Hello, back to Energy 101. Today, we're going to talk about energy independence.

You hear this term a lot about, we need to be independent for our energy supplies and le, let's delve and take a little bit of a deep dive and, into this independence issue and see exactly what we mean by it and where we stand, regarding our energy independence. Well what is energy independence? Well is it, primarily it came about because of crude oil, that's where the term first developed, from back in the 70s, when we were embargoed from OPEG, from shipping us any oil. So, and that was all crude oil but now as I've mentioned last time, regarding petroleum. Now people kind of switched the ballgame on us and talk about liquid petroleum independence, which I claim, is very misleading. But, because it assumes that oil and natural gas liquids are equivalent, and which I don't believe they are and, and, interchangeable. So here, to give you a view of how independent or dependent we are, on imported sources is that here's the amount of oil that we use on in energy, not barrels per day because it compares natural gas, as the gas through natural gas liquids, the coal is the solid. So, it's the energy equivalent of all of these things, is what we plotted here. So the energy equivalent for crude oil, is about 30 quads, 10 to the 15th is a quad, 10 to the 15th BTUs, that's 10 to the 15th BTUs. Not really important, but to because every, they're all in the same units. Natural gas, the total, this is our use, this is the amount that we import, and this is the amount that we consume, that we produce. Notice that we don't produce as much as we consume, we import. Can just look at that, visually. Natural gas on the other hand, we produce and consume less energy value of the natural gas. But we import much smaller percentage of it, somewhere around 15, 20%. And that all comes from Mexico. Not all, but essentially all for intent

purpose, intent and purposes come from come from some Mexico and Canada because it comes from a pipeline because shipping it across the ocean, gets to be expensive. As I mentioned last time, you gotta cool it, to minus 260 degrees liquefied, to get it on a ship container that has to be, to maintain it is minis 260 degrees and etc etc. Natural gas liquids, you can see here, is we don't really import a significant amount of that, there's [INAUDIBLE] there. And coal, now coal, notice that this is negative down here this is negative. That means, we're exporting coal. This is zero, and this is minus 10. So we actually are producing this much coal and we're producing this much, so we're consuming, what's above zero. We're consuming about 21 gigs of coal. And then, this is the energy value of renewables. And the biggest thing in renewables, is hydro, and biomass, biomass and just burning, burning biomass waste in, in a lot of cases. So, that's our energy value, and it looks like that, you know, we're doing pretty, pretty good on natural gas, but I don't think this is the important way to compare these. I think, a much more important way to compare it, is look at the value of these imports, in dollars. And oil sells for about five times more, per energy value, than natural gas, five times more value. So, the value of the oil that we consume, whether we pay for it, for for importing it to somebody else or what we pay to produce it ourselves, pay it to Exxon, or or chevron, or shell or whoever might be, to produce it here, we are spending that much money, to, use the oil that we use. And this much is produced here, in the US and this much is imported, including Canada and Mexico. Natural gas, the value, economic value of the natural gas we use, is of course,

much lower. As I mentioned, it's about five times lower per unit value and total energy value, is not far off. Natural gas liquids, the value of natural gas liquids, is shown here and the economic value of coal, is shown there. I didn't show renewables because of the energy value, the cost of the energy itself is zero, is the capital cost that you have to, the plants you have to build, the wind turbines, and the [UNKNOWN] it takes and things, to produce it and get it, convert it. So, this is for, for, because of this chart right here. This is the big dog, and the thing that's important, about our energy independence. So, the far as I'm concerned, we need to be looking at crude oil for our energy independence, because that's the economic import issue, that's what we drive our transportation system with, and we don't have any other alternatives right now. Sure, we could, we do, there are some other options. We could run our transportation system on natural gas, but we're not converting to that very fast. They cost about $10,000 per vehicle for the re-fueling and converting the vehicle etc., etc., etc. So, unless we have a national plan, to get off oil and get onto something like natural gas, it's just going to hap, it happen very, very, very, very slowly and maybe, never. So, that economic value of these energy uses, is an important thing to note. This shows crude oil insour source, crude oil source. And to look at our energy independence issue we see that, that we import about 60%, and we produce about 40%, and that's the crude oil. Now we import it from overseas, as well as Canada and Mexico. So, this includes Canada and Mexico, which we say you know, isn't too big a deal because they're

fairly friendly and stable. But if you look at crude oil percent of imports, you can see it has, it has dropped, thank goodness. It's dropped and it's from our peak. One reason is, is that, our use has dropped with the recession, when the economy goes down, we noted before, our oil use goes down, in energy in general. So, this is a crude oil import, as percentage of crude oil use and it's a significant number and it's You know, by the way, in the two, 1970s, when we were embargoed we were pretty, we were importing less than 20%. We were importing less than 20%, that's down here, okay? That's when we embargoed, and it absolutely crippled the heck out of the economy. I know, I was around then and can go on and on about, look it up on the web, see what that did to us, and how we had to respond to that. Caused a recession and all kinds of problems, that we were importing 20% and now we're importing about 55%, over 50%. Well, let's look at this North America in US in total imports. Well it turns out, that we're importing about a third of it from of, of outside the U.S. and we're producing from North America, we're getting about 66%. Okay, let me clarify that a minute. I didn't say that very clearly. North, from North America, we are producing about 65% of our oil. 66-65% of our oil. From North American, that includes Canada and Mexico, and from outside, and this is, I didn't say this bit well, from outside the, North America, that should be, not the US. Outside North America, we're getting about 35%. So, 35% of our oil is coming from outside of North America and 66% is coming from Canada, the U.S. and Mexico, so that, that's what the numbers show. And when you get them from the energy information by the way, all this data has been updated through the

year 2012. Liquid petroleum independence US liquid petroleum production is increasing, with increase in natural gas production, and it really is not an issue. We don't import a significant amount, as we saw before. So, we don't need to deal significantly, with that. That shows the liquid petroleum sources. Now liquid petroleum of course, is not just natural gas liquids, that's oil and everything. But since a lot of people talk about petroleum, I wanted to show that data. And for, if you want to pursue it, and extract anything you want to, out of it, which is difficult for me. But the North America oil dependence in a nutshell, is about 60% of our US oil is produced in North America. About 40% is imported, from outside the US. Call it 65 and and 35, if you want. It's in that ballpark. I'm just making the point that we're or, still pretty in, importing a significant percentage of our oil, from outside North America. And that has some concerns for us, where is it coming from? This show, where it's all coming from. This shows that Canada is our biggest, import, export to the US. Mexico is next or approximately, the same as Saudi Arabia. Now, we're getting, there are some unstable regions here. So this, for this, this makes up 35 to 40% of the oil, once we cut off Canada and Mexico. So, Saudi Arabia, Venezuela, Nigeria, Russia, Iraq, Columbia, Algeria, Angola and Brazil. I don't see many, many stable friendly countries, on there. There are, there are a couple that you can probably, that you can probably count on. But just looking at, what's gone on in the Middle East in the last four or five years, certainly does not lead us to believe that it's a fairly, that it's a stable region, that is okay for us to depend on them, for oil. And Ven, Saudi Arabia's the one that we get the most from.

Let me note something about Saudi Arabia, because I, I pointed out before that, they've made a big deal about the fact, about the fact, we may produce as much petroleum, not oil, but petroleum, as Saudi Arabia. Let me show you about, how good a position, Saudi Arabia is in. Saudi Arabia has about 50 active drilling rigs. That is, they're actively drilling to, developing wells, to produce oil. And they're producing about 11 million barrels per day, 11 million barrels per day. Plus or minus one or two, at the most. United States is producing about 7 million barrels a day. This is oil. Make a, you need to start paying attention about, whether we're talking about oil or petroleum. How many active drilling rigs do we have? 1500 produce 7 million barrels of oil. The have 50, to produce 11 million barrels. They have so many reserves. We, it is estimated that we have about 2% of the worlds oil reserves underground, that is yet to be obtained, because it is a finite resource. And Saudi Arabia has about 20-25% of the world's resources of oil. And we're consuming on the other hand, the flip of that. We're consuming 25% of the world's oil, and, and we're only having reserve of about, 2%. So and of course the other thing is, is that Saudi Arabia, while they're producing 11, they use three. The internally, they use three, so they're exporting about eight. we, on the other hand, are producing about seven, but we're consuming about 15. So, we've got to import eight. So, you know, comparing it with Saudi Arabia and Russia, who consume about three, internally and export 70 to 80% of that oil, is not really, I don't think, a meaningful thing, that you can draw many conclusions from.

So conclusions, what are the conclusions? US oil imports, about 40% of oil from outside North America, much of this oil comes from unstable regions. The issues, the economic impact on the US economy. A billion barrel approximately $ 1 billion a day, flowing out of the US economy. Flowing out of the US economy, that could stay here for economic stimulus. Make a huge difference in our economy, if we can maintain, even half that money here. And from a national security issue is, we're subject to interruption and as we were, in the early 70s. When we say, oh that can never happen never say never, I say. [INAUDIBLE] come about all the time, and it is theoretically possible, and I think it's very dangerous to assume, it can't happen. Thank you.