OIL as POWER Powering the World’s Economy 1

Check for Understanding 2 Why is oil so important to modern life? Which nations have the most oil? Oil to export? What are the political, military, and economic consequences of securing reliable sources of oil? Are the benefits of crude oil worth the costs?

There’s a reason it is called “fossil fuel” 3

Cross-section map of Oil Deposits 4

Important Uses of Crude Oil 5

The world without oil… 6

Refineries Heat and Separate Crude Oil into Various Products 7

Breaking down a Barrel of Crude Oil Fun Fact No. 1: There are 42 gallons of crude oil in one barrel! Fun Fact No. 2: One barrel of crude oil can be converted to 20 gallons of gasoline! 8

Is which nations is oil found? 9

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Top World Oil Producers, 2008 (OPEC members in italics) CountryTotal Oil Production (million barrels per day) 1)Saudi Arabia )Russia )USA )Iran )China )Mexico )Canada )UAE )Venezuela )Kuwait

Current OPEC Membership Organization of Petroleum Exporting Countries 12

OPEC vs. non-OPEC Sources 13

Question If non-OPEC nations produce nearly 60% of the world’s oil, why is there so much fuss made about OPEC’s power? Why is OPEC so important? 14

A Brief History of OPEC Oil Demand increases with the manufacture and sales of automobiles (1920s), jet engines (1950s), air conditioning (1950s), and fertilizers (1940s). Newly-independent oil kingdoms nationalize oil companies (take them over). OPEC is formed to coordinate production and increase prices in OPEC today is a legal cartel with their own website: 15

What about the U.S.? We’re the third biggest producer of oil – why aren’t we part of OPEC? 16

U.S. Production vs. Consumption (Millions of Barrels Per Day) 17 5 Mil 15 Mil 10 Mil 20 Mil ’50 ’55 ’60 ’65 ’70 ’75 ’80 ’85 ’90 ’95 ’00 ’05 ’10 ’15 ’20 ’25

U.S. Oil and Gas Production Areas 18

U.S. Oil Production 19

OPEC and current world reserves World crude oil reserves are estimated at more than one trillion barrels, of which the 11 OPEC member countries hold more than 78 percent. In other words, if non-OPEC nations keep using as much oil as they have been, the future of oil belongs to OPEC! 20

World Oil Reserves by Nation 21

The Power of Oil has Gone Up and Down with its Price So, what’s the price (and power) of oil been? 22

History of Crude Oil Prices – mid 20 th Century 23

Recent History of Oil Prices 24 Source:

Fueling the Supply of Oil -Prices of Inputs: Land, Labor, and Machinery -Number of Producers -Technology to find new reserves (ocean exploration, geological scans) -Technology to transport oil (pipelines) -Civil Strife (Wars, Unrest, Insurgencies) -Environmental Occurrences (Hurricanes) 25

Going to the ends of the earth for oil… This is a photo of “Jack II”, a deep-water oil rig platform in the Gulf of Mexico that drills oil from over five miles beneath the ocean floor. It is owned by the Chevron Corp. 26

Fueling the Demand for Oil -Income of Consumers -Population Changes -New Uses for Oil -Prices of Alternatives (ex. Nuclear Power) -Lifestyle Preferences (ex.Surburbia & SUVs) 27

China’s factories run on oil… 28

What are the economic & military implications for the U.S. based on oil import dependence? 29

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The $ nations of the Persian Gulf 31

What’s the connection between oil and U.S. military bases? 32

The Taliban’s Vision of the “Good Society”

34 What do you think about our worldwide military presence?

The Future of Oil? 35