Free Markets, Free People


The US: Massive energy resources and an incoherent energy policy

As Peter Glover says, writing in the Energy Tribune, this ought to be the lead story in every American paper and on every American news show.  But it’s overshadowed by Japan, Libya and other developments in the world.

America’s combined energy resources are, according to a new report from the Congressional Research Service (CSR), the largest on earth. They eclipse Saudi Arabia (3rd), China (4th) and Canada (6th) combined – and that’s without including America’s shale oil deposits and, in the future, the potentially astronomic impact of methane hydrates.

The US and Russia are the two most resource rich countries in the world.  Here’s the chart that shows how huge our advantage is:

 

worldfossilfuel

 

Note it says “Oil Equivalent” on the left side.  That’s because it includes coal.  Yeah, that icky, nasty stuff that we’re trying to ban or make it supremely expensive to use.

The CRS estimates US recoverable coal reserves at around 262 billion tons (not including further massive, difficult to access, Alaskan reserves). Given the US consumes around 1.2 billion tons a year, that’s a couple of centuries of coal use, at least.

In fact, the US has 28% of the world’s coal.

Natural gas?

In 2009 the CRS upped its 2006 estimate of America’s enormous natural gas deposits by 25 percent to around 2,047 trillion cubic feet, a conservative figure given the expanding shale gas revolution. At current rates of use that’s enough for around 100 years. Then there is still the, as yet largely publicly untold, story of methane hydrates to consider, a resource which the CRS reports alludes to as “immense…possibly exceeding the combined energy content of all other known fossil fuels.” According to the Inhofe’s EPW, “For perspective, if just 3 percent of this resource can be commercialized … at current rates of consumption, that level of supply would be enough to provide America’s natural gas for more than 400 years.”

So, the possibility of 400 years worth of NG, a couple hundred years worth of coal – but what about oil?

 

americasoil

 

Well shucks, seems we have the potential to be quite free of foreign oil, doesn’t it?

While the US is often depicted as having only a tiny minority of the world’s oil reserves at around 28 billion barrels (based on the somewhat misleading figure of ‘proven reserves’) according to the CRS in reality it has around 163 billion barrels. As Inhofe’s EPW press release comments, “That’s enough oil to maintain America’s current rates of production and replace imports from the Persian Gulf for more than 50 years”

Of course that all assumes we do something about taking advantage of the resources we have and actually putting ourselves in a position where we’re not at the mercy of foreign sources of the same sorts of product.

Obviously and hopefully, we’ll come up with affordable and available renewable energy products while we’re doing that. 

However, we have no coherent energy plan from this administration.  Instead it seems to have gone to war with the oil industry and is doing everything it can to slow its ability to find and exploit these resources.  19,000 jobs and 1.1 billion in earnings have been lost since the imposition of the administration’s moratorium.  Both former Presidents Bush and Clinton have spoken out against the delays.   And the administration remains in contempt of a court order which ordered them to speed up the permitting process.  As a result the EIA has estimated a loss of 74,000 barrels a day of production due to the moratorium this year.

Meanwhile our President touts foreign oil, our investment in it and claims we’ll be its “best customer”.

As Glover says:

Meanwhile US energy policy persists in pursuing the myth that renewables are the economically viable future, with fossil fuels already, as the president said in January, “yesterday’s energy”. With 85 percent of global energy set to come from fossil fuels till at least 2035 no matter what wishful thinkers may prefer, current US energy policy – much like European – is pure political pantomime.

Couldn’t agree more.  We sit on a veritable treasure trove of natural resources which could actually make us energy independent and we have an administration which is doing everything in its power to not just keep us dependent on foreign oil, but to increase our dependence.

~McQ

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21 Responses to The US: Massive energy resources and an incoherent energy policy

  • I’ve come to the conclusion the one of two things explains all of this.
    1)  Large numbers of government official truly believe that alternate energy sources can be used to save us from .. pick what you like .. AGW, dwindling long term oil and gas, or just plain having money in our wallets.  The AGW story just doesn’t completely add up, as nobody seems to take their “carbon footprint” seriously, most especially environmental wennies.  Resources aren’t infinite, but it’s going to be a long time before we’re dragging the bottom. Well, politicians are always looking for a “wallet-ectomy” so what’s new.
    2)  The plan is to suck all resources out of everywhere, except the US.  He who last the last oil, controls the universe.

  • The energy “policy” that we see in evidence is only incoherent if you insist on reality.

    If you are a Collectivist, you have suspended any reliance on reality as an ordering principle.  This allows for things like the Unicorn Engineering of our CIC, wherein he mandates things the laws of thermodynamics cannot support, and markets cannot provide (or they would without a mandate).

    This is a system of pure, blind faith, predicated on wishful thinking to solve imaginary problems.  Hellofaway to run a railroad…

  • Yeah but everytime we drive an SUV a polar bear dies, or something.

  • I’m still not sure why I should care that oil is “foreign” or not.
    I mean, I understand not wanting to give the Saudis any money, but there are two little problems:
    A) Foreign doesn’t mean that, specifically – we get more foreign oil from Mexico and Canada than anywhere else (individually, in fact, not just combined). Neither of those countries is hostile (and indeed, while Mexico has its problems, cutting off their oil revenue to us wouldn’t help any of them at all).
    B) Someone else is still going to buy every drop the Saudis, Iranians and so on are willing to bring to market, so they’ll still be getting money to fund nastiness with. Europe and China and the Whole Rest Of The World are in that market for the almost-perfectly-fungible resource called petroleum.
    It’d be nice to have some supply insulation from, say, a giant disaster in the Gulf, but even then – with a free market, if that happened, oil prices and supplies in the US would still go up and down, respectively, because the market is global and fungible.
    So, “meh”, as they say on the Internets.

    • The idea of “energy independence” is simply dumb, IMNHO.
      We should develop our own resources according to the dictates of market forces.
      We should buy our needs for anything where the market tells us to.

      • The idea of “energy independence” is simply dumb, IMNHO

        >>>> Not really.  Our most vital resource is either controlled by our enemies or is in a position where we have to compete for access to purchase it with other enemies.

        If we had not only what we needed, but enough to sell as well, we’d boost our strategic position as well as weaken that of others.

        • Your argument is sound as respects a “strategic necessity”, which is only true in a real emergency.
          Under normal conditions…which are the kind we deal with MOST…it is a protectionist argument.
          I am a market capitalist.  I am grateful every day for the foreign devils who bring their production to me in exchange for a little of my time.
          I don’t consider Canada and Mexico enemies.  (Mexico is iffy.  But what would it be like if we did not buy oil from them?  Better or worse?)

          • I am a market capitalist. 

            >>> Then you can see the benefit of our being able to sell more and buy less.  Cheaper, more plentiful energy at home = red bull for the economy plus all that income from sales

          • PS-  I tend to see oil more as a strategic/political/military asset as opposed to in market terms.

      • Unless you like to spend and spend
        Obama Likes Spending

    • A) why buy or import “foreign” regardless of where it comes from, when you can produce domestic? Makes absolutely no sense to me. Shorten the supply line, etc.

      B)And yes, oil prices will still go up and down, but 1973 would be unlikely to ever happen again and the more that’s produced globally, the less impact things like Libya have on the price of that commodity. And the more that’s produced, even with rising demand, the less volatile pricing will be.

      Finally, wouldn’t it be nice if we didn’t have to worry about how the strategic reserve was doing by having all we can bring in on line?

      • Exactly.

      • A) why buy or import “foreign” regardless of where it comes from, when you can produce domestic? Makes absolutely no sense to me. Shorten the supply line, etc.

        Whether it makes sense to you or me, what does the market price tell us?  That is the ONLY relevant question under all but EMERGENCY conditions.
        As I’m sure you are aware, I support domestic production.  My certainty is that it would explode in a free market, largely BECAUSE there are HUGE market distortions pushing it down right now, including an essential prohibition in important areas.
        But I would OPPOSE a mandate to use ONLY domestic oil for the exact same reasons.

        • Who said anything about mandates to only use domestic? Let refiners buy from whomever they choose, but trust me, as with all businesses, if they can save a few pennies per barrel in transport or pipeline charges by getting it relatively close to the refinery, they will.

          The bottom line is increased domestic production gives us options we don’t have now and it provides us with energy security we don’t have now.

          • I was not putting that in your mouth, merely stating the argument from the opposite end.
            We agree, seems to me…
            Unless you just WANT to fight…  I’m good.

  • Those of us in the oil industry have known this for years.  We always laugh when we hear people talking about how we are about to run out of fossil fuels.  I used to attend parties thrown by the exploration teams from Conoco/Phillips.  from what they told me, even this report is a bit on the low side of our estimated recoverable reserves.

  • Interesting information. Does this same service have any idea as to what may be beneath the Arctic? I’ve read about the oil shale and that seems to be worth pursuing. A very massive shale field(?) runs from western NY state down through Pa and Ohio and into Kentucky. I’m thinking if these states are smart this’ll get looked at. Kasich in OH might be one to go after it. Ohio could sure use some sort of industry now that steel, rubber, autos, etc, are pretty much hollowed out.

  • Lets say that burning vast amounts of material that will kill you if you do so in a closed container such as your garage (or say, Earth) is harmless. Lets say that finding alternative sources of energy isn’t the blatantly obvious economy of the future. Lets say that fossil fuels are the only way to transport us and run the things we operate. Given all of these very questionable conservative beliefs, does it seriously not occur to you guys how powerful the US will be if the Middle East runs out and we are still going strong? Really?

    • We’re talking possibly in centuries though.  I’m all for taking a long view of things but that’s too long!