As the world watches Colonel Moammar Gadhafi and the implications of a multi-national intervention in Libya, oil prices have skyrocketed in response. After weeks of unrest, Libyan oil production has dropped drastically – taking more than 1.6 million barrels of oil per day off the market and leaving working families wincing at the pump. With Libya unlikely to resume previous returns of production rates for an extended period of time, it underscores the importance of domestic energy production.

Libyan Output & Losses

• World’s 17th largest oil producer

• Normally pumps 1.6 million barrels per day; 85% is exported to Europe

• Typical output is equivalent to 2% of global consumption

• Unrest has cut output to about 400,000 barrels per day

• 5% of Libyan oil is exported to the United States

Implications

• Libyan output may continue to drop – or cease all together – if unrest continues

• It could be years before production rates return to previous levels

• Countries in Europe typically supplied by Libya will need new sources of oil

• US will be competing more aggressively for oil with influx of European markets

• Oil prices will rise as the commodity becomes scarcer in the market

• US must begin serious movement in tapping domestic resources

National Security and Domestic Production

• The Interior has only approved 5 deepwater drilling permits in the last year, 3 of which had received prior approval

• President’s FY 2011 budget proposal included upwards of $36 billion in new oil and natural gas taxes

• BOEMRE officials say they have received 43 deepwater drilling permit applications that are subject to new federal offshore drilling safety and environmental requirements put into place in the fall. BOEMRE has returned 22 of those applications back to the operator to request additional information about subsea containment of a spill.

• 220,000 barrels of oil per day can be extracted from the Gulf of Mexico

• The President pledged his support to the development of Brazilian oil reserves, putting Brazilian oil production ahead of our own, telling them, “We want to be one of your best customers.” Meanwhile, the Obama administration continues to lock away North American oil supplies and delay the Canadian oil sands pipeline, a multi-billion dollar U.S. investment which will give the U.S. access to the second largest reserves in the world

• West Texas Intermediate and other crude oil spot prices have risen $15/barrel since unrest in the Middle East and North Africa began in mid-February

• At least 13,000 jobs have been lost since last summer’s moratorium on offshore oil production, surpassing projected job losses in a 2010 study, according to the Louisiana State University professor Joseph Mason who authored the study.

• LSU Prof. Joseph Mason also estimated the national job losses to have increased from 12,000 to 19,000; regional  wage losses to be $800 million, up from $500 million; national wage losses to be $1.1 billion, up from $700 million; lost tax revenues on the state and local level to be $155 million, up from $100 million; and lost tax revenues on the national level to be $350 million, up from $200 million.

In Their Own Words

“We are in Libya because of oil. It all goes back to the 5 million barrels of oil we import from OPEC on a daily basis. I think all Americans know why the president made this strike. As long as no American soldiers are on the ground … then I think it’s a good decision for the president.” -Rep. Ed Markey (D-MA) March 21, 2011, MSNBC

“[W]e want to partner with Brazil…on the issue of energy, which is why President Rousseff and I…agreed to launch a Strategic Energy Dialogue. By some estimates, the oil you recently discovered off the shores of Brazil could amount to twice the reserves we have in the United States. We want to work with you. We want to help with technology and support to develop these oil reserves safely, and when you’re ready to start selling, we want to be one of your best customers. At a time when we’ve been reminded how easily instability in other parts of the world can affect the price of oil, the United States could not be happier with the potential for a new, stable source of energy.” -Obama’s address last Saturday to the CEO Business Summit in Brasilia, Brazil