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The Changing Anatomy of U.S. Oil Imports Over the Last Decade

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The Changing Anatomy of U.S. Oil Imports Over the Last Decade

The Changing Anatomy of U.S. Oil Imports

In 10 short years, Canada has replaced the once mighty OPEC

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

OPEC was once a name that made world leaders shake in their boots.

In the early 1970s, the infamous oil cartel controlled more than 50% of global market share. The power of the cartel was also clear – in response to the Yom Kippur War of 1973, many OPEC countries (that were a part of OAPEC – the Organization for Arab Petroleum Exporting Countries) initiated production cuts and an oil embargo against Western countries.

Oil prices quadrupled from $3 to $12, and OPEC producers raked in the cash.

Meanwhile, the West was in a panic. Emergency energy rations were imposed, currencies were devalued, gasoline sales were restricted, and Sunday driving was banned in seven European countries.

No Longer Mighty?

The organization still has some influence, though it seems to be harder to come by.

After many months of squabbling, OPEC recently came to its first deal to cut production since 2008. That’s kept the oil price above $50/bbl, but gains will be effectively capped once low-cost shale producers ramp up production again.

OPEC often touts its 81% share of global “proven” reserves as a sign of its might:

OPEC's market share of crude oil reserves.

However, it seems OPEC’s peak influence is in the rear-view mirror due to several external factors.

To start with the obvious, oil is slowly waning in importance in the global energy mix. According to the EIA, oil made up 34% of total global energy demand in 2010. By the year 2040, the EIA expects this share will be closer to 30%, though things could happen faster if the technology behind renewables and batteries makes a bigger impact than expected.

Next, U.S. domestic production has almost doubled because of the shale and fracking revolution. In 2008, the U.S. produced 5.0 million bpd, and in 2015 the country averaged 9.4 million bpd.

Lastly, as you can see on the chart, accelerated development of Canada’s Oil Sands has enabled the U.S. to buy any imports needed from Canada instead of the Middle East. In 2005, Canada only supplied 16.1% of U.S. oil imports, but Canada is now the major supplier of oil to the U.S. with a massive 43.0% share.

With Donald Trump taking the reins in 2017, Obama’s decision on the Keystone XL pipeline could easily be reversed and then fast-tracked for completion. Such a move could bump Canada’s share of U.S. oil imports even higher, downsizing influence from OPEC even more.

Internal Friction

It’s not just a changing global macro environment that is hurting OPEC’s influence.

Internally, their members have shifting goals and needs, and this has made the organization largely dysfunctional over recent years.

The biggest factor? It’s Saudi Arabia, a country that is the largest oil producer in the group, but also a global low-cost leader. It has outsized influence in the cartel, but it also has way bigger margins to play with. This means that sometimes maintaining market share is more important than maximizing profit margins for the Saudis, and other countries disagree with this stance.

With the Saudis finally capitulating to a production cut, maybe the OPEC forces can remain aligned over the near-term. Then again, it might be a temporary fix as OPEC influence continues to slowly sink – especially now that OPEC as a whole is only the second biggest supplier of imports to the U.S., and shrinking.

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Energy

Visualizing China’s Energy Transition in 5 Charts

This infographic takes a look at what China’s energy transition plans are to make its energy mix carbon neutral by 2060.

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China Energy Mix

Visualizing China’s Energy Transition in 5 Charts

In September 2020, China’s President Xi Jinping announced the steps his nation would take to reach carbon neutrality by 2060 via videolink before the United Nations Assembly in New York.

This infographic takes a look at what this ambitious plan for China’s energy would look like and what efforts are underway towards this goal.

China’s Ambitious Plan

A carbon-neutral China requires changing the entire economy over the next 40 years, a change the IEA compares to the ambition of the reforms that industrialized the country’s economy in the first place.

China is the world’s largest consumer of electricity, well ahead of the second place consumer, the United States. Currently, 80% of China’s energy comes from fossil fuels, but this plan envisions only 14% coming from coal, oil, and natural gas in 2060.

Energy Source20252060% Change
Coal52%3%-94%
Oil18%8%-56%
Natural Gas10%3%-70%
Wind4%24%+500%
Nuclear3%19%+533%
Biomass2%5%+150%
Solar3%23%+667%
Hydro8%15%+88%

Source: Tsinghua University Institute of Energy, Environment and Economy; U.S. EIA

According to the Carbon Brief, China’s 14th five-year plan appears to enshrine Xi’s goal. This plan outlines a general and non specific list of projects for a new energy system. It includes the construction of eight large-scale clean energy centers, coastal nuclear power, electricity transmission routes, power system flexibility, oil-and-gas transportation, and storage capacity.

Progress Towards Renewables?

While the goal seems far off in the future, China is on a trajectory towards reducing the carbon emissions of its electricity grid with declining coal usage, increased nuclear, and increased solar power capacity.

According to ChinaPower, coal fueled the rise of China with the country using 144 million tonnes of oil equivalent “Mtoe” in 1965, peaking at 1,969 Mtoe in 2013. However, its share as part of the country’s total energy mix has been declining since the 1990s from ~77% to just under ~60%.

Another trend in China’s energy transition will be the greater consumption of energy as electricity. As China urbanized, its cities expanded creating greater demand for electricity in homes, businesses, and everyday life. This trend is set to continue and approach 40% of total energy consumed by 2030 up from ~5% in 1990.

Under the new plan, by 2060, China is set to have 42% of its energy coming from solar and nuclear while in 2025 it is only expected to be 6%. China has been adding nuclear and solar capacity and expects to add the equivalent of 20 new reactors by 2025 and enough solar power for 33 million homes (110GW).

Changing the energy mix away from fossil fuels, while ushering in a new economic model is no small task.

Up to the Task?

China is the world’s factory and has relatively young industrial infrastructure with fleets of coal plants, steel mills, and cement factories with plenty of life left.

However, China also is the biggest investor in low-carbon energy sources, has access to massive technological talent, and holds a strong central government to guide the transition.

The direction China takes will have the greatest impact on the health of the planet and provide guidance for other countries looking to change their energy mixes, for better or for worse.

The world is watching…even if it’s by videolink.

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Energy

Visualizing the Flow of U.S. Energy Consumption

From renewables to fossil fuels, we’ve visualized the diverse mix of energy sources that powered U.S. energy consumption in 2020.

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America Energy Consumption Natural Gas

Breaking Down America’s Energy Consumption in 2020

The United States relies on a complex mix of energy sources to fuel the country’s various end-sectors’ energy consumption.

While this energy mix is still dominated by fossil fuels, there are signs of a steady shift to renewable energy over the past decade.

This radial Sankey diagram using data from the EIA (Energy Information Administration) breaks down U.S. energy consumption in 2020, showing us how much each sector relies on various energy sources.

The Balance of Energy Production and Consumption

In 2019 and now in 2020, America’s domestic energy production has actually been greater than its consumption—a development that hasn’t taken place since 1957.

Last year’s numbers were severely impacted by the COVID-19 pandemic, seeing a 5% drop in energy production and a 7% drop in consumption compared to 2019. Total energy production and consumption for 2020 came in at 95.75 and 92.94 quads respectively.

The energy amounts are equalized and measured in quadrillion BTUs (British thermal units), also known as quads. A quad is a huge amount of energy, equivalent to 183 million barrels of petroleum or 36 million tonnes of coal.

So how is America’s overall energy production and consumption split between energy sources?

U.S. Energy Production and Consumption Share by Source

Energy SourcePercentage of U.S. Energy ProductionPercentage of U.S. Energy Consumption
Petroleum32%35%
Natural Gas36%34%
Renewable Energy12%12%
Coal11%10%
Nuclear9%9%

Source: IEA

America’s new margin of energy production over consumption has resulted in the country being a net total energy exporter again, providing some flexibility as the country continues its transition towards more sustainable and renewable energy sources.

Fossil Fuels Still Dominate U.S. Energy Consumption

While America’s mix of energy consumption is fairly diverse, 79% of domestic energy consumption still originates from fossil fuels. Petroleum powers over 90% of the transportation sector’s consumption, and natural gas and petroleum make up 74% of the industrial sector’s direct energy consumption.

There are signs of change as consumption of the dirtiest fossil fuel, coal, has declined more than 58% since its peak in 2005. Coinciding with this declining coal dependence, consumption from renewable energy has increased for six years straight, setting record highs again in 2020.

However, fossil fuels still make up 79% of U.S. energy consumption, with renewables and nuclear accounting for the remaining 21%. The table below looks at the share of specific renewable energy sources in 2020.

Distribution of Renewable Energy Sources

Renewable Energy Source2020 Energy Consumption in QuadsShare of 2020 Renewable Energy Consumption
Biomass4.5239%
Wind3.0126%
Hydroelectric2.5522%
Solar1.2711%
Geothermal0.232%

Source: IEA

The Nuclear Necessity for a Zero-Emission Energy Transition

It’s not all up to renewable energy sources to clean up America’s energy mix, as nuclear power will play a vital role in reducing carbon emissions. Technically not a renewable energy source due to uranium’s finite nature, nuclear energy is still a zero-emission energy that has provided around 20% of total annual U.S. electricity since 1990.

Support for nuclear power has been growing slowly, and last year was the first which saw nuclear electricity generation overtake coal. However, this might not last as three nuclear plants including New York’s Indian Point nuclear plant are set to be decommissioned in 2021, with a fourth plant scheduled for retirement in 2022.

It’s worth noting that while other countries might have a higher share of nuclear energy in their total electricity generation, the U.S. still has the largest nuclear generation capacity worldwide and has generated more nuclear electricity than any other country in the world.

Converting Energy to Electricity

The energy produced by nuclear power plants doesn’t go directly to its end-use sector, rather, 100% of nuclear energy in the U.S. is converted to electricity which is sold to consumers. Along with nuclear, most energy sources aside from petroleum are primarily converted to electricity.

Unfortunately, electricity conversion is a fairly inefficient process, with around 65% of the energy lost in the conversion, transmission, and distribution of electricity.

This necessary but wasteful step allows for the storage of energy in electrical form, ensuring that it can be distributed properly. Working towards more efficient methods of energy to electricity conversion is an often forgotten aspect of reducing wasted energy.

Despite the dip in 2020, both energy production and consumption in the U.S. are forecasted to continue rising. As Biden aims to reduce greenhouse gas emissions by 50% by 2030 (from 2005 emission levels), U.S. energy consumption will inevitably continue to shift away from fossil fuels and towards renewable and nuclear energy.

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