With the 2020 Presidential Election looming, and with many claims and counterclaims about a president’s impact on the oil industry, I thought it might be of interest to review the history of U.S. oil production and consumption over the past 50 years. Here are the highlights from each president’s term in office.
Richard Nixon was inaugurated as the 37th president on January 20, 1969. When President Nixon took office, U.S. oil production was nearing a peak after over 100 years of increasing production. Imports made up 10% of U.S. consumption. In 1970, U.S. oil production reached 9.6 million barrels per day (BPD) and began a long, steady decline.
Richard Nixon began his second term on January 20, 1973. U.S. oil production had declined to 9.2 million BPD while consumption had increased by 3 million BPD from the first year of Nixon’s first term. As a result, oil imports would more than double during Nixon’s presidency, and American citizens would learn the danger of the dependence on imports with the OPEC oil embargo of 1973.
Gerald Ford was inaugurated as the 38th president on August 9, 1974 after Nixon resigned in disgrace. During President Ford’s term in office, domestic oil production continued to decline. U.S. oil consumption and imports continued to grow, and both were at all-time highs during Ford’s last year in office.
Jimmy Carter was inaugurated as the 39th president on January 20, 1977. Recent trends in consumption, production, and imports all reversed themselves during President Carter’s term. Consumption fell by 2%, U.S. production increased by 6%, and imports, after initially rising to record highs during his first year in office, were a fraction of a percentage lower at the end of his term than during Ford’s last year in office. Factors beyond Carter’s control, such as the Iranian Revolution and the Iran–Iraq War, heavily influenced the oil markets.
Ronald Reagan was inaugurated as the 40th president on January 20, 1981. Oil consumption continued to decline during most of President Reagan’s first term, and oil production crept back to levels that had not been seen in a decade. Oil imports fell by 35% during his first term.
Ronald Reagan began his second term on January 21, 1985. The trends from his first term all reversed themselves, as consumption rose 10%, domestic production fell by 8%, and oil imports increased by 49%.
George H. W. Bush was inaugurated as the 41st president on January 20, 1989. Consumption fell slightly during his term, but domestic production fell even more, down 12%. Imports increased by 19%, back above 6 million BPD for the first time since the 1970s.
Bill Clinton was inaugurated as the 42nd president on January 20, 1993. During his first term, consumption increased by another 7%, domestic production fell by 10%, and imports increased by another 23%, exceeding 7 million bpd for the first time in U.S. history.
Bill Clinton began his second term on January 20, 1997. His second term trends were almost identical to those of his first term. Consumption rose by another 8%, domestic production fell by another 10%, and imports increased by an additional 21%. Consumption and oil imports were at all-time highs, and production had fallen 40% from the 1970 production peak.
George W. Bush was inaugurated as the 43rd president on January 20, 2001. During his first term, consumption climbed above 20 million BPD for the first time in the nation’s history. Imports also reached new highs, above 10 million BPD. Domestic production continued to fall.
George W. Bush began his second term on January 20, 2005. During Bush’s second term, consumption began to decline as the nation entered a recession and oil prices reached record highs. Imports fell back to below 10 million BPD. The decline in domestic production continued, albeit at a slower rate of decline than during his first term. This marked the first trickle of oil production from hydraulic fracturing, which would make a major impact during the terms of the next two presidents. During Bush’s last year in office, the level of imports reached just over 50% of U.S. consumption.
Barack Obama was inaugurated as the 44th president on January 20, 2009. The economic sluggishness initially continued, but the impact of hydraulic fracturing began to be felt in President Obama’s first year in office. In a reversal of the long decline that began in 1970, crude oil production would rise all four years of Obama’s first term.
President Obama began his second term on January 21, 2013. The fracking boom caused oil production to accelerate until 2015. But then overproduction led OPEC to initiate a price war that ultimately crashed prices and production. Production began to decline in 2015, but 2016, the last year of Obama’s second term, was the first year of his presidency that annual oil production declined.
Between 2009 and 2015 oil production had increased by 4.4 million BPD. This was the fastest increase in oil production in U.S. history, and marked the largest increase in oil production during a single term of any president. If natural gas liquids (NGLs) are included, the gains during Obama’s first seven years were 6 million BPD. U.S. net imports of finished products like gasoline turned into net exports during Obama’s second term, and next imports of finished products plus crude oil fell by over 6 million BPD.
Donald Trump was inaugurated as the 45th president on January 20, 2017. Oil production had declined during President Obama’s last year in office as the average annual price of West Texas Intermediate (WTI) fell to $43.34/bbl. But in 2017 that rose to $50.79/bbl, and then to $65.20/bbl in 2018. Oil production followed prices higher. During the first three years of President Trump’s first term, annual U.S. oil production gained 3.4 million BPD. Net imports of crude oil and finished products turned into net exports in late 2019. U.S. oil production eclipsed the previous 1970 peak (although if you include NGLs, that peak was eclipsed in 2013).
But then the Covid-19 pandemic crushed oil demand. Now, less than a month before the election, U.S. oil production is at 10.5 million BPD, a significant decline from the 12.2 million BPD of 2019.
The net impact of the past 50 years of U.S. Presidents was a long, slow decline of oil production that was only reversed when the hydraulic fracturing revolution began.
U.S. oil production didn’t fall under Bush and rise under Obama based on the policies of these presidents. Production behaved according to policies that had been put in place years earlier, and in accordance with the behavior of oil prices in previous years. Jimmy Carter experienced a rise in oil production because the Alaska Pipeline, approved by Nixon, was completed while Carter was in office. Obama and Trump experienced a rise in oil production following years of climbing oil prices, which led to a fracking boom.
Presidents publicly fretted for decades about the loss of energy independence for the U.S. They tried many different approaches to solving this problem, from serious intervention in the energy markets to letting the free market solve the problem. Many billions of dollars were spent on programs with the intent of eliminating dependence on foreign oil.
Yet in 1969, Americans depended on oil imports for 10% of their consumption, and in 2008 that number had risen to over 50% of consumption. That trend was only reversed when fracking caused U.S. oil production to surge.
Thus, a president may have some impact on U.S. oil production, but it is mostly a factor of influences well beyond their control.
Culled from Oil Price International, London.
NNPC, UTM Seal Deal On First Indigenous Floating LNG Project
Nigerian National Petroleum Corporation (NNPC) and UTM Offshore have signed a Heads of Terms (HoT) agreement for the construction of the nation’s first indigenous floating LNG project.
The agreement, described as a major step towards bolstering Nigeria’s energy security and promoting the utilisation of its abundant gas resources, was signed on July 20, in Abuja.
It covers the 1.5 million tonnes per annum (mtpa) floating LNG project which is seen as a “must-do” initiative for Nigeria.
Signing the agreement, NNPC’s Group Chief Executive Officer (GCEO), Mele Kyari, expressed the company’s readiness to secure gas feedstock towards the project.
Group Managing Director UTM Offshore Ltd., Julius Rone, who described the deal as a milestone achievement, said it showcased the capability of indigenous companies to collaborate with world-class energy conglomerates to drive growth in Nigeria’s energy sector.
Rome further explained that apart from significantly cutting down on gas flaring and supporting the country’s commitment to reducing carbon emissions, the project would also create over 7,000 job opportunities, contributing to the nation’s economic growth and development.
For this project, UTM Offshore awarded the contract for the conceptual design service to JGC Corporation back in 2021.
It would be recalled that in late 2022, the consortium of JGC and Technip Energies secured the front-end engineering and design (FEED) contract.
The project was also supported by $5 billion from the African Export-Import Bank (Afreximbank).
Earlier this year, however, NNPC signed a Memorandum of Understanding (MoU) with Norwegian Golar LNG, an owner and operator of marine LNG infrastructure, to build a floating LNG plant in Nigeria.
‘NNPC Spent N15b To Reconstruct Lagos-Badagry Expressway’
The Nigerian National Petroleum Company Limited (NNPC Ltd.) has disbursed N15 billion for the reconstruction of the Lagos Badagry Expressway under the Federal Government Road Infrastructure Tax Credit (RITC) Scheme.
The N15 billion represents a 100 per cent payment of the funding of the Lagos-Badagry Road rehabilitation under the tax credit funding of the NNPC Ltd.
Group Chief Executive, NNPC, Mr Mele Kyari, made this known when he led NNPC’s management team with some top government officials to inspect the ongoing rehabilitation and expansion of Lagos-Badagry Expressway (Agbara Junction-Nigeria/Benin Border).
The road under rehabilitation is being funded by the NNPC Ltd. under the Federal Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme.
The execution of the scheme is being carried out in collaboration with the Federal Ministry of Works and Housing as the supervisor and Federal Inland Revenue Service (FIRS) for NNPC’s tax obligations deductions.
This is in response to address the plight faced by petroleum products marketers in transportation which affects nationwide distribution.
Kyari said the fund disbursed was part of the N621.24 billion earmarked for the reconstruction of 21 roads nationwide under the scheme.
He expressed satisfaction over the stage of the road development.
“We are covering 1,804.6mkm across the country and taking another set of over a trillion naira investment on infrastructure in Nigeria, believing that with the tax credit system which Mr President has put in place, very soon there will be massive change.
“NNPC as the enabler will consider from its cash flow and fund whatever FIRS and Ministry of works approve for the company”, he said.
The Minister of Works and Housing, Mr Babatunde Fashola, represented by the Director, Highways, Roads and Rehabilitation of the Ministry, Mr Folorunsho Esan, said the intervention of the NNPC sped up the reconstruction of the expressway.
Esan said the project was 40 per cent completed.
“In the next 12 months we should be able to deliver this project because the drainages are in place, just for earth works and pavement works, it cannot take us more than 12 months,” he said.
Speaking on the gridlock being caused by the Lagos-Ibadan Expressway project, he said the contractor would clear all impediments and move out of site by December 15 to make the highway free for Yuletide.
Oil Marketers Urge Buhari To Crash Diesel Price
Petroleum marketers under the platform of Natural Oil and Gas Suppliers Association of Nigeria (NOGASA) rose from their 2nd National Executive Council (NEC) meeting last week, within a plea to President Muhammadu Buhari to direct the Central Bank of Nigeria (CBN) to make dollars available at official rate to oil marketers.
This, they said, will enable them import diesel, end petrol scarcity, and ultimately save the Nigerian economy from sinking, saying that dollar support should be available till Dangote Refinery comes on stream later in the year.
The association, among others, urged the National Assembly to immediately enact a Bill for the establishment of Energy Bank for easy transaction in petroleum products in the sector.
National President of the Association, Mr Benneth Korie, who briefed the media after the NEC meeting in Abuja, noted that the bulk of the operational challenge peppering marketers and depot owners spring from expensive diesel which hovers around N850/litre.
While thanking President Muhammadu Buhari for approving a higher bridging cost payment to transporters, Korie said the operators’ challenges were far from over as oil marketers and depot owners spend about N20 million weekly on diesel to power their operations, thus eroding their profits.
The association urges the National Assembly to review the policy of taxation as it affects petroleum products supply and distribution chain.
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