U.S. President Donald Trump vowed to make America free from OPEC oil, but the country's oil imports from the cartel declined 60 percent in seven years under the Obama administration, data compiled by Anadolu Agency showed on Wednesday.
With a promise to "unleash an energy revolution" during his campaign, Trump wants to "achieve energy independence from the OPEC cartel," a White House statement read hours after he took office on Friday.
Trump's promise to rid the U.S.' reliance on OPEC, however, is not new. It had been repeated by one American president after another since the early 1970s.
After the U.S. supported Israel in the Yom Kippur War, OPEC put an oil embargo in 1973 on the U.S. and its western allies, who were highly dependent on crude produced by Arab countries.
Americans "have an energy crisis," President Richard Nixon said in November 1973, and promised to end his country's dependency on oil imports by developing potential for domestic energy production.
With rising crude prices worldwide, U.S. imports from OPEC reached all-time record levels of 6.6 million barrels per day (mbpd) in July 1977, from 3.5 mbpd when the embargo first began in October 1973, marking an 88 percent increase, according to the Energy Information Administration (EIA).
President Gerald Ford could not find an answer for U.S. dependency on OPEC oil, but his successor, the 39th President Jimmy Carter created the U.S. Department of Energy, and introduced energy and fuel efficiency policies, including the installation of solar panels on the roof of the White House, and advised Americans to lower their consumption.
He defined the American effort against fuel shortages in 1977 as the "moral equivalent of war" and brought price control in gas stations, where long lines were formed across the country.
When Ronald Reagan took office in January 1981, two of his first acts were to rid the price control mechanism, and sign an executive order to abolish federal controls on production and distribution of oil and gasoline.
- Global oil market reshaping
When the Iran-Iraq war began in September 1980, U.S. oil imports from OPEC were almost at 3.7 mbpd, EIA data shows. The war limited the output of two of the most significant oil producers in the world, out of which came new actors onto the global oil market.
Mexico, Venezuela, the U.K. and Norway increased their individual output to fill the void made from Iran and Iraq. The new oil producing countries were both geographically closer to the U.S, and unlike Middle Eastern producers, were free from conflict, thus providing supply security for America's demand.
As OPEC's crude production and power as a cartel declined, the U.S.' crude imports from the cartel declined to an all-time record level of 1 mbpd in February 1983, according to EIA data.
However, with the demise of the Soviet Union and Iraq invading Kuwait, security concerns in the Middle East reemerged.
- U.S.-Saudi alliance
Upon taking office in January 1989, the 41st President George H. W. Bush, who had oil experience spending his earlier years in Texas, was well aware that neither domestic output nor imports from new oil producing countries could satisfy the U.S.' booming energy consumption.
When Iraq invaded Kuwait in 1990, Bush sent his Defense Secretary Dick Cheney to Saudi Arabia, along with some 600,000 American troops, to secure the Kingdom from Saddam Hussein, and formed an alliance with the Saudi royal family to establish crude supply security for the U.S.
As a result, the U.S.' dependence on OPEC oil began to rise once again, reaching 4.9 mbpd in August 1990, and never falling below 3.5 mbpd until 2013, according to EIA data.
During the wars in Afghanistan and Iraq under the 43rd President George W. Bush, and his Vice President Dick Cheney, who was the CEO of oil giant Halliburton from 1995 to 2000, the U.S.' oil imports from OPEC further increased, reaching 6.4 mbpd when Bush left office in January 2008.
- Shale oil revolution
In 2008, new techniques for oil production, such as horizontal drilling and hydraulic fracturing, became slowly more common across the U.S., paving the way for an unprecedented acceleration in domestic crude production.
The U.S. produced an average of 5.1 mbpd of crude at the beginning of 2008. This almost doubled and jumped to 9.6 mbpd in April 2015, during the presidency of Barack Obama.
During the same period, U.S. oil imports from OPEC decreased from 6.4 mbpd to 2.5 mbpd, marking a 61 percent decline, the EIA figures show.
The U.S.' dependency on OPEC crude oil was finally overcome.
- Where are we today?
The latest data shows that domestic crude production in the U.S. stood at 8.8 mbpd in October 2015, while the country's oil imports from OPEC were 3.3 mbpd.
The reason behind the 800,000 barrels per day of decline in U.S. domestic output and the 800,000 barrels per day of increase in OPEC imports between April 2015 and October 2016 was obvious -- plummeting oil prices.
Due to global oversupply and low demand worldwide, oil prices began falling in mid-2014 from $115 a barrel down to below $30 per barrel in January 2016.
Shale oil production, which has a higher break-even price than Middle Eastern oil output, was hurt tremendously during the slump, as billions of dollars were lost in the American oil industry.
American refineries preferred the cheaper Middle Eastern oil and began importing more and more from OPEC countries, instead of the domestic crude that was more expensive because of higher production costs.
While OPEC refused to cut output until November 2016 to push U.S. shale oil out of the global market, American producers adapted to the changing market conditions, and they seem to have learned to live with an average of around $50-$55 per barrel at the moment.
- Where do we go from here?
With OPEC trimming its supply by 1.2 mbpd, the global glut of supply is expected to decline and oil prices are anticipated to increase gradually, which in return would give more incentive for American producers to raise their output.
Trump's plans to lower regulations on the American oil industry and to "unleash an energy revolution" is expected to expedite this process, and further lower the U.S.' dependency on OPEC oil, according to experts.
By Ovunc Kutlu in New York
Anadolu Agency
ovunc.kutlu@aa.com.tr
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