Autonomous Vehicle Consultant

In his State of the Union speech in January 2011, President Barack Obama declared, “Now, clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling. So tonight, I challenge you to join me in setting a new goal: By 2035, 80 percent of America’s electricity will come from clean energy sources.”

In contrast to that worthy goal, the U.S. Department of Energy (DOE) provides a different goal—business as usual—as illustrated in the following figure.  According to this figure, 14 percent of renewables and not 80 percent will contribute to the generation of electricity by 2035.

As of 2008 renewable energy consumption (wind, photovoltaic, biomass, hydroelectric, geothermal, and solar) contributed 7 percent to electrical generation. An increase from 7 percent (2008) to 80 percent (Obama’s goal for 2035) represents a compound annual growth rate of 9.4 percent, which is rather ambitious.

Figure. Electricity generation by fuel, (1990-2035).

Business Development Issues

Sometimes a commercialization path can be established based on government regulatory requirements. That approach may be next to impossible given the contradictory signals from President Obama and the DOE.

The top five exporters of crude oil to the United States are Canada, Mexico, Saudi Arabia, Venezuela, and Nigeria. In August 2010 they constituted 63 percent of all imports to the United States. Four of these five countries have problems that could affect U.S. oil imports. Canada is the only country with long-term social and economic stability and large proven reserves (an estimated 179 billion barrels in 2007). This post summarizes business development  issues, mostly related to U.S. government policy, or rather its absence, on foreign oil dependence. Previous posts discussed top oil exporting countries and why their oil exports are potentially unreliable.

Business Development Issues

As a de facto matter of policy or simply chance, the United States imports crude oil from a few dozen countries in addition to the five countries cited previously. Although this approach tends to shield the United States from excessive dependence on any one source, serious reduction of oil from any of the major oil exporters could have dramatic effects because of market sensitivity based on price, supply and psychological factors that could lead to panic. For example, the Yom Kippur War, starting in October 1973, “resulted in a net loss of 4 million barrels per day and extended through March of 1974. This loss represented 7 percent of the free world production. The extreme sensitivity of prices to supply shortages became all too apparent when prices increased 400 percent in six short months.”

The top five exporters of crude oil to the United States are Canada, Mexico, Saudi Arabia, Venezuela, and Nigeria. In August 2010 they constituted 63 percent of all imports to the United States. Four of these five countries have problems that could affect U.S. oil imports. Canada is the only country with long-term social and economic stability and large proven reserves (an estimated 179 billion barrels in 2007). This post summarizes Venezuelan and Nigerian oil export dependability issues. Subsequent posts discuss the other top oil exporting countries and business development issues.

Venezuela

Proven oil reserves in Venezuela may be the worlds largest at 297 billion barrels and presumably surpass that of Saudi Arabia with 265 billion barrels. Oil field development has been hampered by political unrest, especially during 2002 when 18,000 state oil field workers went on strike and subsequently were fired. Crude oil from this country is heavy and must be processed by specialized refineries. The United States imports 1.4 million barrels per day from Venezuela. If Saudi Arabia cannot maintain its current export level to the United States, perhaps that shortfall could be countered by Venezuela, if President Hugo Chavez were so inclined…if.

Nigeria

Nigeria is the 10th most petroleum-rich country based on its reserves. “The oil industry has been marred by political and economic strife largely due to a long history of corrupt military regimes and complicity of multinational organizations.” Long-term reliable access to Nigerian oil is questionable.

The top five exporters of crude oil to the United States are Canada, Mexico, Saudi Arabia, Venezuela, and Nigeria. In August 2010 they constituted 63 percent of all imports to the United States. Four of these five countries have problems that could affect U.S. oil imports. Canada is the only country with long-term social and economic stability and large proven reserves (an estimated 179 billion barrels in 2007). This post summarizes Saudi Arabian oil export dependability issues. Subsequent posts discuss the other top oil exporting countries and business development issues.

Saudi Arabia

Despite its large oil production, 90 percent of Saudi Arabia’s oil production comes from only five fields and up to 60 percent of its production stems from the Ghawar field. These giant, aging oil fields were discovered in 1941 to 1965.¹ The Saudis may have irretrievably damaged some of their oil fields by over pumping salt water into them to maintain production. No external auditing of their oil fields is permitted by the Saudis. The turmoil spreading throughout the Middle East has not impacted Saudi Arabia yet. That situation, however, could change quickly. If that happens, what is the United States’ plan?

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¹ Giant Oil Fields of the World, Presentation, AIM Industrial Day, May 23, 2005, Fredrik Robelius

The top five exporters of crude oil to the United States are Canada, Mexico, Saudi Arabia, Venezuela, and Nigeria. In August 2010 they constituted 63 percent of all imports to the United States. Four of these five countries have problems that could affect U.S. oil imports.

Canada

Canada is the only country with long-term social and economic stability and large proven reserves (an estimated 179 billion barrels in 2007). This post summarizes Mexican oil export dependability issues. Subsequent posts discuss the other top oil exporting countries and business development issues.

Mexico

Two principal problems that may affect the United States are internal instability due to massive carnage from the drug cartel wars and declining oil production. From December 2006 to February 2011, the total number killed in Mexico was 35,614. The case for declining oil production is illustrated in the following graph and shows that Mexican oil production peaked in 2003 and has been decreasing since that time.