Forget About American Oil Independence, Here’s Why…

Here’s a resource riddle for you…

If you were to add up all the oil consumed in the U.S. and rank where it comes from, where would the Persian Gulf region appear on the list?

The answer, I have a feeling, may surprise you. Heck, it even through your editor for a quick fact-finding mission. Today let’s take a look at what I found, and why it’s important that you know the truth about America’s energy debate…

The question stems from a late night phone call I received from my parents. Apparently Sunday evening (at 11pm) is when you try to call your resource-hunting son and quiz him on oil stats!

I’m always up for the challenge, so when asked a similar question I quickly spouted out “20%.”

After all, I know that roughly 20% of our consumption comes from OPEC.

As it turns out, the devil was in the details. Apparently the stat my parents were referencing meant strictly “Persian Gulf” oil — a far cry from OPEC stats, omitting Venezuela and Nigeria.

So where does the Persian Gulf rank?

Well, when you add it up the region accounts for right around 10% of our daily oil consumption.

10% doesn’t sound like much at all, frankly it’s not much at all. And that’s the line of thinking that many advocates of U.S. oil independence want you to consider. In fact, if you follow the trend-line of lowered U.S. demand and increased domestic supply, it’s only a matter of time before we could wean ourselves off Middle East oil completely.

The Facts Behind America’s Energy Independence…

Today I want to tell you why this line of thinking isn’t as important as you’d think — especially in today’s energy market.

The riddle I asked you at the beginning of today’s write-up is compelling — it’s a “sticky” story that stays with you like an urban legend. I can hear the crowds now: “Wow, we only use 10% of Persian Gulf oil. We’re so close to independence!”

But when it comes to the grand scheme of the oil business, our country’s safety and our goal here to protect and grow your wealth stories like that don’t hold much weight.

So, before we get to the thrusters to this energy independence argument — more reason not to be fooled by oil independence advocates or other partial parties — it’s important that you know the facts. In particular, it’s amazing how little the average American knows about the energy we use on a daily basis.

Just take a look at this “man on the street” interview conducted by Fox Business’s John Stossel.

Where Does Our Gasoline Come From?

“out of the country”

“…not from America’

“The Middle East”

“Saudi Arabia, Venezuela, Canada…”

Some folks even ventured guesses like India or Afghanistan.

Overall, the one answer that was missing was the correct one: domestic oil production.

Take a look at the hard numbers below…

First, it’s important to note one seeming discrepancy on the info-graphic above. You’re probably wondering why the total consumption (18.83 million) is below the total supply (21.44 million from domestic production and imports combined.)

There are several reasons why these numbers differ. But the large majority of that “oversupply” is from refining and export. Simply put, the U.S. imports crude and exports gasoline and other petroleum products — this can make it seem like there’s an overabundance of crude sitting in reserve, but that’s not exactly the case.

Getting to the meat of the information, you can see most of the U.S consumption is supplied by domestic oil production. This is an area of common misconception, preyed upon by political affiliations on both sides. But let’s be clear, the U.S. is currently the 3rd largest oil producing nation in the world. So if anyone ever comes up to you at a gas station and asks where the majority of that gasoline comes from you’ll know it’s right here in the U.S.

The other misconception is in regard to our imports. Looking at the graphic above you can see that over 60% of our total imports come from NON-OPEC sources. Add it up and that means that well over 80% of U.S. oil consumption is supplied by North American or non-OPEC production.

The way I see it we could be oil independent any day we’d want.

But that begs the question: what’s the point?

“Why would we want to be independent of the world’s biggest, most-important, most transparent market, it makes no sense at all” says the Manhattan Institute’s Robert Bryce.

I agree with Bryce, but not only because of the global-connectivity that he stresses. Indeed, the real reason I’d suggest you not worry about oil independence points to a bigger, more-important trend.

The Real Reason To Forget About Energy Independence…

Think about it this way…

For years we’ve given away our paper dollars to receive shipments of crude oil. The crude oil came to our door with impeccable consistency and surprisingly low prices during the late 80’s, 90’s and early 2000’s. We readily made use of that cheap oil, too (…if you have an SUV you know what I mean.)

And don’t forget… no matter who you are around the world, in the past half-century if you want to buy a barrel of crude it’s priced in U.S. dollars.

So all the while we’ve made use of this cheap energy, our government has slowly but surely reduced the value of a buck.

Looking at this story in a vacuum: we paid for a hard commodity, oil in this case, for increasingly worthless dollars.

Oh goodness gracious. I know what kind of mailbag I’m in store for tomorrow…

“But Matt, that means we’re sending money directly to the Saudi sheiks, Nigerian warlords, and other unfriendly clientele, like Venezuelan Hugo Chavez. Why would this be a good thing!?”

Why? Think about what I said above. Essentially we paid for that petro with a monetary time bomb. We wrote checks with magic, disappearing ink. It’s only a matter of time before those dollars lose even more of their purchasing power.

So the real story isn’t sending money to the Middle East, rather it’s a story of a manipulated purchasing power.

Thus, I’d urge you to quit worrying about our dependence on the Middle East and Persian Gulf all together. Instead, start worrying about things closer to home and much more important to YOUR immediate well-being. First and foremost that means protecting your wealth from a manipulated U.S. dollar.

In fact, that’s what we try to do here on a daily basis: provide you with easily-quantified, hard-asset ways to protect and grow your wealth. In particular we look for ways to profit from oil, gas and other resource opportunities, while simultaneously side-stepping a down trending dollar.

There’s a bull market under this line of thinking. It’s fueled by our government’s inability to keep a stable currency. And right now it’s much more important than who provides us with oil.

Keep your boots muddy,

Matt Insley
for The Daily Resource Hunter

Forget About American Oil Independence, Here’s Why… was originally featured in The Daily Resource Hunter. Check out the newest Daily Resource Hunter research video “The Price of Gas Explained”.

Article Title originally appeared in the Daily Resource Hunter (www.dailyresourcehunter.com) At the Daily Resource Hunter our approach to research is different. With our boots on the ground, we travel the world looking for the most lucrative resource opportunities and deliver them to you in a daily email newsletter. For more information visit us at www.dailyresourcehunter.com)