The answer appears to be no and yes. No, we don’t import that much oil from Libya currently, but yes, Libya has huge reserves, the largest in Africa, of light sweet crude that will no doubt play a role in the industrialized world in the future.
According to Reuters, Libya is estimated to have lost at least two thirds of its production capacity since the fighting between the rebels and Gaddafi’s forces began, but their exports to the U.S. amounts to only 5% of their normal production. Approximately 32% of their oil is exported to Italy, 14% goes to Germany, 10% to France, 10% to China, and as mentioned previously, 5% to us.
In a previous post, I mentioned that Saudi Arabia has offered to pick up the slack by increasing their production, but so far, this offer hasn’t been enough to hold the line on oil prices, which are trading ever higher, at $107.38 per barrel, as I write, according to Bloomberg. It seems that buyers and traders of crude have lost confidence that the Saudis can make good on their promises.
Libya, however, is still important in the grand scheme of things. Because of the fact that the countries mentioned above import a lot of their oil from Libya, and Libya’s production is way down, those countries have to make up the shortfall in imports by turning elsewhere, Right now, buyers are saying they can make up the shortages by turning to Nigeria, (which has enough social unrest to fill a blog of its own, and which also provides a good percentage of the oil we use here), and Azerbaijan. Both countries produce the same type of low-sulphur crude as Libya.
Meanwhile, according to Platts Energy Week, the Libyan rebels are saying they can continue exporting from the oil fields they have captured, but it’s not clear that they have control of the oil terminals from which the crude is shipped. Adding to their difficulties is the fact that those who underwrite insurance on the oil tankers visiting Libyan ports have seen fit to raise their premiums rather dramatically. (Can you blame them?) This, of course, makes it more expensive for the shippers to get the oil out of Libya. Right now, no crude is shipping from rebel-held ports.
So, from where exactly do we import most of our oil? According to the Department of Energy, here are the top ten countries from which we get our crude:
1. Canada (I’ll bet you’re surprised; I was too. Ah, our good friends to the north…)
2. Mexico (There are questions about production levels.)
3. Saudi Arabia (Here’s hoping they have as much oil as they say they do. See previous post.)
4. Nigeria (Quieter recently, but has been the scene of major political unrest.)
5. Venezuela (Calls us “Imperialists.” Not a big fan of the U.S. Their leader, Hugo Chavez, is currently on a tour of South America, stirring up anti-American sentiment.)
6. Algeria (Protests, riots, and bloodshed, like so many other mid-east countries.)
7. Colombia (Having some problems with pipeline attacks.)
8. Angola (Richer and happier now that the price of their oil is up. Seemingly stable.)
10. Ecuador (Sends over 50% of their crude exports to the U.S. Seemingly stable.)
Even if Libya is not on the list as a big exporter to the U.S., it would be in our best interests if some sort of peaceful settlement could be reached and Libya could go back to “taking care of business” as soon as possible. Only about half of the countries from which we import the bulk of our crude could be characterized as stable and friendly to U.S. interests, and now we’ll be competing against Europe for Nigerian oil — if they do indeed turn to Nigeria to take up the slack for Libya’s lost oil exports.
Meanwhile, there are questions about drilling here at home. Are we drilling everywhere we can, or are we paying other countries to drill for us? There’s a bit of controversy about our involvement with Brazil’s nationalized oil interests, and why aren’t we using that money to drill in U.S. waters. You probably know the answer already – environmental concerns and costs. For a more comprehensive discussion of the “drill baby, drill” issue, see Kenneth Rapoza’s blog entry for Forbes, dated March 31.
As you can see, oil importing and exporting is a complex topic, but I think it’s very important for us to have a basic understanding of something as vital to us as this. We’re absolutely, positively dependent on these foreign suppliers to maintain our American way of life — at least for now… at least until we can somehow gain energy independence, and it looks as if that won’t be happening any time soon.