Tuesday, February 10, 2009

Oil imports by the Numbers

U.S. net "all petroleum products" imports fell 8% in 2008 from 2007.

Yes, I know we are in a recession and the argument is that the U.S. does not need to import as much Oil...  Here is why that argument falls flat...

The U.S. MUST move from a CONSUMER society/economy to a PRODUCER society/economy, complete with physical exports (to replace the financial services exports that are GONE for good) and we must actually supply our own capital (through savings).  In order to PRODUCE goods, the U.S. will need to either INCREASE its energy consumption, or transfer consumption of energy from wasteful practices (like driving an SUV 3 miles each way to a clerical job) to productive practices.

Here is the problem:

When the WORLD economy comes back, it is not going to come back evenly.  While U.S. consumption of Oil is down drastically, this is not so for WORLD Oil consumption, and the GROWTH will come from the emerging markets and the BRIC countries.  The decline in energy prices has forced the closure, some of it PERMANENT, of marginal wells and fields, ergo, WORLD OIL PRODUCTION likely peaked either in 2005 or 2007 - and that means a permanent decline in Oil imports into the U.S. likely began in late 2007 early 2008.

In the final analysis that means no U.S. economic recovery in excess of 2007 real GDP... and that mens no bottom in site for U.S. housing or banking issues. 


Everything you are hearing out of Washington is for appearances ONLY.  The President and Congress are POWERLESS to stop the discipline of the markets.

Rather than level with the American people and tell them that we will have to WORK and SAVE and finance our own capital needs, retirement needs, AND CURRENT NEEDS (social programs WILL BE profoundly curtailed) our government continues to blow sunshine up our collective skirt. Like it or not,  this is truly "The Age of Personal Responsibility".


I am absolutely certain that a political crisis will come at anytime over the next several years.  Could be today, tomorrow, next week, next year... Once the markets and the American people realize that  the various government sponsored Ponzi/Madoff schemes will not be able to deliver the reaction by the people will be overwhelming.  

I do not say this to be shrill, I do not say that I wish this to happen, only that the prescription that our leaders have concocted and articulated today by U.S. Treasury Secretary Tim Geithner is far worse than the disease, and when compounded with the liability of the U.S. entitlement programs and energy shortages will bring much of the system to its knees - primarily because the EXPECTATIONS of the people simply cannot be met.

Our leaders need to work on those expectations.  

Mentatt (at) yahoo (d0t) com


Anonymous said...

Expectations die hard, especially for those who haven't worked too hard for what they've come to expect. Riots won't fill your stomach, though, and when that realization sinks in, people will start to work.

You've hit it right on the head. This thing won't stop until the structural problems in our economy are righted through work, savings, investment and self-discipline. I haven't heard a single thing to address the structural problems.

Our fearless leaders won't address them, either. Too many votes lost in that. They will monetize the Federal debt and continue to support entitlements and civil service full force. The economy will be so distorted that profitable enterprise is impossible. We'll end up a great big Venezuela or Cuba. Poverty for all.


Coal Guy

Anonymous said...

The Pentagon entitlement programs will also have to be extremely curtailed and there is extreme resistance to this.
It's expensive running an empire. Remember, the Pentagon is the biggest single user of petroleum products in the US. More than all those SUV on urban beltways.
Some say we will have a military coup before 2012 to keep that dog and pony show afloat. Or that we'll get a Petraeus Palin junta by "democratic" means.
Rock and roll, bitches.

bureaucrat said...

You'll have to describe what you mean by oil consumption going down drastically here. A 6% overall drop isn't very drastic (marginally I suppose it is, since a 6% drop ended up cutting prices in half for oil and gasoline), but in my travels (you know, the ones to Jewel etc etc), I still see a LOTS of cars and trucks moving thru the streets and expressways of Chicago. Demand for oil may have dropped statistically, but it is hard to observe it has dropped by much.

Greg T. Jeffers said...

Dear anon@12:42:

I hope you are just kidding the coup thing. The one group of Americans most likely to accept our circumstance with proper dignity will be members of the officers corps.

The military budget WILL be cut by necessity, as a matter of course.

Greg T. Jeffers said...


I simply calculate the slope of the rate of decline "Y" with data from the EIA, and then I GUESS at the "X" intersection.

You got a better way?

Anyway, I have no idea how to define "lots" of cars at the Jewel. Our financial system requires endless expansion of production, money supply, and debt in order to function. You read Mish's stuff... seen any expansion of that stuff around here lately?

bureaucrat said...

Since I have no patience for numbers calculation, I've always been more partial to observation, as unscientific as that is. And as I've said, I'm learning new things about energy master limited partnerships; managed futures in commodities, currencies, livestock, grains and metals; international bonds (to avoid the U.S. dollar) and other things to move away from the S&P 500, which did so well for me for 18 years. But with peak oil, peak credit, peak earnings (you know, Mish stuff), I can't see how the S&P 500 gets out of this mess for the next 20 years. My 180-degree investing planing and "difficult days" preparing continues ...

Greg T. Jeffers said...


You have a Federal job, hard to be in a better spot than that at the moment.

This game is almost up. I am thinking about starting a new blog about communal living...

Dan said...

Anecdotally, I travel down a major east- west interstate then up a major north south one passing seven truck stops on my daily commute. Normally there thousands of trucks but lately they have been three quarters empty or more.

bureaucrat said...

My cushy Federal job relies on the following:

Sales of used Federal vehicles into a market where there is too many vehicles already

A possible stimulus bill, which would lead to purchases of more vehicles, which would require lots of people to manage them that we don't have.

Continued borrowing from the world, and an unsustainable Federal pension and supplemental social security system. Payments likely in inflating dollars.

I'm not so different from y'all. :)

Greg T. Jeffers said...


THe best research for macro trends is often to take disparate anecdotal data and connect the dots.

Thanks for that data point!

sharon said...

thanks for the information....

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