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CAN THE UNITED STATES BE INDEPENDENT OF MIDDLE EAST OIL?

CAN THE UNITED STATES BE INDEPENDENT OF MIDDLE EAST OIL?. By Ibrahim M. Oweiss Professor of Economics Georgetown University, SFS Address before Academic Bridge Program, Education City Doha, Qatar May 2, 2006. STATEMENTS OF PRESIDNENT BUSH.

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CAN THE UNITED STATES BE INDEPENDENT OF MIDDLE EAST OIL?

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  1. CAN THE UNITED STATES BE INDEPENDENT OF MIDDLE EAST OIL? By Ibrahim M. Oweiss Professor of Economics Georgetown University, SFS Address before Academic Bridge Program, Education City Doha, Qatar May 2, 2006

  2. STATEMENTS OF PRESIDNENT BUSH • State of the Union Address on January 31, 2006 claiming we “replace more than 75 percent of our oil imports from the Middle East by 2025” • Saying on February 20, 2006 the nation is on the verge of technological breakthroughs that would "startle" most Americans

  3. THE PROBLEM? • Continued rise on the price of oil • Continued increase in US Consumption of oil “Addiction to Oil” • Continued decline in US oil reserves • Continued decline in US production of oil • Continued increase in US oil imports

  4. US Production of Oil • Dwindling over the years • It was 8.3 m/b/d in 1994 • In 2004, it was 7.2 m/b/d and decreasing • Two main reasons: • Proved reserves are decreasing from 3.6 bb in 1994 to 2.9 in 2004 • Environmental concerns over oil exploration in Alaska • With no new discoveries of oil, the US will run out of oil in 10 years

  5. US Consumption of Oil • In contrast with a declining internal US production of oil, US consumption has been on the rise • Steady annual increase from 17.7 m/b/d in 1994 to 20.5 m/b/d in 2004 • US consumption 20.5 m/b/d = 25% of world • Gap between US production of oil and its consumption keeps widening over the years • US imports of oil will then have to rise unless there is a technological breakthrough and/or new discoveries of oil

  6. US Imports of Oil 12.9 m/b/d From % S & Central America 20.5 Middle East 19.4 Canada 16.4 Mexico 12.7 West Africa 12.7 Europe 7.6 North Africa 3.7

  7. To address what President Bush called a “serious problem” “Advanced Energy Initiative -- a 22 percent increase in clean-energy research -- at the Department of Energy” • To double federal funding for scientific research in the next 10 years • “Tax credit to encourage bolder private-sector initiatives in technology” • “To encourage children to take more math and science” His three points to achieve the goal:

  8. President Bush’s Goal “To replace more than 75 percent of our oil imports from the Middle East by 2025” • It contradicts his statement on the Dubai port issue, “it would send a terrible signal to friends and allies” • It did not take into account market realities • It did not learn from the failure of President Nixon’s project energy independence announced in 1974 • His 3-point proposal may be NECESSARY for technological breakthroughs in developing and using alternate sources of energy, but cannot be considered SUFFICIENT.

  9. Oil Reserves

  10. United States Dependency on Middle East Oil • In the absence of new discoveries or technological breakthroughs, such dependency will rise not fall. • Almost two thirds of proved oil reserves are in the Middle East • Middle East oil continues to gain market share. • Russia’s production rose substantially • Largest decline in oil production were in U.K. and the USA

  11. Technologies to reduce dependency on oil • Use of existing technologies and new emerging ones “cannot be known with certainty” Department of Energy (DOE) • Zero energy homes using solid state lighting (SSL). Semi Conductor Light Emitting Diode (LED) and Organic Light Emitting Diode (OLED) are both commercially available but at high cost • Research on development of efficient and long lasting batteries for electric-gas hybrid cars including plug-ins. a nickel-metal-hybrid battery, the kind that powers most hybrid-electric vehicles, and a small one with lithium-ion batteryyet to be developed in the future by Johnson Controls Inc. laboratory,in Milwaukee Wisconsin • To speed the development of biofuels such as "cellulosic" ethanol made from wood chips or sawgrass • "Roof makers will one day be able to make a solar roof that protects you from the elements and at the same time, powers your house” President Bush

  12. In contrasting the existing technologies to replace oil against market realities, I predict that the US will double its oil imports form the Middle East by the year 2023

  13. Can the United States be Independent of Middle East Oil? • Not in the foreseeable future • Yes in the long run But the late Lord John Maynard Keynes once said: “In the long run we are all dead”.

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