With Friends Like These ...

Now that Prudhoe Bay and 8% of US domestic oil supply are going offline “indefinitely,” we’ll have to look toward our overseas suppliers: As of May, the countries supplying the most oil to the United States were, in order, Canada (2.172 million barrels per day in 2005) Mexico (1.646 million bpd), Saudi Arabia (1.523 million bpd) and Venezuela (1.506 million bpd). All stats from http://tinyurl.com/l5uy4

CANADA: Total crude oil production has been dropping since 2004, but is expected to pick up starting in 2010, thanks to oil sands production, according to this Canadian Association of Petroleum Producers 2005 Oil outlook: http://tinyurl.com/juswg And you can read the highlights of the 2006 outlook here http://tinyurl.com/krysh. Just ignore the fact that every cubic metre (1,000 litres) of oil produced requires between 2 to 4.5 cu meters of water. A million barrels a day of oil production translates into roughly 2 to 4.5 million barrels of water a day. Planned oil sands projects will increase the water use to 529 million cubic metres, according to the Pembina Institute's report, "Down to the Last Drop". You can read about that report here: http://www.corpwatch.org/article.php?id=13924. Considering that the drought in North America is worsening, we may have other uses for Canadian water.

MEXICO: Production at Mexico’s giant Cantarell is falling fast – hitting a 4-year-low -- and it could be headed for a “catastrophic” decline. Government assures everyone that “all is well” when it can’t even afford to buy steel pipe.

SAUDI ARABIA: The “Central Bank of Oil” is rushing to rent offshore drilling rigs and will spend $283 billion in the next seven years on oil facilities and oil infrastructure. And yet despite opening a new oil field at Haradh, oil flows from the Saudis have shrunk by 400,000 barrels per day over the past few months. The Saudis say they’re adding lots of “spare” capacity. Funny, how can they do that when they can’t pump at regular capacity. The Saudis are also seeking to tap “heavy” oil (a la Canadian Oil Sands). That’s odd for a country with a desert full of crude, don’t you think?

By the way, Saudi Arabia will earn more than $203 billion in oil export earnings this year, an all-time record, up 25% from the record last year of $162 billion. How much of that do you think is going to go into gold?

VENEZUELA: Where do we begin with this one? Venezeula’s reserve (79.7 million barrels) rank 7th in the world, and it could take the #1 spot if just 10% of its 3 TRILLION barrels in Orinoco “heavy oil” is deemed recoverable. Venezuela provides 15% of US oil; looked at another way, the US buys 60% of Venezuela’s production. Nice numbers; they belie the fact that this is a match made in hell.

Venezuela’s leader, Hugo Chavez, hates George W. Bush with a passion (something to do with Bush supporting two coups against Chavez, blah blah). Anyway, he’s bound and determined to sell his oil to other people. To that end, Chavez has ...

• Signed new supply agreements with China, India, Jamaica, Haiti, Paraguay, and Bolivia
• Yanked taxes and fees on foreign oil companies operating in Venezuela much higher
• Brought in the Iranians to help him develop his oil after scaring off the Europeans
• Shipped tankerloads of oil to China and India, markets that are up to seven times more distant than the U.S. customers that traditionally take most of the country's exports, even though this eats into Venezuela’s oil profits!

As a result, Venezuela’s oil shipments to the US FELL 6% in the first four months of the year.

Chavez is just starting. Petroleos de Venezuela said in May that it planned to buy 18 oil tankers from Chinese shipyards at a cost of $1.3 billion to allow for increased shipments to Asia. Chavez plans to boost his oil exports to China from 80,000 per day at the end of last year to 300,000 barrels per day by the end of this year.

Bottom line: If these are our top four suppliers, we are in big, big trouble.

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