Oil use in the U.S. has been reduced to its lowest level in decades at a time when production is actually on the rise. As a result, U.S. oil imports have been reduced to just 41% of consumption, and at the current rate, the U.S. could begin producing more oil than Saudi Arabia in two years time. This is both a good and a bad thing for alternative fuels.
While some analysts are worried about falling gas prices reducing the desire for fuel efficient and alternative fuel vehicles, increased U.S. oil production isn’t like to have a dramatic effect on global prices. Why? Because quite simply, Saudi Arabia can turn off the spigot, limiting the amount of oil in global circulation. This will keep prices probably right around where they are.
The production of more oil in the U.S. will also result in the extraction of more natural gas, which many Americans seem more willing to embrace (at least on paper) than electric vehicles. As short as our collective memories seem to be these days, even if gas prices fall people aren’t likely to rush out and buy big SUVs again.
We’ve about hit that tipping point, where automakers can deliver good fuel economy and performance at all price levels. However, this could be a bigger problem for electric-only vehicles, who justify their high upfront cost with their lower fueling prices. If gas prices do drop and stabilize, EVs may struggle to find any market share outside of the current niche.
Even with new technology enabling oil producers to tap previously unattainable reserves of crude, the appetite for oil pretty much ensures an upward trend in pricing. But America could find itself sitting pretty as a major oil producer to sell to countries like China, where a rising middle class is buying cars at a record rate. In 2006, 60% of oil consumed in the U.S. was imported. In 2011, that number was just 41%. At that rate, by the end of the decade, America could all but eliminate oil imports…at least for a little while.
If America can stand on track with its alternative fuel goals, we could become a leading exporter of oil, which means more money and jobs coming back to the states. I don’t care what side of the aisle your politics is on, this is a good thing.
Source: Plug-In Cars