Free Markets, Free People

IER


About the rise in oil production

You probably remember these lines in President Obama’s State of the Union address this year:

Over the last three years, we’ve opened millions of new acres for oil and gas exploration, and tonight, I’m directing my administration to open more than 75 percent of our potential offshore oil and gas resources.  (Applause.)  Right now — right now — American oil production is the highest that it’s been in eight years.  That’s right — eight years.  Not only that — last year, we relied less on foreign oil than in any of the past 16 years.  (Applause.)

Anyone … what’s the implication?  Yes, that’s right, the implication is that this president and his administration have worked tirelessly to aid in the exploitation of oil during his three years in office.   And he’s right about one thing, American oil production is the highest its been in eight years.

But it true despite of him and his administration, not because of them.  The rise in oil and gas production has been because of an increase in production on state and private land, not federal land as this chart demonstrates:

 

Oil-and-Gas-2010-2011

 

Another myth destroyed.  In fact, as most who’ve followed this administration’s energy policies for three years know, they’ve been anything but friendly toward the petroleum industry.  The chart simply quantifies how unfriendly they’ve been.  In fact, if it wasn’t for production on state and private land, we’d be looking at the lowest production in eight years. 

Oh, by the way, another myth was also offered up that night in an appeal to justify more money to “green” energy, i.e.:

But with only 2 percent of the world’s oil reserves, oil isn’t enough.  This country needs an all-out, all-of-the-above strategy that develops every available source of American energy.  (Applause.)  A strategy that’s cleaner, cheaper, and full of new jobs.

According to the Institute for Energy Research’s North American Energy Inventory published in December of 2011, the total recoverable oil resources in North America (and that obviously includes Canada) is 1.79 trillion barrels, or “enough oil to fuel every passenger car in the United States for 430 years”.  Any guess why Keystone XL is so critical?

The problem, according to IER isn’t that we have low proven reserves (the usual figure backing that 2% number is 20 billion barrels).  The problem is where there are recoverable oil reserves there are also federal prohibitions against drilling and exploiting those reserves.  The US has 1.4 trillion barrels in recoverable oil with the largest deposits located offshore, Alaska and in the Rocky Mountain West’s shale.  Combined with Canadian and Mexican resource’s, the total recoverable oil in North America is 1.79 trillion barrels or, as the IER points out, “more [oil] than the world has used since the first oil well was drilled over 150 years ago…”.  If you need more context, Saudi Arabia has about 260 billion barrels of proven oil reserves.

And if you really want to see some eye-popping numbers, take a look in the IER Energy Inventory at our gas reserves.  At current natural gas generation levels, there are enough recoverable gas resources to provide the US with electrical energy for 575 years.

If we do what is necessary to recover it.

The myth of America being an energy poor country is just that, a myth.  And, as the State of the Union proves, it is still used by those who are determined to scare Americans into accepting their more expensive (and thus heavily subsidized) alternatives.  The Co2/global warming/cap and trade scare has failed.  The alternative is to claim we don’t have the petroleum base to support our consumption.  It simply isn’t true.

But you can count on continuing to hearing both myths continued during this election year. 

Don’t buy into them … demand the federal government get the hell out of the way and let us do what is necessary (safely and sanely) to exploit the tremendous petroleum and gas reserves we enjoy.

~McQ

Twitter: @McQandO


About That Dependency On Foreign Oil – Get Used To It

The double-talking Obama administration, who lectured us about the need to wean ourselves from our dependency on foreign oil, has, through actions taken by Interior Secretary Ken Salazar, made the goal of less dependency less likely.

Salazar, yesterday, announced a new level of bureaucratic requirements sure to slow and provide disincentives to increases in domestic oil and gas exploration.  In the first year of the Obama administration’s tenure, Salazar had already slowed such exploration to a walk  As the Institute for Energy Research (IER) reports:

* Under the first year of the Obama administration’s 2009 oil and gas leasing program, fewer onshore and offshore acres have been leased than in any previous year on record.

* The Interior Department collected less than one-tenth the revenue from oil and gas lease sales in 2009 than it did in 2008

* For the year 2008, lease sale revenues produced a return for the taxpayer of $942 per acre leased. In 2009, taxpayers received about $254 in return for each acre leased under the Obama administration – indicative of the quality of leasable land made available under Sec. Salazar

* More than 97 percent of the 2.46 billion acres of taxpayer-owned lands in the public domain are presently not leased for oil and gas exploration

In a time of economic hardship where federal revenues are way down and deficit spending runs rampant, it is almost criminal to do what Salazar has done. As the Industrial Energy Consumers of America points out:

“At a time when we should be working to enhance our energy supplies here at home, we believe it would be a mistake to pursue policies that would make it more expensive or difficult to access critical natural-gas resources …”

But that is precisely what Secretary Salazar intends to do. IER president Thomas J. Pyle released the following, which pretty much calls the administration out on their absurd policies concerning domestic exploration for oil and gas.  Frankly, I think it is an understatement:

“When it comes to paving the way for the responsible development of homegrown, job-creating energy resources, no administration in history has done more to ensure producers do less.”

The Bureau of Land Management released the following:

Under the reformed oil and gas leasing policy, BLM will provide:

* Comprehensive interdisciplinary reviews that take into account site-specific considerations for individual lease sales. Resource Management Plans will continue to provide programmatic-level guidance, but individual parcels nominated for leasing will undergo increased internal and external coordination, public participation, interdisciplinary review of available information, confirmation of Resource Management Plan conformance as well as site visits to parcels when necessary;

* Greater public involvement in developing Master Leasing and Development Plans for areas where intensive new oil and gas extraction is anticipated so that other important natural resource values can be fully considered prior to making an irreversible commitment to develop an area;

* Leadership in identifying areas where new oil and gas leasing will occur. The bureau will continue to accept industry expressions of interest regarding where to offer leases, but will emphasize leasing in already-developed areas and will plan carefully for leasing and development in new areas.

BLM Director Bob Abbey said the increased opportunity for public participation and a more thorough environmental review process and documentation can help reduce the number of protests filed as well as enhance BLM’s ability to resolve protests prior to lease sales.

Of course, anyone who has been around for more than a day or two has seen this sort of wording before and know how to read between the lines. For instance, note the last sentence. “Increased … public participation” means environmental groups opposing such leases will be given much more access to the process. “A more thorough environmental review process” means leases will essentially be held hostage to a review process which could last years. Finally, the “ability to resolve protests prior to lease sales” means the priority will be to make the protesters happy, not those seeking a lease.

The effect, of course, will be less exploration, less production, fewer jobs and more dependency on foreign oil. Given the economic climate today and the country’s energy needs,  that’s inexcusable.

As Jack Gerard, president of the American Petroleum Institute warns:

About 9.2 million Americans rely on the oil and gas industry for their jobs. By imposing these unnecessary additional hurdles, American jobs will be threatened along with the economic opportunities afforded by oil and gas development.

So, instead of safely and swiftly exploiting domestic resources (and creating jobs and increasing revenue) it appears the plan is to sit on an estimated 86 billion barrels of oil and 420 trillion cubic feet of natural gas offshore, as much as 35 billion barrels of oil in Alaska and the Chukchi Sea, and a massive 2.2 trillion barrels of energy in oil shale deposits in Utah, Wyoming and Colorado while Salazar plays politics with our energy future.