Energy Production and Consumption – Coursework Example

Economics Work Introduction Saudi Arabia, being the world’s leading oil producer, will be overtaken by The United States by around 2020. Projections have also been made placing The United States as a net exporter of oil by the year 2013.Oil consumption problem in the future revolves around two major factors; the population and the increased use from the developing countries. Projections has been made by the US census Bureau’s that the world’s population will experience a steady increase over the first half of this century (US Energy information administration, 2012, 1).
If such happens, then the big population would mean an increase in the demand of fuel, food, plastics and energy which as a matter of fact, highly depend on the production of oil. The increased use of oil in developing countries is also another factor. The countries represent a small percentage of consumption.
USA must explore all the means to develop its domestic energy resources and come up with a way to reduce its dependence on imports cost effectively. In an attempt to attain this, a consideration should be made on the effects this possess on the US supplies. The depletion of theses supplies could cause a very big problem in the due course (US Energy information administration, 2012, 1). Following these rise in energy level, it is also believed that US can somehow manage to eliminate all imports virtually between the years of 2020 and 2030. This could only be an assumption on a best case situation.
Even with these optimistic assumptions, the estimates do not affect the near-term dependence on direct energy imports. This entirely means that US must and will still pay the oil prices worldly in case of an energy crisis (Energy Information Administration (EIA), 2012, 1). Neither is it considered that US is dependent on the health contributing to a broader global economy contributing to a steady dependency on the export security if Gulf energy.
Considerably, the IEA projections are far much optimistic than the EIA’s. However, even if the projections are right, the impact on Iranian treat to the world energy exports would not be affected in the next decade. The importance of oil exports does not depend on the mobility of petroleum from one nation to another. It is rather dependent on the supply of the global market and a balance in the demand and supply (US Energy information administration, 2012, 1).
Both IEA and EIA share a common theory that the world economy could steadily grow dependent on the Gulf energy exports. This is projected to be between 2035 to 2040. This come with an emphasis that as the world oil prices will be paid by the US, it is more dependent on the health of the global economy (Energy Information Administration (EIA), 2012, 1)
Subsequently, the ability of US to keep up with the demand calls for a control in energy products and imports. This is in agreement with the previous experiences from 1980 where a decline was registered in both absolute interest and as a total share of the energy consumption of US. The decrease in energy imports is a clear indication of an increase in production of domestic petroleum and natural gas, increase in the use of biofuels and reduction in the demand as a result of rising energy prices and acquisition of new efficiently standardized vehicles (US Energy information administration, 2012, 1). Figure 9 below is a representation of energy production and consumption from 1980 with a projection from 2011 ranging to 2040.
Crude oil production in US has also been registering an increase in its production from 5.7 million bpd in 2011 to a 7.5 million bpd in 2019. The high volume of production is as a result of onshore oil production. A higher domestic crude oil production can be as a result of a faster growth of tight oil production. Figure 10 below represents energy production of fuel in US from 1980 and projected production to 2040.
(Energy Information Administration (EIA), 2012)
(Energy Information Administration (EIA), 2012)
Conclusion
Having mentioned the above, USA will still face challenges from the risks posed by Iran, terrorism and even instability wave from the Gulf. As a recommendation, The US should task the military forces to provide security to the energy exports globally.
Bibliography
Energy Information Administration (EIA), Annual Energy Review 2011, DOE/EIA-03384 (2011)
US Energy information administration, (2012) AEO2013 Early Release Overview, Retrieved on
January 8, 2012 from