In the next 20 years, according to estimates by the U.S. Energy Information Administration, the demand for oil in the United States is projected to increase by 33%. However, even as consumption surges, U.S. oil production is expected to continue to drop precipitously.
“We now produce 39% less oil than we did in 1970, losing nearly four million barrels a day in the process,” said Secretary of Energy Spencer Abraham. Unless the energy policy is changed, he said production will slip to just 5.1 million barrels per day by 2020 – down from a high of 9.4 million a day 30 years ago.
“This widening gap between demand and domestic supply will make us increasingly dependent upon foreign imports,” he added.
In 1973, at the height of the oil crisis, the U.S. imported just 36% of its oil. Today, it imports 54%.
“ This will put more power in the hands of foreign suppliers,” Abraham said. “Power they are not reluctant to use.”
The repercussions of high oil prices go farther than trucking. Abraham said America’s last three recessions have all been tied to rising energy prices – and there is strong evidence that the latest crisis is already having a negative effect.
For example, the National Association of Manufacturers estimates that soaring fuel prices between 1999 and 2000 cost the U.S. economy more than $115 billion – shaving a full percentage point off the Gross Domestic Product of the U.S., Abraham said.
Despite a 20% decline in diesel prices, the U.S. still remains uniquely vulnerable to severe fuel price fluctuations because the number of refineries in the U.S. has been cut in half since 1980, and a new one has not been built in the U.S. in 25 years, said Abraham.
