The US as Leading Oil Producer - Essay Example

of the of the The United s have gained the global prominence as leader in the production of oil in this century although there are critical setbacks on its level of distribution, based on reports. But this is challenged by vulnerabilities at all fronts too, ranging from market condition, quality control, threats, climate changes, political environ, and damages of infrastructures done by hurricanes. US: Leading oil producer Recent data showed that Texas topped by 37% in the production of oil which statistically doubled its share since 2007as its now getting about 2.6 million barrels per day (MBD) (Styles, 2013). Alaska, California, Louisiana succeedingly ranked in its respective slate in 1989 for generating 41% of oil but have degraded its supply contribution to 17% of total oil output recently (Styles, 2013). This decline is supplemented with the development of extractive industry at New Dakota which replaced Alaska in 2012and is contributed further by Colorado, Oklahoma and New Mexico’s rigs (Styles, 2013). The risk however is showed by oil generation reduction when the principal pipeline of onshore oil production became a funnel for oil importation (Styles, 2013). There is imminent reduction of New Mexico’s oil supply too following the Deepwater Horizon incident in 2010 (Styles, 2013). Economists recognized that the challenged nowadays is how the oil supplies from the upper part of the country to be distributed in the regions needing more of oil supply efficiency for domestic market demands (Styles, 2013). Such meant that the company therefore should be re-strategizing its ways to balance the distribution of oil from region with crude surplus to other areas by transporting or shipping the refined products via multiple tankers to the Midwest (Styles, 2013). Recognizing that there is reduced supply after more than two decades of extraction, the challenge on oil production and efficiency distribution is doubled, notwithstanding fact that there are Oil Companies now eyeing oil resource in Monterey deposit (Styles, 2013). Suffice it to say, there is further challenges in the participation of the states in the west coast and hence, economist purviewed that California, Oregon, Nevada, and Washington will be primordially affected when oil production and distribution disruption happens (Styles, 2013). As an adviser to the consultant of the oil industry sector, the following vulnerabilities are therefore significant for consideration: 1. Improving quality control for oil generation and control.- Oil companies have been confronting problems on facilities and pipelines safety amid issues that have happened on leakage or destruction in some significant part of the generation or oil refinery plants that caused and cost significant amount of destruction. 2. Problems involving social acceptability of tapping oil reserves- Strong sentiments on climatic changes, environmentalism and protection of indigenous peoples rights, as well as strong presence of armed elements over their lands are major causes of resistance from regions where proposed tapping of oil reserves are abound. Company managers must look into these concerns and seriously deal states and communities in rigorous dialogues. They must also be ready of measures to prevent potential outbreak of violence. 3. Future oil production and distribution efficiency for the Midwest states. The significance of this matter is highly elaborated in the preceding paragraphs of this paper. 4. Adaptation to renewal energy. Review the capacity of renewable energy production of the country and valuate its supplementary contribution to meet the demands for energy for Midwest states. Evaluate if the states can opt to maximize the potentials of renewable sources of power and its feasibility to double or triple it adaption (Department of Energy, 2013). Concerns relating to climatic changes and weather patterns must be accounted for serious consideration too on how renewable energy be maximized in accord to weather patterns and challenges. 5. Climate change challenges. As the extractive industry also recognized the contribution of climatic changes and disasters major hurricanes or typhoons that brought disastrous calamity to infrastructures including the oil infrastructure (DoE, 2013). The review should include the capacity of the oil industry sector’s adaptation of national climate change planning, as well as it’s identified opportunities, as laid by the Interagency Climate Change Adaptation Task Force and Strategic Sustainability Planning based on Executive Order 13514 (DoE, 2013). It is also equally significant for the company to review its initiatives and efforts to promote energy security following the Department of Energy’s goal to respond to the challenges of using technologies supportive of the program for climate resiliency (DoE, 2013). Review must also include how the extractive industry must engage its stakeholders to adopt new policies and strategies for responsible oil use consumption (DoE, 2013). 6. Need to strengthen innovative policies and its implementation. Include in the review the states involvement and level of implementation of innovative policies that helped broaden paradigms on the maximization of advanced technologies that are perceived as climate-resilient energy to meet responsibly the market demands, whilst at the same time rigorously involve stakeholders and the market in managing demands, as well as the identified prospective market barriers (DoE, 2013). 7. Laxity in monitoring and negligence in monitoring. Review the identified measures named by the DOE and the extractive industry and how these have been integrated or implemented in varied development planning. Help identify models, tools and further measures to address vulnerabilities in the oil production via extensive research to aid company managers and state agents in making decisions to help mitigate impacts and climate-related scenarios, including the tipping points of potential irreversible changes at unpredictable scale (Styles, 2013; DoE, 2013; Energy.gov, 2013). Evaluate too the level of analysis that has been reached by the extractive sectors and the economists in the Midwest to determine their level of resilience and its capacity to mitigate the damages or loss of critical facilities, as well as the economic losses due to disruption anent in oil production and delivery (DoE, 2013, Energy.gov, 2013, Styles, 2013). 8. Lack of climate- resilient technology in extractive industry. Review the level of adaptation on the proposed transition of climate-resilient energy sector based on the measures stipulated in the Energy Policy and Conservation Act of 1975 particularly in reducing the energy demand amid the reduction of energy production efficiency (DoE, 2013; Energy.gov, 2013). Such must be viz-a-viz the context of Strategic Petroleum Reserve and Energy Conservation Program (DoE, 2013). The consultants can also look into the initial educative initiatives to improve company-stakeholders communication and information relating to vulnerabilities in the energy sector (Styles, 2013). The effectiveness of their coordination and mechanism for capacity enhancement should also be delved into. 9. Increasing security management. The political climate of neighbouring states where the oil refinery is geographically situated will affect the security of the company and will have implication too in its production or distribution in the market. Aside from this, there is also evident presence of armed groups and terrorists whose operational dynamics direct their attacks on corporation’s infrastructures. The possible closure of Strait of Hormuz has been perceived by scholar in case conflict should conflict between Iran and Israel escalate in the latter’s effort to dismantle nuclear weapon research facility (Talmage, 2008). The case will have serious implication on the use of the strait as passage of oil tankers and the same seriously pose security threat to the oil industry, one of the major sources of oil supply of US (Talmage, 2008). Security evaluation alleged that Iran has the battle capacity to conduct littoral warfare with mines, anti-ship missiles, and well-armed military defence (Talmage, 2008). The volatile condition could halt Strait of Hormuz for a long period and can therefore cause economic embargo (Talmage, 2008). US therefor must adopt a security and energy policy by prioritizing diplomatic remedies and take pro-active political support for lawful peaceful negotiations and dialogue to resolve issues relating to dismantling of nuclear research facility (Talmage, 2008). Extensive communication should be clarified for conflicting parties about the need to maintain an environment supportive for economic trade (Talmage, 2008). To keep the flow of oil produce, the following are recommended measures: a. Enforce and maximize diplomatic channels between conflicting countries and communicate the significance of maintaining the strait open for trade relations; b. Support peaceful negotiations between Iran and Israel brokered by third party state. Soft diplomacy is essential to sustain economic relations and oil flow. The use of military force to deescalate conflict and to control the strait should be the last option. Such could only be undertaken too for the best interest of the oil refineries. c. Maximize effective negotiators and those with core competency for diplomatic channels. These values are significant in negotiating and creating deals to prevent economic sabotage and embargo. d. The negotiations must be regularly monitored by the US Executive, legislative body’s committee concern on trade relations, of the DoE, State Secretary, diplomatic officials, and officials of the Department of National Defence. In the last decade, the oil and gas facilities have been confronting security problems which include terrorist attacks and natural hazards. The patterns and situations indeed seriously posed serious vulnerability to the industry. Measures should therefore be adoptive of strategic and comprehensive security management. Conclusion The oil industry is indeed confronting the challenges to meet market demands, quality control issues, climate adaptation and industrial resiliency, need to adopt on innovative technology for improved business management, serious threat on security, disturbing conflicts of nations that can potentially cause economic embargo, and the rapid changes in the market. The resolve will not only require policy formulation and enforcement but also of corporate leadership in managing performance and quality control. It also demands the use of diplomatic relations and international laws to get an environment conducive for sustained oil production and distribution in the market. The classic case of threat in the Persian and Oman gulf is among the cited issues that posed vulnerability to oil industry. However, oil trade is also about international business relations and therefore, policies and diplomatic channels can be an effective measure to deescalate tension and to discourage the use of military power as means for business pursuits. References Department of Energy (2013). US Energy Sector Vulnerabilities to Climate Change and Extreme Weather, US: Washington, pp. 1-42. Retrieved: http://energy.gov/sites/prod/files/2013/07/f2/20130716-Energy%20Sector%20Vulnerabilities%20Report.pdf Accessed: Oct. 21, 2013. Energy.gov (2013). Strategic Petroleum Reserve. US: Department of Energy, p. 1. Retrieved: http://energy.gov/fe/services/petroleum-reserves/strategic-petroleum-reserve Accessed: Oct. 21, 2013. Hirshfeld, R. (2013). Iran warns of Strait of Hormuz Closure If US Chooses War, Israel: IsraelNationalNews.com, p. 1 Retrieved: http://www.israelnationalnews.com/News/News.aspx/164555#.UmSrnNLrySo Accessed: Oct. 21, 2013. Styles, G. (2013). As US Oil Production Revives, New Vulnerabilities Appear, US: The Energy Collective.com, p. 1. Retrieved: http://theenergycollective.com/geoffrey-styles/284436/us-oil-production-revives-new-vulnerabilities-appear Accessed: Oct. 20, 2013. Talmadge, C. (2008). Closing Time: Assessing the Iranian Threat to the Strait of Hormuz. International Security 33, no. 1, pp. 82-117. Read More