Gulf Oil: Declining US oil imports could push up Indian expenditure on Navy

Discussion in 'Indian Navy' started by Neil, Nov 9, 2011.

  1. Neil

    Neil Senior Member Senior Member

    Joined:
    Jun 23, 2010
    Messages:
    2,610
    Likes Received:
    1,946
    Location:
    India
    [​IMG]


    Many readers were incredulous at my last column in The Times of India. This said that by 2020, US oil imports would dip and be met entirely from neighbours in the Americas, ending US dependence on the Persian Gulf. This would lead to substantial US military withdrawal from the Gulf.

    Many readers complained they had not read about this anywhere else. So, let's get into the sources. Daniel Yergin, global oil guru, has written a new book, The Quest. Historically, says Yergin, oil moved mainly east-west. That is, oil from the Middle East and Africa travelled east or west to the US and Japan. However, new discoveries mean that by 2020, most oil transport will be north-south, from Canada and Latin America to the US.

    This is simply another way of saying that traditional US dependence on the Gulf is going to disappear. Three major developments are driving this new phenomenon.

    The first is the steady rise in production of oil from Canada's tar sands, which hold more oil than all Saudi Arabia's reserves. Extracting oil from tar sands is environmentally messy and has attracted much green resistance. Yet, Canadian oil sand production has risen from nothing to 1.5 million barrels per day (mbd), and could double by 2020.

    The second development is the discovery of massive 'pre-salt' oilfields offshore in Brazil, making it a major exporter. Brazilian output will in a decade rise to at least 5 mbd, half today's Saudi output.

    The third development is a new technology, fracking, which breaks up tight rock in shale formations and makes it economic to extract oil and gas from enormous US shale deposits historically regarded as uneconomic. The biggest shale oil development is in the Bakken shale in North Dakota, where production has touched 0.5 mbd and should double soon. This has given North Dakota the lowest unemployment rate in the US, just 3.8%.

    Similar shale oil development is taking place in the Eagle Ford and Permian basins in Texas, and the giant Utica shale in Ohio and Pennsylvania. Total shale oil production should reach 3 mbd by 2020.

    An analysis by Ed Crooks in the Financial Times (in edition dated November 1, 2011) points out that US oil consumption peaked at 20.7 mbd in 2007 and has since fallen because of recession and mixing ethanol in petrol. Falling consumption may continue because of tighter fuel economy standards and the rise of electric and hybrid cars. Large truck and bus fleets could conceivably switch to using cheap, abundant gas instead of liquid fuels.

    Ed Morse, a former US energy diplomat, estimates that US oil imports will fall from 10 mbd today to just 3 mbd by the 2020s, a quantity the US can get from just Canada and Mexico, without even tapping Brazil or Venezuela. Oil from neighbours will be much cheaper than Gulf oil because of lower transport costs.

    Most defence strategists have exaggerated notions of US dependence on Gulf oil. This year, of US imports of 10 mbd, just 1.3 mbd will come from Saudi Arabia. Other suppliers are Canada (2.6 mbd), Mexico (1.2 mbd), Venezuela (0.9 mbd), Nigeria (0.9 mbd) and minor suppliers.


    Why then does the US place high strategic value on the Gulf and its oil? One reason is that the US psyche was shocked as never before when the Arab oil embargo of 1973-74 led to terrible shortages, queues and fist-fights at petrol pumps, and politicians decided this could never be repeated. A second reason is that Nato partners, above all Japan, will continue to need Gulf oil. Third, any interruption of Gulf supplies will send oil prices spiralling, whether the US imports oil from Canada or Saudi Arabia.

    So, the US will retain some interest in smooth oil flows from the Gulf even if its own imports from the region fall to little or nothing. However, the US budget deficit is now a political hot potato. Rather than cut welfare entitlements, politicians would rather cut military spending, especially in areas of falling strategic importance.

    Defence experts, including ex-defence secretary Robert Gates, have questioned Nato's value to the US - other members spend so little that they do not materially assist US security. The US wants to cut its own spending and placing a higher burden on Nato allies.

    The US will also want major oil importers to bear a larger share of the cost of policing the waters in and out of the Gulf. Japan is currently the largest importer from the Gulf, but will soon be replaced by China, with India a distant third. Japan's constitution limits its own defence spending. So, China looks like first supplementing and then replacing US naval dominance in the Gulf.

    Pakistan has begged China to use Gwadar port as a naval base, but till now China has refused. However, Gwadar would be an ideal future location for policing the Gulf, right at its entrance. Western analysts will not see a Chinese naval base at Gwadar as an anti-Indian move. Indeed, some will argue that China's policing will ensure secure oil for all importers including India.

    Yet, can India be comfortable entrusting its oil security to China? Indian strategists will demand a much stronger Indian naval presence to check Chinese naval dominance. This will be politically tricky, and very expensive. It promises to be a top strategic issue in the coming decade.



    Gulf Oil: Declining US oil imports could push up Indian expenditure on Navy - Page2 - The Economic Times
     
  2.  
  3. trackwhack

    trackwhack Tihar Jail Banned

    Joined:
    Jul 20, 2011
    Messages:
    3,757
    Likes Received:
    2,573
    By some estimates there is about 6 trillion barrels of oil in North and South America. Compare that to 1.2 trillion barrels in the Middle East. As long as there is enough oil, Big Oil is going to ensure that emerging energy technologies in the West are suppressed. This is where India has a chance of transforming into a clean thorium based economy while the west continues to daddle in the Oil Age. Hope I live to see this come true. :)
     
    Tshering22 likes this.
  4. Neil

    Neil Senior Member Senior Member

    Joined:
    Jun 23, 2010
    Messages:
    2,610
    Likes Received:
    1,946
    Location:
    India
    any source to your claim sir...?? 6 trillion will make america the new gulf for say a century or something...
     
  5. Vishwarupa

    Vishwarupa Senior Member Senior Member

    Joined:
    Sep 15, 2009
    Messages:
    2,030
    Likes Received:
    2,209
    This is where India has a chance of transforming into a clean thorium based economy while the west continues to daddle in the Oil Age. Hope I live to see this come true. :)[/QUOTE]

    yes i agree with Trackwhack that India should use Thorium as a source of energy instead of depending on oil.
     
  6. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

    Joined:
    Sep 28, 2011
    Messages:
    14,140
    Likes Received:
    8,529
    Location:
    North Carolina, USA
    1.As long as there are "Green" technologies to be used to scam the Americans, people in power like Obama will ensure that drilling for oil in North America will be suppressed.

    2 American "environmentalists" hate to see those ugly oil rigs offshore, but love ugly windmills.
     
  7. Ray

    Ray The Chairman Defence Professionals Moderator

    Joined:
    Apr 17, 2009
    Messages:
    43,117
    Likes Received:
    23,545
    Location:
    Somewhere
    A wise country uses others resources and preserve their own for a rainy day!
     
  8. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

    Joined:
    Sep 28, 2011
    Messages:
    14,140
    Likes Received:
    8,529
    Location:
    North Carolina, USA
    1. Benefit/cost analyses should be applied to domestic oil exploration.

    2. The US has Strategic Petroleum Reserves for a rainy day.
     
  9. trackwhack

    trackwhack Tihar Jail Banned

    Joined:
    Jul 20, 2011
    Messages:
    3,757
    Likes Received:
    2,573
    Read up on the Oil in North Dakota - 2 trillion barrels, Canada 2.6 trillion barrels and South America - more than 2 trillioin barrels. All Shale oil that is being fracked at under $50 a barrel. You have to use google. I saw this in a documentary called Crude Independence
     
  10. asianobserve

    asianobserve Elite Member Elite Member

    Joined:
    May 5, 2011
    Messages:
    7,308
    Likes Received:
    2,976

    Then I have a simple solution, why don't oil men just stick windmill blades on top of those oil rigs to satisfy those romantic environmentalists? This will satisfy all parties: the oil men get their oil and the envirnmentalists get their aesthetic highs...:rofl:

    (BTW, you might take this seriously, I'm in favor of pumping those oil and natural gas out of the rocks [anywhere on the planet]. In your case, America could really make use of those resources now.)
     
    bobli and W.G.Ewald like this.
  11. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

    Joined:
    Sep 28, 2011
    Messages:
    14,140
    Likes Received:
    8,529
    Location:
    North Carolina, USA
    I am so going to steal that line.
     
  12. p2prada

    p2prada Stars and Ambassadors Stars and Ambassadors

    Joined:
    May 25, 2009
    Messages:
    10,233
    Likes Received:
    3,896
    Location:
    Holy Hell
    The Americans and Canadians have the largest reserves of oil shale. Estimates say the reserves could be as big or bigger than Middle East.

    As for numbers the potential amount of oil shale in the world could be over 1 Trillion tons which could be over 5 times the known global reserves of crude oil. Possibly over 60% is in North America. India has reserves of oil shale in Assam and Arunachal Pradesh. GoI will be selling the reserves to our companies. If things go right, we may even end up exporting oil.

    Oil in middle east is cheaper and easier to dig out.
     

Share This Page