Domestic oil sources drying up?

August 19, 2010

An interesting article recently made the point that crude oil production from Alaskan fields is declining, and the big pipeline that brings product south is reaching the point where it is turning into a maintenance problem. Long story short, these days the pipeline is delivering less oil, which increases problems with corrosion and damage from the environment. You can walk faster than the flow velocity.

The fields in Alaska that have been the biggest producers are declining and there isn’t much enthusiasm for expanding drilling, especially offshore. Of course there’s no interest in expanding offshore drilling anywhere around here these days, especially the gulf. This will be a problem in the long run. The Alaska pipeline needs some work, but if drilling continues to be restricted, there is little incentive to fix it.

Unless these situations change and reverse the downward production spiral, the only alternative is increasing imports or cutting consumption. As discussed here last March, consumption in North America is below its peak in 2007, and refiners are cutting capacity. I don’t have the most recent statistics, but domestic production has probably dropped even more, which means oil imports are creeping up again.

If you were to ask most Americans if they would be willing to change their behavior, in this case make a personal effort to reduce oil consumption, you probably wouldn’t get many who would take up the challenge. Of course nobody wants to see oil spills here, which is why imports will go up. Importing oil allows us to export most of the risk and mess. Seeing TV coverage of a spill or other damage somewhere in South America or Africa doesn’t carry the same impact as tarballs washing up in Louisiana.

Maybe that’s a cynical attitude, but consider this: Frito-Lay brought out a new type of bag for its Sun Chips products. The bag is compostable and biodegrades. It’s made from vegetable products. Those are good things, right? Sales of Sun Chips have declined since the bag’s introduction. The complaint? The bag makes too much noise. So much for changing behavior.