Perpetual Innovation

Category: import substitution

  • Reduce Oil Dependence Costs

    Reduce Oil Dependence Costs: “Nearly 40% of the oil we use is imported, costing us roughly $300 billion annually. Increased domestic oil production from shale formations and improved fuel economy standards have decreased oil imports over the past few years, but the U.S. Department of Energy projects that we will continue to rely on imports for 35% to 40% of our petroleum needs in the future.”

    This is interesting. The rate of oil imports is dropping like lead. We are down dramatically form 13m Barrels per day in August 2006 before the Great Recession to only about 6m in 2013. See stats here: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTNTUS2&f=M

    Several oil Execs have commented that we should be North-America energy independent about the end of this decade. US independence should probably happen within 10 years, (Assuming that the US gov let’s us start exporting.)

    How did the Department of Energy get this so very wrong?

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  • A Shrinking U.S. Trade Deficit—Brought to You by Fracking – Businessweek

    A Shrinking U.S. Trade Deficit—Brought to You by Fracking – Businessweek:

    US trade deficit is shrinking. Rapidly.


    The reason is the import of oil is a very expensive commodity. By the end of this decade, North America should be trade neutral on energy and then move to a surplus thereafter. At peak, the US trade deficit was about 6% of GDP. That is, our GDP would be reduced by the oil that is not produced domestically, but produced afar.


    For a country such as Saudi Arabia, with only about $30 to $40 costs associated with producing a barrel of oil, that leaves about $60 of profits. All of that money per barrel leaves the US and goes to foreign governments and foreign companies (or Multi-national companies).


    With all the new found oil at home, the GDP jumps by a couple percent. The trade deficit — as it pertains to energy — will shift form a percent or two deficit to  becoming a surplus within 10 years.


    Economically, this is a beautiful think. If the US were a developing country this would be called economic development utilizing import substitution. Here is a blog on US Energy  that discusses the US Energy Outlook Report for 2013. Want to look at forecasts of the future, go to US Energy Information Administration Annual Energy Outlook 2013.


    As we drop from 10M barrels per day of oil-type imports to zero we will drop more than $300B in trade deficits (more than 2% of GDP). (See http://www.eia.gov/.)

    National security improves.


    Of course there is one small caveat. Oil, gas, coal and Nat Gas are non-renewable resources. That means that they must be phased out, sooner or later.


    Beautiful thing economically, but with a few clouds surrounding it.

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