WASHINGTON -- For anyone who needed another reason to cure our addiction to foreign oil: high prices at the pump mean fueling one of the greatest transfers of wealth in history, with a full two-thirds of the money spent on crude oil going directly to foreign producers.
While some have surmised most of that money ends up in the pockets of Middle Eastern oil tycoons, it's actually countries like Canada that end up taking home much of the petroleum profit. According to estimates from the Energy Information Administration from 2011, Mexico, Canada, Saudi Arabia, Venezuela and Nigeria account for 69 percent of all U.S. crude oil imports. Canada leads the list, exporting 2,829 thousand barrels of crude to the U.S. each day.
Those numbers matter because the retail price of gasoline is largely a function of the cost of crude oil. Refining, transportation and taxes factor in too, but according to Geoffrey Heal, a professor of social enterprise at Columbia Business School, since those variables are more or less fixed, upticks in price go to benefit the producers of crude almost exclusively.
"The refining and transportation costs really haven’t changed much over the last few years," Heal said. "So basically what moved the gasoline price is the movements in the price of crude oil."
The U.S. produced 5.9 million barrels of crude oil a day back in December, while consuming more than 18.5 million barrels of petroleum products, according to a recent Energy Department estimate. These numbers include oil used to power vehicles as well as heat homes.
That means about 12.6 million barrels of crude came from foreign sources. Assuming a price of roughly $118 per barrel, that's over $1 billion draining out of the U.S. each day.
The single biggest source of U.S. crude is still the U.S. itself, Heal notes, but given the country's current financial straights, one can certainly understand why Americans worry about sending so much of the extra money they pay at the pump overseas -- or even just north and south of the border.