“We [Americans] consume about 25 percent of the world’s oil,” says President Barack Obama, but we “only have 2 percent of the reserves.”
Obama uses this statistic to argue against increasing U.S. oil production, saying that even if Americans “drilled every drop of oil” we have, “it still wouldn’t be enough to meet our long-term needs.” Instead, he says, “We’ve got to discover and produce cleaner, renewable sources of energy.”
As others have noted, the president’s figures are suspect. However, let’s assume for the sake of argument that his numbers are correct. If the U.S. share of global oil consumption is 25 percent, and the U.S. share of global reserves is 2 percent, the ratio of our shares of consumption to reserves is 25:2, or 12.5 to 1.
To put this ratio in perspective, let’s compare the U.S. with other industrialized nations, using the CIA World Factbook’s figures for consumption and proved reserves: For the European Union, this ratio is about 32:1; for Japan, 1,300:1; for Taiwan, 5,400:1. For Switzerland, Hong Kong, or Singapore, the ratio is infinite, since they have no proved reserves at all.
What exactly does the president think this proves? That the Swiss should use no oil?
Oil consumption compared with GDP
Global oil demand was 89.1 million barrels per day last year, according to the International Energy Agency. The U.S. Energy Information Administration put daily U.S. consumption at 18.8 million barrels; so, our consumption was actually about 21 percent of the total.
However, global GDP was about $63.3 trillion last year, according to the World Bank. The U.S. Bureau of Economic Research put U.S. GDP at $15.3 trillion; so the U.S. contributed about 24.2 percent of the total. Thus, as a share of the totals, the U.S. contributes more to global GDP than to global oil consumption.
Is it unreasonable to use 21 percent of the world’s oil to produce 24 percent of the world’s total value of goods and services? Many other countries’ shares of oil consumption are actually greater than their contribution to global output. Such countries range from Canada and Mexico, to Belgium and the Netherlands, to South Korea and Singapore.
As the world’s third-largest oil exporter, the U.S. is unusual. According to the International Monetary Fund’s GDP figures for 2011, most major oil-exporting countries contribute far more to global oil consumption than to global GDP. For example, Iran’s share of global oil consumption is 58 percent greater than its contribution to global GDP; for Venezuela the figure is 69 percent; for Saudi Arabia, over 200 percent.
U.S. has more than “proved” reserves
Obama’s claim that the U.S. has only 2 percent of the world’s oil reserves refers only to currently “proved” reserves. But despite rising consumption, proved reserves more than doubled from 1980 to 2009. As oil analyst Daniel Yergin observes, “Just in the years 2007 to 2009, for every barrel of oil produced in the world, 1.6 barrels of new reserves were added.”
Regarding what the president calls “our long-term needs,” the U.S. Energy Information Administration estimates that “ultimately recoverable global reserves” of oil and natural gas total 2.4 trillion barrels, of which 185 billion barrels are in North America. In addition, the U.S. Geological Survey estimates domestic reserves to include another 2 trillion barrels of shale oil. This is nearly twice the reported reserves of all OPEC counties combined, meaning that the total U.S. share is not 2 percent, but closer to two-thirds of global reserves.
The president’s fuzzy math has resulted in millions of dollars transferred from the American public to Obama’s cronies at “green energy” black holes like Solyndra, failed maker of solar panels, while gas prices have doubled. It’s time to put a stop to that, and to get serious about American energy, and energy self-reliance.