Free Markets, Free People

GAO

About the myth that the US only has 2% of the world’s proven oil reserves

With the following quote, which Anu K. Mittal, the GAO’s director of natural resources and environment provided in written testimony to Congress, forever kills the meme that we have only 2% of the world’s proven oil reserves:

“USGS estimates that the Green River Formation contains about 3 trillion barrels of oil, and about half of this may be recoverable, depending on available technology and economic conditions,” Mittal testified.

“The Rand Corporation, a nonprofit research organization, estimates that 30 to 60 percent of the oil shale in the Green River Formation can be recovered,” Mittal told the subcommittee. “At the midpoint of this estimate, almost half of the 3 trillion barrels of oil would be recoverable. This is an amount about equal to the entire world’s proven oil reserves.”

Of course the 2% myth has been useful to deny the viability of “drill, baby, drill”.  President Obama has used it repeatedly (and I have no doubt he will continue to do so because he seems to come from the school that thinks if they repeat something that is untrue enough times, well, it becomes true, or something).  The entire argument has centered around the premise, given the 2% figure, that even if we were to drill everything, we’d still be dependent on foreign oil.  And so, the logic then goes, since that is “true” then it would seem we should instead concentrate on alternate energies, especially clean and renewable energies, to displace fossil fuel use, decrease our foreign dependence and replace oil with those alternatives (even if they’re more costly).

Naturally, this works perfectly into a further claim that we’ll also save the planet from warming, increase net job growth by creating domestic green jobs and everyone will live happily ever after.

None of it is true.  Myth after myth has been shattered.  Global warming, despite James Hansen’s insistence, is simply not happening the way he and his alarmists claimed.  He continues to beat the same drum he was beating years ago as if nothing has disputed his initial theories.  Just last week he doubled down with a NY Times op/ed piece that barely yielded a yawn.

Should we be pursuing alternate and so-called “clean” energy sources?  Of course we should.  And we will as necessity and markets guide entrepreneurs.  But this myth that we must be a net oil importer forever and ever and can’t find ways to fully secure our own supply (i.e. not have to import oil from unfriendly or potentially unfriendly countries or be subject to their whims) is a myth.

That is, unless we don’t exploit this resource.  And remember, the estimate Mittal is talking about covers one area in the US.  We’re not talking off-shore, where most of the off-shore area  also holds vast amounts of oil but remains off-limits.  We’re talking right here on dry land.

The Green River formation is near where the state borders of Colorado, Utah and Wyoming come together.  The unfortunate aspect of that is most of the land is owned by the Federal government.  And, under this administration, anyone who has been following the energy policy of the administration knows that’s bad news for Americans.

“The federal government is in a unique position to influence the development of oil shale because nearly three-quarters of the oil shale within the Green River Formation lies beneath federal lands managed by the Department of the Interior’s (Interior) Bureau of Land Management (BLM),” she testified.

Again, with this administration, most know what that means.  If history is a guide, little if anything will be done to take advantage of this petroleum windfall by Mr. “All-Of-The-Above”.

Look at the Bakken oil fields and their impact in this down economy for an example of what Green River could mean in real terms.  Here’s blurb published today from a Billings, MT newspaper:

Thousands of workers chasing quick riches by flooding into the Bakken oil field have helped jump-start home sales in Billings.

And the wave is starting to make Billings houses harder to find — and more expensive.

Well-site geologist Joe Hallgren works under contract for SM Energy of Billings. He and his family live in Williston, N.D., the oil boom’s epicenter. But, they’re building a house in Billings and when it’s finished in July they’ll move here and Hallgren will commute to the oil patch.

“I’ve seen a few boom-bust cycles. This one is crazy,” he said. “We got to the point where, for our family, Billings is just going to be better for us.”

Last week, Bozeman resident Doug Pezoldt, who surveys land for local engineering firm Sanderson Stewart, and his wife started moving into their custom-built Billings home.

“Really, in one year’s time, the boom in the Bakken has increased the volume of work and we just need more people in Billings to support that,” Pezoldt said. “My wife and I just feel like Billings is where we want to make our home long term.”

That is the reality of Bakken and the potential of Green River in a very down economy.

Question: Do you think the administration will bother to take advantage of it?

Forward.

~McQ

Twitter: @McQandO

Geithner Off By A $100 Billion?

It gives you great confidence in someone when they can’t even tell you how much is  left in a fund which they control.  Apparently Treasury Secretary Tim Geithner thinks he has about $132 billion left in TARP funds.

But the Government Accountability Office, a non-partisan federal agency, reports that figure is closer to $32 billion, which is what ABC News and other independent analysts thought.

The Treasury Department continues to insist GAO and others are double-counting commitments and underestimating potential paybacks.

So everyone but Treasury is wrong. I’m willing, at this point, to wait until a final determination is forthcoming, but I have to tell you, if I were a betting person, I wouldn’t be backing Geithner’s position.  And don’t forget how cooperative his department has been with the oversight folks.  

~McQ