DRILL!

