I am going to be lazy this week and post a very short one.
We discussed the Bakken before. It is producing nearly a million barrels a day of oil. This is $100 million in oil sales a day. It costs up to $45/barrel to lift the oil out of the bakken. The Bakken makes profits of about $50 million a day, or about $18 billion a year.
Let's compare this to Saudi Arabia. They pull oil out of the ground for $1 per barrel (it is very efficient there). They make profits of roughly $100/barrel. They produce 12 million barrels a day. In other words, they make $1.2 billion per day.
The US currently imports 11 million barrels of oil per day, and we use a total of 20 million. We transfer about $1.1 billion out of the US per day to drive cars.
What is the end product of this money? Many countries with oil have what is called the "resource curse." It is also known as Dutch disease. It turns out if your country has a ton of natural resources, it becomes inefficient and actually has less growth than it would have otherwise. This has several reasons. First, if a government makes a ton of oil money (or copper or gems), they tend to provide stuff for free to the populace. They take the money they make and just use it to pay for social things, like schools, hospitals, etc. Citizens pay less or no taxes. Corruption and handouts tend to be rife, but since the citizenry gets stuff for free, they don't even care. It is highly inefficient, and the country does not develop a real economy. They often will not use the money to diversify the economy, and once the resource runs out, the country is literally worse off than it was before they found the resource. Finally, having resources tends to allow despotic regimes to thrive. Iraq, Iran, Venezuela,
Interesting, eh? Maybe is a good reason to drive a fuel efficient car. Except that China and India and other developing countries with increasing numbers of cars will ensure every barrel of oil finds a buyer.
One last thing. The US gets its oil imports almost entirely from North America, from Mexico and Canada. The Middle East oil goes to China and the rest of the east. Why does the US spend so much money to maintain peace in the Middle East? Cause if the oil produced there came off the market, the former buyers will have to go elsewhere to buy their oil. Despite the fact that we don't get oil from the middle east, the global price (and our price) is much lower than it would be if war caused the oil to stop flowing from there. So why doesn't China start also enforcing peace in the Middle East? How come the US is the major country to fund this peace keeping? Frankly put, no other country has the experience of the US with having troops on foreign soil. China doesn't yet have the experience to effectively do this sort of thing. But they are already practicing. Eventually, as China continues to rise, they will likely begin to shoulder responsibility of ensuring the flow of oil.
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