USA: An oil rich nation after all

posted at 8:05 am on March 17, 2012 by Jazz Shaw

The President has been traveling on Campaign Tourapalooza 2012 this month and seeking to explain rising oil and gas prices. One of his favorite tag lines has been to say that you “can’t just drill your way to lower gas prices.” (And he’s partly correct there, but more on that later.) But he’s also tossing out another figure when he makes these remarks.

“With only 2% of the world’s oil reserves, we can’t just drill our way to lower gas prices,” he said. “Not when we consume 20% of the world’s oil.”

So is that actually true? Are we an oil barren nation? As John Merline points out at Investors Business Daily, it’s not even close to being accurate unless you’re really picking and choosing your terms. This is because the figure that Barack Obama is quoting relies on estimates of proved reserves.

But the figure Obama uses — proved oil reserves — vastly undercounts how much oil the U.S. actually contains. In fact, far from being oil-poor, the country is awash in vast quantities — enough to meet all the country’s oil needs for hundreds of years.

The U.S. has 22.3 billion barrels of proved reserves, a little less than 2% of the entire world’s proved reserves, according to the Energy Information Administration. But as the EIA explains, proved reserves “are a small subset of recoverable resources,” because they only count oil that companies are currently drilling for in existing fields.

When you look at the whole picture, it turns out that there are vast supplies of oil in the U.S., according to various government reports.

Proved reserves is a valuable number to keep track of, no doubt. It gives you a good snapshot of the amount of oil you’re currently tapping into, and that allows you to develop solid estimates of what’s going to be entering the pipeline each season. But by the same token, it’s not any sort of reflection of what your total assets are. That’s like saying that Bill Gates only has $20K of liquid cash in his primary checking account this month so he must be close to filing for bankruptcy. Here’s a more complete picture for you:

Oil Scarcity

  • At least 86 billion barrels of oil in the Outer Continental Shelf yet to be discovered
  • About 24 billion barrels in shale deposits in the lower 48 states, according to EIA.
  • Up to 2 billion barrels of oil in shale deposits in Alaska’s North Slope
  • Up to 12 billion barrels in ANWR, according to the USGS.
  • As much as 19 billion barrels in the Utah tar sands
  • A stunning 1.4 trillion barrels of oil shale the massive Green River Formation in Wyoming

The main problem is that most of these resources are roped off. Just knowing the oil is there comes as little comfort if there are never going to be any leases issued by the government for energy companies to explore. And our ability to access the shale oil – while technically well withing our capability today – will be significantly hamstrung as long as activists continue to fight fracking and horizontal drilling.

But before we get too carried away, it’s still worth noting that one part of Obama’s claims is actually true. Even if we opened the floodgates and were able to jack up our domestic production by 20% overnight, it wouldn’t do much to move the needle on gas and oil prices in general. That’s because, as we’ve noted before, the idea of “energy independence” is something of a misnomer. Energy is traded on a global market, not compartmentalized by nation. When we produce more than we need, the rest is immediately sold as exports with few exceptions. When we don’t produce as much, we import more. It’s just the way the free market works.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Comment pages: 1 2 3

If only Americans would keep their tires filled, we’d be OK…

itsnotaboutme on March 17, 2012 at 8:10 AM

When you have an administration that believes that resources and human potential are limited you will inevitably end up with limited opportunity and limited resources/higher prices.

LifeTrek on March 17, 2012 at 8:13 AM

The oil will be recovered. If not by us, then by our Chinese overlords.

kbh on March 17, 2012 at 8:14 AM

Obama said we were drilling everywhere. Hmmm..

vcferlita on March 17, 2012 at 8:14 AM

And that’s not counting all the algae the US has…
;-)

albill on March 17, 2012 at 8:14 AM

Oil reserves are roped off by regulation and recovery costs. Improvements in technology, productivity and infrastructure can help to lower recovery costs. Improvements in government will ease the regulatory burden. But never-mind all that, let’s focus on social issues …

carl todd hand on March 17, 2012 at 8:20 AM

If you still don’t understand that Obama is on ChiCom payroll, you’re nutz. Electric cars idiocy, refusal to drill for American oil, even the light bulb debacle – his every economic action is set to benefit the Chinese directly, in addition to weakening their primary opponent.

Archivarix on March 17, 2012 at 8:20 AM

The lie goes event further towards infinity if you consider that natural gas reserves are even more huge, and a transition to NG for much of what oil is now used for would take “hundreds of years of oil supply” probably to a thousand or more (and certainly until we no longer need the stuff…)

ParisParamus on March 17, 2012 at 8:29 AM

Here is the plan.

Let a Republican win, and increase leases for drilling, explore and give new permissions.

Let 8 years go by.

Elect a democrat president and let him say that we are pumping more oil than ever in our history! History can repeat itself.

Fleuries on March 17, 2012 at 8:33 AM

It may be true that opening the tap on drilling won’t move the needle tomorrow, but since speculators, uh, speculate on the future, wouldn’t they be able to say supplies will surely go up if the US opens drilling leases? Sure, the Saudis could restrict output to keep the price high, but their share would decrease, so it wouldn’t be all that beneficial to them; that only works when they control the the world’s supply.

And that, right there is what would help remove our dependency on foreign oil; having more US oil in the global pipeline. It’s utterly ridiculous to think that drilling here wouldn’t have a drastic effect on multiple levels even if lowering prices by 25% in the short term isn’t one of them.

BKeyser on March 17, 2012 at 8:34 AM

Oil reserves are roped off by regulation and recovery costs. Improvements in technology, productivity and infrastructure can help to lower recovery costs. Improvements in government will ease the regulatory burden. But never-mind all that, let’s focus on social issues …

carl todd hand on March 17, 2012 at 8:20 AM

Tell that to Teh SCOAMF.

Steve Eggleston on March 17, 2012 at 8:41 AM

If we had been sucking more oil out of federal lands the last 3 years it would have helped reduce the price, but it would be offset somewhat by the devaluation of the dollar.

Wigglesworth on March 17, 2012 at 8:43 AM

I argued the point about our vast reserves elsewhere the other day, and I don’t buy that we cannot move the needle. If we start harvesting these vast resources it will have an impact on any notion of scarcity or fear driving the market. If we start converting vehicles to LP it will have an impact. The fact is that Obama’s energy policy is disastrous and endangers our future all in the name of mollifying tree worshipers.

Southernblogger on March 17, 2012 at 8:51 AM

All together, now … IN CONTEMPT OF FEDERAL COURT !!!

pambi on March 17, 2012 at 8:54 AM

I’m sure that politifact and snopes and the other truth-websites will call out little Bammie on his latest lie.

slickwillie2001 on March 17, 2012 at 8:57 AM

I argued the point about our vast reserves elsewhere the other day, and I don’t buy that we cannot move the needle. If we start harvesting these vast resources it will have an impact on any notion of scarcity or fear driving the market. If we start converting vehicles to LP it will have an impact. The fact is that Obama’s energy policy is disastrous and endangers our future all in the name of mollifying tree worshipers.

Southernblogger on March 17, 2012 at 8:51 AM

Yes.

CW on March 17, 2012 at 8:57 AM

I dunno about this……….

We need to hear from Prezident Algie on this first…………

Alabama Patriot on March 17, 2012 at 9:02 AM

Even if we opened the floodgates and were able to jack up our domestic production by 20% overnight, it wouldn’t do much to move the needle on gas and oil prices in general

I contend this is untrue. “Opening the floodgates” on domestic production would drive price down almost immediately. The prospect of massive US oil and gas resources coming onstream would immediately eliminate the “scarcity” premium at the very least.

clippermiami on March 17, 2012 at 9:02 AM

It may be true that opening the tap on drilling won’t move the needle tomorrow, but since speculators, uh, speculate on the future, wouldn’t they be able to say supplies will surely go up if the US opens drilling leases? Sure, the Saudis could restrict output to keep the price high, but their share would decrease, so it wouldn’t be all that beneficial to them; that only works when they control the the world’s supply.

And that, right there is what would help remove our dependency on foreign oil; having more US oil in the global pipeline. It’s utterly ridiculous to think that drilling here wouldn’t have a drastic effect on multiple levels even if lowering prices by 25% in the short term isn’t one of them.

BKeyser on March 17, 2012 at 8:34 AM

Yeah, WTH? All of this should have been in the article.

Not to mention, an emergency like a war, in, say, the Middle East, it would be nice to have a large, secure, domestic supply of oil.

Dongemaharu on March 17, 2012 at 9:03 AM

I have asked it before with no answer so I will try again. If the 2.5 million barrels a day of semi-permanent new production that Newt says we can bring into production over his presidential term will not lower gasoline or oil prices because we are in a world market; why did the world market oil price spike (like $15/barrel)when the 2 million barrels of Libyan oil was off the market temporarily during the insurrection?

My suspicion is that 2.5 million barrels of US production wlll not reduce production elsewhere because according to the Wall Street Journal, the price of oil is 135% of production cost of the most expensive oil getting to market currently. Thus, unless you drop prices dramatically, no producer would have reason to get out of the market. Instead, I expect it will lower gasoline prices enough to raise demand by 2.5 million barrels a day and what price would do that would depend on the elasticity of the oil market; but John Stossel’s recent claim that 2.5 million more barrels a day would only lower gasoline prices a penny or two seems way off the wall when oil consumption world-wide is only 90 million barrels a day and I cannot believe that a penny or two of price change change would not engender 3% more demand to consume the extra production.

KW64 on March 17, 2012 at 9:03 AM

It may be true that opening the tap on drilling won’t move the needle tomorrow, but since speculators, uh, speculate on the future, wouldn’t they be able to say supplies will surely go up if the US opens drilling leases?

BKeyser on March 17, 2012 at 8:34 AM

Yes.

roy_batty on March 17, 2012 at 9:05 AM

I cannot believe that a penny or two of price change change would not engender 3% more demand to consume the extra production.

KW64 on March 17, 2012 at 9:03 AM

KW64 on March 17, 2012 at 9:06 AM

At least 86 billion barrels of oil in the Outer Continental Shelf yet to be discovered

Also out there on that shelf is my yet to be discovered platinum nugget weighing a tad over 400 lbs. At todays price, thats around $10,000,000.

Woohoo! Anyone interested in buying a share?

BobMbx on March 17, 2012 at 9:21 AM

drink the milkshakes…

equanimous on March 17, 2012 at 9:22 AM

Even if we opened the floodgates and were able to jack up our domestic production by 20% overnight, it wouldn’t do much to move the needle on gas and oil prices in general

I contend this is untrue. “Opening the floodgates” on domestic production would drive price down almost immediately. The prospect of massive US oil and gas resources coming onstream would immediately eliminate the “scarcity” premium at the very least.

clippermiami on March 17, 2012 at 9:02 AM

Of course it is untrue, it’s just another damnable lie from President Jackass McDowngrade. He says this stuff while begging Saudi Arabia on the other hand to increase production.

slickwillie2001 on March 17, 2012 at 9:23 AM

Yeah, but it’ll take ten years for that stuff to reach the gas pump. Let’s not do anything for another ten years and then take another look at the problem.

Finbar on March 17, 2012 at 9:26 AM

The price of oil is high because everybody around the world is bidding for those last barrels of oil that they absolutely need. Oil producers have gotten very good at making supply match demand. Our problem is that the oil spigot is in foreign hands–not ours. Why we can’t take back control of our energy fate is a great mystery to me. I can’t believe it’s all the work of environmentalists. There’s got to be a financial answer too.

RBMN on March 17, 2012 at 9:26 AM

I argued the point about our vast reserves elsewhere the other day, and I don’t buy that we cannot move the needle

Do you understand the relationship between supply and demand?

libfreeordie on March 17, 2012 at 9:28 AM

And that, right there is what would help remove our dependency on foreign oil; having more US oil in the global pipeline. It’s utterly ridiculous to think that drilling here wouldn’t have a drastic effect on multiple levels even if lowering prices by 25% in the short term isn’t one of them.

BKeyser on March 17, 2012 at 8:34 AM

There is an assumption, generally, that increases in oil production domestically will be used domestically and not sold on the market.

Thats a dangerous assumption. There will be price moderation for short period, but the lower price will spur increased consumption globally, which then eats up that extra supply, driving the price up again.

The only way drilling at home would work is if the US petroleum industry divorced itself from the global markets (no sales or purchases of crude outside the US), and the price of US crude was set by committee, and not the free market.

BobMbx on March 17, 2012 at 9:30 AM

Why we can’t take back control of our energy fate is a great mystery to me. I can’t believe it’s all the work of environmentalists. There’s got to be a financial answer too.

RBMN on March 17, 2012 at 9:26 AM

We fought to bring capitalism to the globe, but global capitalism sucks sometimes. If you are an oil producer and there’s a global market that offers you $100 a barrel and the U.S. government (hypothetically) which offers you $50 a barrel. Which would you choose? The profit principle means that domestic oil suppliers have *zero* incentive to sell oil domestically for less than they can get for it on the international market.

What’s sickening is that the GOP is trying to purposefully obfuscate this fact and continues to blame Obama for gas prices that are set by a global market.

libfreeordie on March 17, 2012 at 9:32 AM

The only way drilling at home would work is if the US petroleum industry divorced itself from the global markets (no sales or purchases of crude outside the US), and the price of US crude was set by committee, and not the free market.

BobMbx on March 17, 2012 at 9:30 AM

How intellectually honest of you. Bravo.

libfreeordie on March 17, 2012 at 9:33 AM

A cardinal rule among liberals and progressives:

Never let facts get in the way of the narrative.

coldwarrior on March 17, 2012 at 9:33 AM

I contend this is untrue. “Opening the floodgates” on domestic production would drive price down almost immediately. The prospect of massive US oil and gas resources coming onstream would immediately eliminate the “scarcity” premium at the very least.

clippermiami on March 17, 2012 at 9:02 AM

Exactly. The supply and demand quotient for commodities also factors in future supply/demand ratios. And even if this weren’t true, it’s still in our interest to use as much of our own oil as possible for many reasons.

Sorry Jazz but you muffed this one a bit.

jnelchef on March 17, 2012 at 9:34 AM

Of course it is untrue, it’s just another damnable lie from President Jackass McDowngrade. He says this stuff while begging Saudi Arabia on the other hand to increase production.

slickwillie2001 on March 17, 2012 at 9:23 AM

What is it like to know that a global oil market exists and still come to the conclusion that the President has any control over the price of oil. I genuinely want to know how those two ideas exist in your brain at the same time.

libfreeordie on March 17, 2012 at 9:35 AM

What’s sickening is that the GOP is trying to purposefully obfuscate this fact and continues to blame Obama for gas prices that are set by a global market.

libfreeordie on March 17, 2012 at 9:32 AM

But we’re playing that game, and we don’t have to play that game. We have our own oil.

RBMN on March 17, 2012 at 9:35 AM

Rich in oil, and richer still in natural gas.

The leftist stranglehold on our energy production is outrageous.

petefrt on March 17, 2012 at 9:36 AM

The only way drilling at home would work is if the US petroleum industry divorced itself from the global markets (no sales or purchases of crude outside the US), and the price of US crude was set by committee, and not the free market.

BobMbx on March 17, 2012 at 9:30 AM

Communism or fascism is never a good answer. All this would do is move investment in oil production to other countries that don’t interfere in the market.

slickwillie2001 on March 17, 2012 at 9:36 AM

If a lot of these reserves are on public lands, they belong to the American people. Companies that recover that oil should pay a percentage of the value of that oil to pay down our debt.

For God’s sake, don’t let the politicians get their hands on it.

trigon on March 17, 2012 at 9:37 AM

And even if this weren’t true, it’s still in our interest to use as much of our own oil as possible for many reasons.

Sorry Jazz but you muffed this one a bit.

jnelchef on March 17, 2012 at 9:34 AM

Oh hi there Hugo Chavez! Didn’t think I’d see you on here.

Hmmm? What’s that? You’re not Hugo Chavez? How odd, because it looks an awful lot like you’re proposing that the state could claim some control over American oil reserves and distribute those resources themselves at a discounted price. There is no other way you could prevent multi-national oil companies from selling U.S. oil supplies to the global market.

libfreeordie on March 17, 2012 at 9:38 AM

libfreeordie on March 17, 2012 at 9:28 AM

Do you understand that when supply is plentiful prices go down? The problem is not even supply right now as much as fear and worry of scarcity.

Southernblogger on March 17, 2012 at 9:39 AM

If a lot of these reserves are on public lands, they belong to the American people. Companies that recover that oil should pay a percentage of the value of that oil to pay down our debt.

I believe you’re proposing that the U.S. levy a tax on oil profits. Fascinating. And you’re a Republican?

libfreeordie on March 17, 2012 at 9:39 AM

You could institute an export tax on crude or refined products produced here in the US. Depending on the effect you desired, the tax could promote exports, make exporting undesirable, or be a neutral proposition for companies.

trigon on March 17, 2012 at 9:42 AM

Do you understand that when supply is plentiful prices go down? The problem is not even supply right now as much as fear and worry of scarcity.

Southernblogger on March 17, 2012 at 9:39 AM

No, the problem is global demand. The middle class in the developing world, particularly India and China, is growing every single year. They are (like Americans) demanding a particular lifestyle, buying cars, heating/cooling their homes for year round comfort etc. etc. This means that the global demand for oil is much, much, much greater than could be accounted for by an increase in U.S. production. We would be sacrificing our beach fronts (an the tourism dollars there), we would enrich multi-national oil companies and the price of gas might fluctuate for a few months, at best. Sounds like a great idea!

libfreeordie on March 17, 2012 at 9:44 AM

If we increased our domestic oil production, I trhink it would lower prices due to it being a more stable source vs the Middle East.

SouthernRoots on March 17, 2012 at 9:44 AM

Saudi Arabia is not worried about the price of oil, because if the price is high, they’re selling it, and if the price is low, they’re cutting back production. There’s no reason we couldn’t do exactly the same. We could be controlling the price–not at the mercy of others.

RBMN on March 17, 2012 at 9:44 AM

I heard yesterday that the President will be in our great state (Oklahoma) next week as part of his Michael Jackson Driller tour. He’s actually going to Cushing, oil pipeline crossroad of the country, to tout what he’s done for oil production in this country.

I want to puke every time I think about that

Tar Heel Sooner on March 17, 2012 at 9:44 AM

You could institute an export tax on crude or refined products produced here in the US. Depending on the effect you desired, the tax could promote exports, make exporting undesirable, or be a neutral proposition for companies.

trigon on March 17, 2012 at 9:42 AM

Amazing how oil issues transform everyone into a leftist? I thought the free market was the best, most rational, most fair and most effective system for ensuring a sustainable standard of living for the American people. And that its when you increase government that the Free Market starts to fall apart. And yet, here we are, with poster after poster advocating for taxes, state control of oil reserves, the idea that valuable land collectively belongs to the American people and so on and so forth. If you believe these things why are you Republicans?

libfreeordie on March 17, 2012 at 9:46 AM

“It’s just the way the free market works.”

The way the free market works is that pricing happens at the margin, Jazz. Others have correctly pointed out that if the U.S. signaled a commitment to exploiting its resources, prices would drop immediately. Do you really think that the doubling of prices in the past three years has resulted from a doubling of demand or a 50% reduction of supply??

Pretty dumb way to end an otherwise reasonable piece.

PD Quig on March 17, 2012 at 9:46 AM

The muslim in the white house wants us to revert back to the 7th century along with his pals in the middle east. Lean Forward with windmills. This guy has gotta be sent back to Chicago….

jb34461 on March 17, 2012 at 9:47 AM

Even if we opened the floodgates and were able to jack up our domestic production by 20% overnight, it wouldn’t do much to move the needle on gas and oil prices in general.

And Obama is an Economic Idiot…Don’t follow him. Let’s suppose that our increased oil production only increased world output by 1%. This would have an VERY LARGE impact on world prices. For those of you who know economics: Demand for oil is very inelastic, therefore small increases in output can produce very large changes in price.

It is estimated that when oil prices in the early 2000s doubled that this was caused by a 3-4% increase in usage. So just a 3-4% increase in demand caused oil prices to go up 200%. Therefore, while 1% seems very small, it could have a very large impact on price. Additionally, if producers around the world know that more oil will be coming onto the market in the future and thus driving down prices, they will release more oil from their reserves now.

To understand why, suppose you knew you were going to get a much higher price for oil in the future. Would you want to sell as much now? If you do not sell as much now, what happens to prices right now?

quill67 on March 17, 2012 at 9:48 AM

There’s no reason we couldn’t do exactly the same. We could be controlling the price–not at the mercy of others.

RBMN on March 17, 2012 at 9:44 AM

OK, think what you’re saying through to its logical conclusion. Who is going to drill oil in the United States? Are you proposing a state controlled oil agency that extracted, refined and distributed our oil to American consumers only?

No? Then are you proposing that any multi-national corporation who drills for oil in the United States has to donate 50% of their supply to the American reserve, which would then distribute oil at a reduced price to American consumers?

No? Then are you proposing that multi-national corporations who drill on American oil pay a massive tax to the federal government so that we could offset the high price of gas with other redistributionist programs?

No? Then how? How do you propose that U.S. oil supplies avoid being sold to the global market? Seriously, I’m curious.

libfreeordie on March 17, 2012 at 9:50 AM

libfreeordie on March 17, 2012 at 9:44 AM

Mr President, when your argument is based on non-facts , the conclusions arrived at tend to be false too. Get Sasha or Malia to explain this. There is increased demand for sure, but the way to offset this is by increasing supply.Simple.

Southernblogger on March 17, 2012 at 9:51 AM

I believe you’re proposing that the U.S. levy a tax on oil profits. Fascinating. And you’re a Republican?

libfreeordie on March 17, 2012 at 9:39 AM

No, I’m proposing that I receive a benefit for something that belongs to me. I’m proposing that that benefit not be hijacked by a bunch of statist politicians. Also, I didn’t propose taxing the profits. I proposed that the companies that recover the oil pay a certain amount per barrel for the privilege. It does, after all, have value.

And, I’m an independent. A conservative one.

I have no problem funding the government by reasonable taxes on transactions that are freely entered into. Taxing income or assets simply because they exist is an abomination.

trigon on March 17, 2012 at 9:51 AM

No? Then how? How do you propose that U.S. oil supplies avoid being sold to the global market? Seriously, I’m curious.

libfreeordie on March 17, 2012 at 9:50 AM

Seriously ironic seeing you argue against Big Gov. You should be all for it . I am sure you can figure it out. You’re a joke.

CW on March 17, 2012 at 9:54 AM

Somehow I get the feeling that libfree was all about blaming Bush when gas prices were high a few years ago…

stvnscott on March 17, 2012 at 9:54 AM

Why are we wasting our time discussing the intricacies of the oil market? Obana will never “open the floodgates” because it would upset his green energy overlords. It needs to be pounded into the heads of the American people that Big Green controls this Precedent. Rather than talking about $2.50 gas, the candidates and pundits should be hammering the SCOAMF on the money wasted on green energy companies that have since gone bankrupt. I’m sick of this shell game. Obama is anti-oil because it doesn’t benefit him. This is where politicians are so myopic; he could benefit by opening the floodgates but he’s not going to risk losing the support from the eco-whackadoodles.

rmel80 on March 17, 2012 at 9:55 AM

I believe you’re proposing that the U.S. levy a tax on oil profits. Fascinating. And you’re a Republican?

libfreeordie on March 17, 2012 at 9:39 AM

So Republicans don’t believe that profits should be taxed. What fricking world do you live in ??? You’re so dishonest in your arguments.

CW on March 17, 2012 at 9:55 AM

If you believe these things why are you Republicans?

libfreeordie on March 17, 2012 at 9:46 AM

I didn’t intend to promote state control of energy production, but to point out the folly of any state policy that manipulates the market. It distorts it, and always in a net negative fashion. Always.

The oil market will be what it will be. Anyone who desires $1.00/gallon gasoline is living a fantasy. Why isn’t the country having a dialogue about the price of anything that isn’t the same as it was 30 years ago?

BobMbx on March 17, 2012 at 9:56 AM

Why are we wasting our time discussing the intricacies of the oil market? Obana will never “open the floodgates” because it would upset his green energy overlords. It needs to be pounded into the heads of the American people that Big Green controls this Precedent. Rather than talking about $2.50 gas, the candidates and pundits should be hammering the SCOAMF on the money wasted on green energy companies that have since gone bankrupt. I’m sick of this shell game. Obama is anti-oil because it doesn’t benefit him. This is where politicians are so myopic; he could benefit by opening the floodgates but he’s not going to risk losing the support from the eco-whackadoodles.

rmel80 on March 17, 2012 at 9:55 AM

Actually, Teh SCOAMF is pretty pro-oil when it benefits his buddies (see Libya, where the interests of George Soros were serviced by the ouster of Gaddafi, and Brazil, who he wants us to be the “best customer” of because they’re currently being run by proto-Communists).

Steve Eggleston on March 17, 2012 at 9:58 AM

No, the problem is global demand. The middle class in the developing world, particularly India and China, is growing every single year. They are (like Americans) demanding a particular lifestyle, buying cars, heating/cooling their homes for year round comfort etc. etc. This means that the global demand for oil is much, much, much greater than could be accounted for by an increase in U.S. production. We would be sacrificing our beach fronts (an the tourism dollars there), we would enrich multi-national oil companies and the price of gas might fluctuate for a few months, at best. Sounds like a great idea!

libfreeordie on March 17, 2012 at 9:44 AM

The beginning of your statement above is cogent. There is an increase of demand on the global front. But, then, you contend we shouldn’t bother increasing production to meet that demand. And then at the end comes the environemntal and eeeeeevil oil company spin. You traveled a long path in a short time.

Bitter Clinger on March 17, 2012 at 9:58 AM

Do you really think that the doubling of prices in the past three years has resulted from a doubling of demand or a 50% reduction of supply??

Pretty dumb way to end an otherwise reasonable piece.

PD Quig on March 17, 2012 at 9:46 AM

You all should really read each other’s posts:

It is estimated that when oil prices in the early 2000s doubled that this was caused by a 3-4% increase in usage. So just a 3-4% increase in demand caused oil prices to go up 200%
quill67 on March 17, 2012 at 9:48 AM

However, quill67 also doesn’t quite have it right.

Therefore, while 1% seems very small, it could have a very large impact on price.

The problem is that our 1% increase would go towards a demand increase that far outstrips our contribution to the global supply. Here are lots of helpful charts, statistics and data:

http://www.smartplanet.com/blog/energy-futurist/oil-demand-shift-asia-takes-over/400

Particularly relevant section

China and India have been primarily responsible for the astonishing growth in demand. Working over data from the EIA, I find that U.S. oil demand fell 1.65 mbpd in the five years from 2005 through 2010, while China and India’s demand grew 0.96 mbpd in just one year, from 2009 to 2010. From 2005 through 2010, the growth in demand from China and India was double the demand lost in the U.S., and 1.14 times the combined demand loss of the U.S. and Europe.

Also this:

It would be a grave error to assume that new supply from expensive and slow-scaling unconventional sources can meet 1 mbpd of new demand this year, and the next, and the next on into the future. Remember, total “tight oil” production in the U.S. in 2011 was just over half a million barrels per day, and it took about 7 years and thousands of wells to achieve. We’re not going to slake the thirst of the Red Dragon by the thimbleful of shale oil.

libfreeordie on March 17, 2012 at 10:00 AM

Energy is traded on a global market, not compartmentalized by nation. When we produce more than we need, the rest is immediately sold as exports with few exceptions.

True to a certain extent, but that doesn’t mean that prices won’t be mitigated here to some extent. And there are other advantages.

1) Even if the market demand absorbs the excess production, the additional supply will reduce the marginal cost of every barrel.

2) The futures market is highly sensitive to perceptions regarding future supply. When President Bush opened land to exploration and made known we would be increasing production we saw prices drop precipitously, even though none of that oil would be on the market for years.

3) If the supply is here, the cost of transportation is greatly reduced, so local prices are reduced relative to the cost of imported oil.

4) From a security standpoint, we are obviously far better off the less we depend on imports. Furthermore, the greater the global production capacity, the less impact troubles in the oil producing countries has on global price swings.

The TRUTH: If the US announced a credible plan to exploit national petroleum resources, the global oil market would react with lower prices immediately.

Obama and his crew are intentionally inflicting higher than necessary energy prices on our country, which increases the costs of not just gas but also food and every single product on the market. The heaviest burden falls on those least able to bear it. Obama and his crew are simultaneously increasing the risks of energy market fluctuations to our national security.

They do this in service to their “green” agendas, and they do it in the midst of of a deep economic downturn.

novaculus on March 17, 2012 at 10:02 AM

quill67 on March 17, 2012 at 9:48 AM

Quite right.

novaculus on March 17, 2012 at 10:03 AM

Proven reserves are used to raise or lower the price of the companies stock. Gold companies manipulate it all the time. If the value of the company drops to far they just “prove up” reserves by drilling on land that they know has gold and raise the stock price. Conversely if the price is to high they slow up exploratory drilling. All mining companies including oil do it.

Proven reserves are an SEC number and may have nothing to do with actual reserves.

BullShooterAsInElk on March 17, 2012 at 10:05 AM

Get Up Behind Him And Flick His Ears!

He does not think for the good of the country, it starts and ends in a very simplistic political analysis.

Has anyone asked the domestic oil industry or the unemployed (those who actually want jobs, of course) whether there is any raeson to produce energy for the rest of the world?

We have trade deficits, debt to China and probably a few payday loan offices, and….

all those guys and gals cashing unemployment checks run up our budget deficits!!!

Not to mention the $50,000 a year energy jobs making SS disability looking less attractive.

And no candidate on the GOP circuit brings this up or calls this clown out!

Mitt? Rick? Ron? Newt?

OMG

IlikedAUH2O on March 17, 2012 at 10:06 AM

Why isn’t the country having a dialogue about the price of anything that isn’t the same as it was 30 years ago?

BobMbx on March 17, 2012 at 9:56 AM

What dialog? Everything inflates because we have a fiat currency. For more than the first 100 years this country was around, there was little inflation (Mostly around the Civil and First World Wars). Since we have decoupled our currency from any kind of backing, the value of money has steadily decreased. Just as the people who did it intended. Now, we’ve all going to get to enjoy the inevitable result of that decoupling.

trigon on March 17, 2012 at 10:07 AM

Libfree I wonder if you can ever make a point on your own. I doubt it . The little games you play are very tiresome.

Hey btw Kasich of Ohio is calling for higher taxes on energy related operations. Isn’t he a Republican?

CW on March 17, 2012 at 10:08 AM

Listen to our POTUS, don’t build refineries or drill..

HIS ATTITUDE IS NOT WHAT BUILT THIS NATION!

IlikedAUH2O on March 17, 2012 at 10:09 AM

Libfree I wonder why Obama is bragging about the increased production under his watch?

CW on March 17, 2012 at 10:10 AM

There is increased demand for sure, but the way to offset this is by increasing supply.Simple.

Southernblogger on March 17, 2012 at 9:51 AM

Do you understand the true scope of the challenge? In just over a decade, global oil demand is expected to increase by over 50%.

This number sounds unbelievable, until you realize how much oil is consumed by the US in a world that’s experiencing unprecedented growth and prosperity in a much more populated part of the world- Asia. You don’t need another Saudia Arabia to satiate the future level of demand- you need 4 or 5 comparable, new sources.

Any impact made on the supply side will be overwhelmed by oil demand growth.

Now when it comes to natural gas, I completely agree with you. The US is positioned to redefine the cost of its energy use; her natural gas supplies truly promise a future of both energy independence and just as importantly economic independence from the potentially devastating effects that future oil demand will have on global prices.

bayam on March 17, 2012 at 10:10 AM

Listen to our POTUS, don’t build refineries or drill..

HIS ATTITUDE IS NOT WHAT BUILT THIS NATION!

IlikedAUH2O on March 17, 2012 at 10:09 AM

Leeches did not build this great country. No wonder the likes of Obama and Libfree are the way they are. Just a bunch of users who without the producers would be wallowing in their own filth.

CW on March 17, 2012 at 10:12 AM

The guy who owns the biggest forest doesn’t control the price of wood until he pulls out a chainsaw and starts cutting. Until you bring out the chainsaw, your forest is just a playground for squirrels, but not much else. Somebody will sell wall studs and roof trusses, and profit from it, but it won’t be you.

RBMN on March 17, 2012 at 10:12 AM

Jazz, Jazz, Jazz you once again fall for the “progressive” theme of oil being traded globally.

Sure the market trades the oil globally and benchmark prices are for certain locations like the Brent spar in the North Sea or Cushing, OK terminal/hub. HOWEVER, oil is produced at certain fields and for the U.S. would include transport cost (rail or pipeline) to Cushing. It also has to move via oil tanker from Brent to desired destination. There in fact ARE discounts below benchmark prices, due to grade and/or location.

Canadian Syncrude is fetching $68/bbl (last time I checked)at Cold Lake, AB. It’s pipeline delivery to Minneapolis, Detroit, Wood River (IL) and Borger (TX) where refineries are presently receiving it in now way is it receiving the $100+ price on the “Global Market.”

Kermit on March 17, 2012 at 10:12 AM

I’m proposing that that benefit not be hijacked by a bunch of statist politicians. Also, I didn’t propose taxing the profits. I proposed that the companies that recover the oil pay a certain amount per barrel for the privilege. It does, after all, have value.

I didn’t propose taxing the profits.

Oh my mistake, carry on.

I proposed that the companies that recover the oil pay a certain amount per barrel for the privilege. It does, after all, have value.

*FACEPALM*

Yes the oil has a value. It is that value, when translated into the market, that becomes PROFIT. The “fee” that oil companies would pay “per barrel” is a “tax” on a “percentage” of their “profits” per barrel. The money they earn per barrel. You are proposing a tax. You can call it whatever you want. A rule, a fee, a regulation, it. is. a. tax.

Here, help me out. Please explain the difference between a per barrel fee and a tax on oil profits.

I’m proposing that I receive a benefit for something that belongs to me.

Something that belongs to you. You are saying that every American citizen has an equal ownership claim on every drop of oil within the United States territory? I would agree, but I’m a fricking Marxist. What you’re describing is collective ownership of the land and a demand that American citizens be compensated for the use of OUR land. Absolutely stunning.

libfreeordie on March 17, 2012 at 10:15 AM

Now when it comes to natural gas, I completely agree with you. The US is positioned to redefine the cost of its energy use; her natural gas supplies truly promise a future of both energy independence and just as importantly economic independence from the potentially devastating effects that future oil demand will have on global prices.

bayam on March 17, 2012 at 10:10 AM

We should go for all the resources, oil, natural gas, solar etc. to meet our energy challenges but to have many simply attack oil and argue against an increase in its production here in this country is just a political ploy. I we make inroads on many fronts , including oil, we will be successful.

To think that Obama’s reluctance to allow more oil production does not affect the markets is just naive.

CW on March 17, 2012 at 10:16 AM

the idea that valuable land collectively belongs to the American people and so on and so forth. If you believe these things why are you Republicans?

libfreeordie on March 17, 2012 at 9:46 AM

The Federal Government coming in and taking control of the land does not make it “for the people”. If anything, it is taking it FROM the people. Now I wonder how you can possibly be a liberal.

And this is also the time (once again), to point out that Federal land ownership is illegal under the Constitution unless it is for administration buildings, military buildings, post roads/buildings or other needful buildings. So unless they are planning on leveling the entire land and covering it with a gargantuan building, it is ILLEGAL. Don’t believe me, read through Article I section 8.

dominigan on March 17, 2012 at 10:16 AM

Here, help me out. Please explain the difference between a per barrel fee and a tax on oil profits.

libfreeordie on March 17, 2012 at 10:15 AM

I will save that post for later when you start claiming fees are not taxes yourself. We know you have.

CW on March 17, 2012 at 10:17 AM

But, then, you contend we shouldn’t bother increasing production to meet that demand.

Do you not understand that the US cannot meet the growing demand of China? You people are right about natural gas, but completely wrong on oil. Look up the oil demand growth numbers. This isn’t a difficult concept to grasp.

bayam on March 17, 2012 at 10:17 AM

Don’t believe me, read through Article I section 8.

dominigan on March 17, 2012 at 10:16 AM

Like 100 watts to cochroaches.

CW on March 17, 2012 at 10:18 AM

This isn’t a difficult concept to grasp.

bayam on March 17, 2012 at 10:17 AM

Ahhh the irony.

CW on March 17, 2012 at 10:19 AM

Energy is traded on a global market, not compartmentalized by nation. When we produce more than we need, the rest is immediately sold as exports with few exceptions. When we don’t produce as much, we import more. It’s just the way the free market works.

Fine, but oil pumped and refined here would be cheaper than oil $hipped in from Muslimville.

Akzed on March 17, 2012 at 10:20 AM

Libfree I wonder why Obama is bragging about the increased production under his watch? CW on March 17, 2012 at 10:10 AM

Aside from debt, the only thing growing under his watch is the hair on his wrist.

Akzed on March 17, 2012 at 10:22 AM

What is funny is that the same people claiming our own production of energy won’t make a dent and make the point rightfully that we cannot force the energy to be sold and used here are the same ones buying Obama’s line about algae and the like. That energy too will have limited effect on prices….that is why we need to go for it all.

CW on March 17, 2012 at 10:22 AM

You need to fix the link to the IBD article and here is the correct link.

http://news.investors.com/article/604303/201203141303/oil-abundant-in-the-united-states.htm

JeffinSac on March 17, 2012 at 10:22 AM

Now when it comes to natural gas, I completely agree with you. The US is positioned to redefine the cost of its energy use; her natural gas supplies truly promise a future of both energy independence and just as importantly economic independence from the potentially devastating effects that future oil demand will have on global prices.

bayam on March 17, 2012 at 10:10 AM

We should go for all the resources, oil, natural gas, solar etc. to meet our energy challenges but to have many simply attack oil and argue against an increase in its production here in this country is just a political ploy. I we make inroads on many fronts , including oil, we will be successful.

To think that Obama’s reluctance to allow more oil production does not affect the markets is just naive.

CW on March 17, 2012 at 10:16 AM

According to which analysts on Wall Street? Can you take your political feelings out of this topic for a minute and try to comprehend the meaning of global oil demand increasing by 50% in just over a decade? The world cannot come even close to meeting that type of demand. The only chance the US has to protect itself to the coming economic shock is to transition to other fossil fuels – no, solar cannot scale quickly enough. Forget about the ‘save the world with green’ idiots for a moment and don’t counter with another argument that’s just as foolish.

bayam on March 17, 2012 at 10:23 AM

Any impact made on the supply side will be overwhelmed by oil demand growth.

bayam on March 17, 2012 at 10:10 AM

Only if progressive liberals remain in charge.

Open up the illegally taken federal lands, invest in lab-proven conversion of coal to oil, lessen regulations/permitting of oil/gas wells and nuclear facilities, restart research on proven thorium nuclear plants (safer than uranium using thorium found in coal)… and we have PLENTY of energy for HUNDREDS of years.

Short-sighted liberal environmentalists have confined us to an artificial box and refuse to think outside it. “Oh, woe are we”…

dominigan on March 17, 2012 at 10:23 AM

CW on March 17, 2012 at 10:12 AM

Just FYI, I won’t be responding to your posts anymore. You can continue to address me if you like.

libfreeordie on March 17, 2012 at 10:23 AM

Libfree I wonder why Obama is bragging about the increased production under his watch? CW on March 17, 2012 at 10:10 AM

Aside from debt, the only thing growing under his watch is the hair on his wrist.

Akzed on March 17, 2012 at 10:22 AM

Akzed this question is for Obama supporters:

Why is Obama celebrating high oil production if he does not think it lowers the prices of oil? Is he being dishonest like most of you?

Simple question . Nobody will take it on.

CW on March 17, 2012 at 10:24 AM

Do you not understand that the US cannot meet the growing demand of China? You people are right about natural gas, but completely wrong on oil. Look up the oil demand growth numbers. This isn’t a difficult concept to grasp. bayam on March 17, 2012 at 10:17 AM

How much is a gallon of gas in Saudi Arabia?

Akzed on March 17, 2012 at 10:24 AM

Fine, but oil pumped and refined here would be cheaper than oil $hipped in from Muslimville.

Akzed on March 17, 2012 at 10:20 AM

Why would an oil company willingly sell market to a domestic market when there are more profits to be made on a global market?

libfreeordie on March 17, 2012 at 10:25 AM

Do you understand the true scope of the challenge? In just over a decade, global oil demand is expected to increase by over 50%.
bayam on March 17, 2012 at 10:10 AM

That only makes it more critical to start exploiting what we have and to utilize other sources better such as natural gas. My whole point is that Obama’s energy policy is insane and irresponsible, and it will have dire consequences if we don’t pry his hands off the lever. I am fine with green power, but it is not close to market ready yet.

Southernblogger on March 17, 2012 at 10:25 AM

Just FYI, I won’t be responding to your posts anymore. You can continue to address me if you like.

libfreeordie on March 17, 2012 at 10:23 AM

Liars hate being called out. Don’t worry I will continue. You’re just a dupe . I have met seen some bought stupid posters but you top the cake.

CW on March 17, 2012 at 10:25 AM

Gee….

I’ve been making this point about the difference between “Proven Reserves” and “Recoverable Reserves” and “Obama lying with the truth” all over the comment threads for some time now.

Glad someone finally caught up.

jaydee_007 on March 17, 2012 at 10:26 AM

Simple question . Nobody will take it on.
CW on March 17, 2012 at 10:24 AM

Another simple question: how much would we save if we ended the practice or having 75 summer blends of gas, like we did when we waived the requirement in the Katrina aftermath?

Akzed on March 17, 2012 at 10:26 AM

Fine, but oil pumped and refined here would be cheaper than oil $hipped in from Muslimville.

Akzed on March 17, 2012 at 10:20 AM

It sure would. Now, based on this, what would you say the percentage of the cost of a gallon of gasoline is the transportation cost from the middle east?

The vast majority of the oil we import does not come from the ME.

BobMbx on March 17, 2012 at 10:26 AM

Don’t believe me, read through Article I section 8.

dominigan on March 17, 2012 at 10:16 AM

Like 100 watts to cochroaches.

CW on March 17, 2012 at 10:18 AM

In my opinion, every conversation on energy involving conservatives should start by highlighting the ILLEGAL taking of land by the federal government, cheered on by liberals. That is the reason we “can’t drill our way out of it”… because 90% of the oil/gas is locked up illegally!

It’s like crying that “we can’t get around like we used to” after shooting ourselves in both feet, both legs, both hands, both arms, and now we’re down to wriggling on the ground using our tongue to pull us along. Stupid, stupid, stupid…

dominigan on March 17, 2012 at 10:27 AM

Another simple question:

If draining the emergency reserves would lower prices as Obooba admits, why won’t pumping and refining oil do the same?

Akzed on March 17, 2012 at 10:27 AM

Comment pages: 1 2 3