- April 19, 2014
- Posted by: essay
- Category: Term paper writing
Historically, the US was reliant on foreign oil exported from different countries of the world. At the moment, the US is still dependent on foreign oil which starts playing strategically important role in the economic development of the US because the stable oil supply and the oil price are crucial factors that influence consistently the US and global economy. Therefore, the reduction of the US reliance on foreign oil is strategically important for the country because the minimization of such reliance will facilitate the economic development of the US and decrease the US dependence on international markets, oil supplies, and oil price, which is determined, to a significant extent, by exporting countries but not by American consumers.
Today, the US is highly dependent on the oil supply by foreign countries. According to the US Energy Information Administration, 45% of oil was imported in 2011 (EIA, 2012). Hence, almost a half of the oil consumed by the US is imported. At this point, it is necessary to take into consideration that the US is one of the largest consumers of oil in the world. Hence, the US economy is heavily dependent on the oil supply from foreign countries.
Furthermore, 52% of oil was imported from Western hemisphere, 22% from the Persian Gulf, 20% from Africa, and 6% from other regions (EIA, 2012). These regions play the crucial part in the oil supply and any economic or political changes in those regions may affect the US economy. For instance, Venezuela supplies about 11% of the US oil import, while Venezuela is headed by President Chavez, who stands on the communist ground and views the US as a potential enemy. Saudi Arabia, another major oil supplier of the US, is located in the Persian Gulf, where the political situation is unstable and the risk of blocking the oil supply by Iran or problems in oil supply caused by a military conflict in the region is very high. The situation in Nigeria, which supplies about 10% of the US imported oil is also uncertain. Hence, the problems with oil supply in either or all of these countries may have a disastrous impact on the US economy. For instance, the stop of oil supply from the three aforementioned countries will cut the US oil supply by 35% of imported oil that is about 15% of the total oil supply the US economy needs. Therefore, the US should eliminate its reliance on foreign oil.
Moreover, the US should take into consideration the fact that the peak oil for the world might well occur this decade.Â While the extraction of oil might decline, energy consumption certainly will not.Â So, energy consumers, among which the US is the largest, will turn to different sources (Ganos, 2012). In fact, the drop of the oil supply will force the US either to increase the oil supply by the rise of domestic oil production or by substituting oil by other fuels. Anyway, the oil is a scarce resource and, in the future, the world will suffer from the shortage of oil that may affect consistently the economic development of countries. Hence, countries, who are dependent on the foreign oil supply will suffer the most because they will grow more and more dependent on suppliers, who will set the higher price over and over again respectively to scarcity of oil. As a result, the lion share of the US national wealth will just move to countries exporting oil to American consumers because exporting countries will be able to set exorbitant price and the US will have no other option but to pay it to keep its economy growing and alive.
At the moment, the US attempts to increase its domestic oil production. For instance, domestic oil production has been surging the last three years and is up 10 percent this year (Frauss, 2012). However, the import of Ssaudi Arabian oil has increased 20% up again (Krauss, 2012). This means that the US cannot replace imported oil by domestic oil in a day. Instead, the US needs a long-run strategy of the replacement of imported oil by domestic one that will allow the country to decrease its dependence on the foreign oil supply. At this point, it is worth mentioning the fact that Alaska is the home of crude oil reserves that experts say could provide a large percentage of America’s energy for decades (Holton, 2012). In addition, the US infrastructure, domestic resources, technology, and environmental impact force the US to look for oil alternatives, such as natural gas, which may be the natural choice for the US due to the larger deposit of natural gas, its high energy efficiency and relatively low price (Ganos, 2012).
Thus, the US should reduce its reliance on foreign oil to reduce its dependence of the US on exporting countries. The reduction of the US reliance on the foreign oil is crucial for the US economy and national interests because the country will grow more and more dependent on oil suppliers. Hence, natural gas and alternative fuels along with domestic oil production should become the core of the energy strategy of the US in the future.