In the fading days of March, and maybe as a tribute to the late-March celebration of life before light (that lights-off thing many people engage in), U.S. president Barack Obama said he aims to cut American oil imports by one-third over the next decade.
Energy independence has been a fantasy of successive U.S. Presidents since the temporary 1973 Arab oil embargo.
The notion is revived every time an international incident occurs and puts oil imports in a precarious position. So, think Iran’s revolution in 1979, the first Gulf War, 9-11 and, as of late, the Arab spring that may or not blossom into democracy.
Meanwhile, despite plans to wean the U.S. from imported oil, the trend has been in the opposite direction.
In 1973, American oil and petroleum imports amounted to just over 6.2 million barrels daily; as of 2009, the last year for which statistics are available, Americans brought in 11.7 million barrels of oil.
That figure has been higher. The U.S. imported 13.7 million barrels in both 2005 and 2006. But then the U.S. entered a recession (from which its escape has been sluggish).
So, in a parallel of weak domestic demand, imports were down to 13.5 million barrels in 2007 and 12.9 million barrels in 2008.
Still, with a more robust recovery on the way for the U.S. economy (one hopes), weaning Americans from anything will be a challenge. This is especially true of imported oil.
In his March speech, the U.S. president acknowledged Canada as a safe supplier.
“When it comes to the oil we import from other nations, obviously we’ve got to look at neighbours like Canada and Mexico that are stable and steady and reliable sources,” said Obama in his Georgetown University address.
Those neighbours indeed matter.
Another trend that might surprise most Canadians and Americans has also emerged over the last four decades: Canada and Mexico now ship more oil to the U.S. than does the Persian Gulf.
Back in 1979, the year of the Iranian Revolution, Persian Gulf countries accounted for about 2.1 million barrels, or 24.5% of all U.S. oil imports.
By 2009, U.S. daily oil imports from Persian Gulf countries dropped to under 1.7 million barrels, and just 14.4% of all oil imports.
In contrast, in 1979, Canada’s share was 538,000 barrels daily while Mexico accounted for 439,000 barrels a day. Together, the two countries provided just 11.6% of all U.S. imports in 1979.
Thirty years later, in 2009, Canada was shipping almost 2.5 million barrels to the U.S. daily while Mexico exported more than 1.2 million barrels.
Together, America’s two NAFTA partners accounted for 31.5% of all U.S. oil imports, handily beating the Persian Gulf countries.
On another measure, overall, the OPEC-member countries accounted for two-thirds of all U.S. imports of oil in 1979. (OPEC countries include some but not all Persian Gulf countries and others, such as Venezuela.)
By 2009, their share dropped to 41% (from 5.6 million barrels daily in 1979 to 4.8 million barrels by 2009).
Thus, if the trend continues, Canada and Mexico may well displace the OPEC countries as the single largest collective supplier of imported oil into the U.S. market.
Regardless, and until alternatives can replace the need for oil to move people and products, it appears Canada’s oil – because of increased demand for oil worldwide – will be increasingly valuable.
In 1980, the Americans accounted for 27% of the daily 63 million barrels of oil consumed worldwide. In 2009, worldwide consumption was up to 84 million barrels with the American share of that down to 22.3% (though the U.S. used slightly more: 18.8 million barrels in 2009 compared with 17 million in 1980).
By 2009, demand in Central and South America almost doubled, albeit from a small base (3.6 million barrels consumed daily in 1980 compared with 6.1 million in 2009); Europe’s consumption declined slightly during this period.
Meanwhile, Asia-Oceania demand exploded. In 1980, that region consumed 10.8 million barrels of crude daily (17% of all consumption); by 2009, Asia-Oceania was the world’s biggest consumer of oil, at 30.4% of the market, or 25.6 million barrels daily.
Whether the U.S. has a significant recovery or merely muddles through, Canada’s oil will be valued.
Depending on proposed pipeline connections, if the United States doesn’t buy it, someone else might, and most likely in Asia.