Foreign Oil Dependence by Choice?

Big Oil executives imply we could develop our own resources, but they know the big reserves are elsewhere.

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Big Oil executives have been called to testify on Capitol Hill several times during this four-year run-up in energy prices, but there was a marked change in rhetoric for this week's appearance.

There was this from Peter Robertson, vice chairman of Chevron:

"We've chosen by our policy to be dependent on oil from overseas. That's our choice. We chose not to develop our own resources in this country. That was our choice."

And this, from John Hofmeister, president of Shell Oil:

"U.S. oil and gas production has fallen steadily for the last 35 years. Why? Because government policies place domestic oil and gas resources off limits. The U.S. government restricts supply to U.S. consumers."

New message: We're dependent on foreign oil because we don't develop the oil on the outer continental shelf or in the Arctic National Wildlife Refuge in Alaska.

Old message: It's a hard truth that as long as we're dependent on oil, the U.S. will always be dependent on other parts of the globe—not by choice—but because they have more oil than we do.

Here are the relevant figures, the most recent estimates from Oil and Gas Journal, as compiled by the Energy Information Administration.

Proved reserves, in billion barrels:

Top countries  Reserves Share
Saudi Arabia 266.8 20 percent of the world total
Canada 178.6 13 percent
Iran 138.4 10 percent
Iraq 115.0 8.6 percent
Kuwait 104.0 7.8 percent
United Arab Emirates 97.8 7.3 percent
Venezuela 87.0 6.5 percent
Russia 60.0 4.5 percent
Libya 41.5 3.1 percent
Nigeria 36.2 2.7 percent
Kazakhstan 30.0 2.3 percent
United States 21.0 1.6 percent
China 16.0 1.2 percent
World total 1,331.7  
We'll set aside, for the time being, the fact that many people believe these numbers are overstated and the entire world (particularly Saudi Arabia) has much less in reserves than we think.

The oil executives are now implying that the U.S. reserves could be much greater, and our foreign dependence on oil could be much less, if Congress would only allow them to drill off both the East and West coasts of the United States and in ANWR.

But let's take the oil industry's own analysis, released last July, in the National Petroleum Council's report "Facing Hard Truths About Energy." Yes, the NPC urged that the government expand access to areas that are now viewed as protected, and as a result, the group estimated, "Material increases to current reserves within five to 10 years from currently inaccessible areas could approach 40 billion barrels of oil." That would put us right around Russia (as currently estimated anyway), with still less than 5 percent of the world's oil.

Of course, for a lot of folks, it's more comforting to believe that we have a Saudi Arabia lurking beneath the tundra that we just haven't taken advantage of, than to think that we truly are in an energy mess.