SAFE Launches Energy Security Fact Pack
- Threats to oil supplies in Iraq, continued political instability in Libya, and even the crisis in Ukraine resulted in upward pressure on, and volatility in, global oil prices during Q2. Brent fluctuated between a low of $103 per barrel and high of $115, WTI a low of $91 and high of $107.
- U.S. oil production rose by a substantial 1.6 mbd in Q2 year-over-year, and consumption remained effectively flat as net oil imports declined a further 1 mbd to approximately 5.5 mbd. The net export of petroleum products increased 0.6 mbd year-over-year.
- The demand-supply balance in the global oil market remained tight as growth in U.S. supplies helped offset record levels of unplanned outages (above 3 mbd), primarily in Libya, Iran, Iraq, Syria, and Nigeria. OPEC spare production capacity represented just marginally higher than 2 percent of global consumption needs.
- Although U.S. sales of alternative fuel vehicles continued to rise in Q2, the oil intensity of the economy remained largely unchanged since 2012, and U.S. household expenditures stayed above $400 billion (annualized).
Stability in Iraq remains an important concern heading into the third quarter, though oil production there remained steady in Q2 and increased year-over-year. Moreover, Iraq’s growing output means it now provides over 3.5 percent of global supply, a level not seen since the late 1980s. It’s a crucial country for the oil market over the long term and currently expected to account for 60 percent of the increase in OPEC crude oil production capacity through 2020.Though violence between the Iraqi government and the Islamic State in Iraq and Syria (ISIS) continues to draw global attention, other developments in the Middle East and elsewhere also loom as threats to oil and energy markets as well as the global economy. Venezuela, for example, faces political and economic challenges, Nigeria experiences sabotage and siphoning on an enormous scale, and any return of Libya’s oil output remains uncertain. Over the longer term, China’s aggressiveness in the South China Sea, sanctions on Russia’s economy, and even regulatory uncertainty in countries like the United States could threaten output (although to differing extents). Such threats will likely ensure markets remain tight—and prices high and volatile. In the United States, domestic production is up 16 percent, increasing by 1.1 mbd in Q2 year-over-year. Higher production at home combined with decreased imports has helped to cushion the impact of supply shortages elsewhere. Meanwhile, increases in U.S. petroleum product exports rose by 0.6 mbd year-over-year to reach 1.6 mbd. Rising U.S. oil production continues to strengthen our country’s energy security, but heavy oil use, particularly in the transportation sector, leaves the economy vulnerable to high and volatile oil prices. The United States moved from 6th to 5th, out of 13 countries, in the latest update of SAFE’s Oil Security Index. U.S. dependence on petroleum fuels in the face of such volatility and high prices reinforces the need to expand the use of more price-stable sources such as electricity and compressed natural gas (CNG). The Energy Security Fact Pack shows that plug-in electric vehicle (PEV) sales and alternative fuel light-duty vehicle sales continued to increase year-over-year, signaling a small but ongoing positive trend toward a more fuel-diverse transportation sector. Today, 19 models of alternative fuel vehicles are available to American drivers, more than a three-fold increase from 2011. Approximately 34,000 plug-in electric vehicles were sold in Q2, a significant portion of the over 225,000 electric vehicles on the roads today. In addition, the average fuel economy rating of new vehicle sales increased to 25.5 miles per gallon, 20 percent higher than 2009 levels, another positive for the U.S. transportation sector. For a detailed look at the latest trends in energy security and oil dependence, be sure to download the SAFE Energy Security Fact Pack in its entirety here.
May 12, 2015