The Business Blog at Intuitive.com

Dave Taylor has been involved with the online world since 1980 and is recognized globally as an expert on both technical and business issues. He has been published over a thousand times, launched four Internet-related startup companies, has written twenty business and technical books and holds both an MBA and MS Ed. He's a columnist for the Boulder Daily Camera and Linux Journal and frequently appears in other publications both online and in print. Additionally, Dave maintains four weblogs: The Business Blog at Intuitive.com, Ask Dave Taylor, Dave On Film, and GoFatherhood. Based in beautiful Boulder, Colorado, Dave is an award-winning speaker, sought after conference and workshop participant and frequent guest on radio and podcast programs, as well as active member of his community and busy single father to three children.

Thinking about the strategic petroleum reserve

So I thought "let's do some math..."

According to this article in the New York Times, the current price of oil is "$28.66 per barrel". Let's assume that our strategic petroleum reserve (SPR as it's called) isn't at 700 million barrels, but at 650 million barrels. That calculates out to a cool $18.6 billion in petroleum.

According to the U.S. Census Bureau, there are 290.5 million people in the United States. This means that there are 2.2 barrels of oil for each of us, worth $64.13 or so. The Census Bureau also indicates that there are over 200 million cars registered in the United States, which means that there are 3.25 barrels of petroleum per vehicle.

But let's look at this a bit differently instead. Again according to the BusinessWeek article, 700 million barrels cover our petroleum needs in this country for 313 days, which means that we consume 2.2 million barrels daily. Meanwhile, according to the Department of Energy,"for the first 11 months of 2002, Iraqi crude oil production averaged 2.02 million bbl/d". I find a remarkable synchronicity between the amount of oil produced in Iraq daily (experts conservatively estimate Iraqi fields could produce over 3 million barrels daily, and their untapped reserve is estimated at above 112 billion barrels) and the amount consumed daily in the United States.

Imagine... if we just annexed Iraq, that one nation could cover all our oil needs, allowing us to completely ignore the already-dying OPEC and even the Russian push for us to buy their own domestically drilled petroleum. Further, with 112 billion untapped, this means that we could keep our current greedy oil consumption at the same level for 139 years. Scary, no?

Perhaps this is what the American automakers have anticipated with their contempt for mileage improvements in cars. It's appalling, and has been since the defeat of the CAFE standards:

"In mid-February, GM, Ford, and Daimler-Chrysler told the National Highway Traffic & Safety Administration, which enforces fuel economy standards, that they can't meet its proposed rules to raise truck and SUV mileage. That plan, to raise combined truck fuel economy from 20.7 to 22.2 miles per gallon by 2007, is just too challenging and too costly, the Big Three argue."

To get out of this loop, surely electric vehicles, gas/electric hybrids, and just plain improved gas mileage are an important step? And the American car makers say "oh, it's too much hassle and we don't want to do it so can we have another exemption for ten years, please"?

And meanwhile Americans are agitating towards the French because they admit that they have an economic interest in Iraq. Like we don't?

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