Why "Drill, Baby, Drill!" Does Not Translate Into Effective National Energy Policy

Amid the carefully choreographed political conventions last month, there was a spontaneous chant that will be familiar to anyone who watched the Republican festivities: 

“Drill, baby, drill!  Drill, baby, drill!  Drill, baby, drill!”

For a party firmly associated with politically unpopular “Big Oil”, having this chant rise up—most vociferously from the ten-gallon hatted Texas and Oklahoma delegations—was not exactly what Republican leaders wanted in prime time. John McCain’s ambivalence was palpable when this chant briefly interrupted him during his acceptance speech. 

Yet the chants of “Drill, Baby, Drill!” do have real populist appeal these days. It was not only Texas oilmen who joined the chorus. Consumers are upset. Gas prices still hover near $4 a gallon. Crude oil, even accounting for its recent swoon back into the sub-$100 zone, has tripled in price since President Bush took office less than eight years ago. The idea that our energy crisis could be fixed by the simple measure of more drilling is tempting. 

But will increased drilling really bring us cheaper oil? Will it bring us independence from foreign oil? Will it even bring us much more oil at all? 

Common sense says it certainly won’t hurt domestic production to drill more. But the truly important question is this: Will more drilling really substantially improve our domestic energy supply? Common sense alone cannot answer this question rigorously. However, we can answer this critical question if we take a careful look at hard numbers from the oil patch.

 Drilling Activity and Oil Production - The Big Picture

 First, we need the hard numbers. The Baker Hughes Corporation (BHI) is not only a leading manufacturer of drill bits, the company also compiles comprehensive data on oil drilling for the entire industry. We’ll be looking at their historical drilling data in this analysis.

There are two main classes of common oil rigs, when someone chants “Drill, baby, drill!” they are referring to rotary drill rigs. These are the workhorses used to punch new holes in the ground. Rotary drill rigs are used both to explore for new fields and also to enhance extraction from known fields. The other main type of rig, the “workover rig”, is primarily used for recasing, data logging, fracturing wells and the like. Workover rigs are also an essential part of oil production, but the focus of people on drilling is quite appropriate, because it is arguably the critical “rate-limiting” step in the search for new oil.

So the first step in determining the relationship between drilling activity and oil is to look at the big picture. The following graph shows United States drilling activity and United States oil production, going back as far as we can (1949) with the publicly available Baker Hughes drilling data.

Click to enlarge

 Looking at nearly 60 years of data in this plot, four important things are clear:

 (1) People debate the likelihood of a global oil production peak heatedly but, from a domestic point of view, peak oil is very old news: U.S. oil production peaked in 1970—a peak that we’ve never since exceeded, despite the subsequent 38 years of technology improvement, major events like the ramping up of North Slope oil production, and the economic incentive of increasing oil prices (remember the average price of oil at the 1970 peak was about 10 dollars a barrel—and that’s in inflation adjusted dollars!)

 (2) Over this large time scale, there is remarkably little correlation at all between drilling activity and oil production. For example, from 1955 to 1970 drilling activity in the U.S. decreased steadily, from over 2500 working rotary rigs all the way down to 1000. Yet during this time oil production increased by over 40%. These were the good old days when boys were boys, men were men, and the U.S. domestic oil industry was still a young industry—with large and easily accessible fields just waiting to be drilled—rather than the mature, literally “over the hill”, industry it is today.

 (3) The best case one can make for the benefits of drilling are during the period from 1971 to 1981 when—spurred by the oil embargo, the huge price increase of oil, and Jimmy Carter’s infamous cardigan—the number of active rotary drill rigs more than quadrupled. This herculean increase in drilling activity did manage to reverse the decline in U.S. production for several years (after a five year delay) but, overall, production in this period of increased drilling still declined: oil production at the secondary peak was still below the 1970 peak. In fact, to take the most optimistic assessment of the benefits of drilling, the 300% increase in drilling bought just a 10% increase in production from the 1976 intermediate nadir to the secondary 1985 production peak.

 (4) Recently, the benefits of increased drilling in expanding oil production are even more anemic. With our domestic resources increasingly mature, the recent increase of drilling—a three-fold increase from 1999 to 2008—has not only brought no increase in production, it has not even stopped the continuing decrease in domestic oil production over the last decade.

 

Looking Closer - Does More Drilling Activity Lead to Increased Oil Production?

 It’s possible to analyze U.S. drilling and oil production more closely and quantitatively. We can do this by graphing the relationship of the number of working drill rigs in a year, and the domestic oil production per rig. Keep in mind that this is something of an abstraction. Rotary rigs do not directly produce oil, there is generally a great deal of work to be done under a workover rig (hence the name) before the oil comes to market but, as I said, drilling is arguably the rate-limiting step to the production of oil and one would expect a tight relationship. Here is the graph: 

Click to enlarge

 

This is quite an extraordinary graph—and a sobering one. Unlike the loose overall historical relationship between domestic drilling and production, there is quite a tight relationship between drilling activity and oil production per rig. However, the relationship is precisely the last one you would want if you hope that drilling will solve our nation’s energy problems. The relationship shows that more active drill rigs translates quantitatively into less oil per rig. Even worse, as the red data and fitted curve show, this law of diminishing returns has gotten both worse, and statistically tighter, recently, including during the increase in drilling over the last decade.

The relationship is a power law, and the little negative exponent is the critical bit. The fact that it is negative, and that its magnitude is greater than one, ends up being very important. This fact is easier to see on a logarithmic graph, which “takes all the curves out” of a relationship like this, and linearizes it:

Click to enlarge

 

 

With everything straightened out this way, the relationship becomes very clear. The little exponent in the untransformed data is now just the slope that you (hopefully) remember from high school math class. As you can see, this slope is -1.16 for the data before 1990. For the most recent years the line is both lower and more steeply negative, with the slope now nearly -1.30 and, furthermore, the relationship is statistically even more robust as of late—the earlier R² of 0.91 is good, but the R² of 0.95 for the most recent data means that 95% of the variation is explained by the relationship, which is very strong indeed.

This strong quantitative relationship between drilling and oil production has a sobering upshot. Since 1949 the overall pattern has been this: the harder we look for oil and the more we drill, the harder it gets to find. And during the last 17 years, with the most current technology and under the most recent economic conditions, this relationship has only gotten worse. The fact that the recent [red] data are lower means that recently we are finding less oil per working drill rig. The fact that the slope has become more steeply negative means that as we look harder for oil in the United States, the oil production we actually get has become even more paltry.

U.S. oil production is in late middle age. This is what the decline looks like quantitatively. And you see those last four red triangles marching forlornly down the red line? Those are the last four years of data.

 

One Proviso – Time Delays From Drilling to Production

Some clever readers may have noticed that I have simplified things a bit by ignoring the time delay between drilling and production in some of this analysis. Drilling proponents tend to underemphasize this delay, because they want the public to think that current drilling will bring oil online very quickly. It turns out that empirically, the best-fitting time delay between drilling and production is 4-6 years. This delay is fairly apparent just by looking again at the graph of U.S. drilling and U.S. production, and inspecting it closely:

Click to enlarge

 

For example, as the up arrows indicate, there was a five-year lag from the drilling nadir in 1971 and the production trough in 1976. And, as the down arrows indicate, there was a slightly shorter four-year lag between the enormous spike in drilling that peaked in 1981 and the following anemic secondary peak of oil production in 1985.

The Pollyannas out there might conclude that the slight shortening of the two lags with time might be because improved technology and increased efficiency have shortened the lag from exploration to extraction. I have heard many oil lobbyists make this claim when they try to downplay the lag between drilling and production. However, if you believe this, then the fact that despite a three-fold increase in drilling from 1999 to 2008, our domestic production continues to decline, is just that much more sobering.

I have done same the same analyses accounting for the time delay. The basic picture is entirely the same. The graphs tell the same story, with the slopes of the power law relationship negative and steeper than -1. (I’ll explain the implications of these slopes in the next section.) So, even accounting for the time delay between drilling and production, the conclusions are identical: the data do not support the hope that even a huge increase in drilling will do anything but, at best, slightly stem the overall rate of decline of our domestic oil production. Hope for a substantial increase is just that, hope, and it is blind hope that is blind to the data and to history.

[Anyone undaunted by the additional complication of accounting for the time delay can find my discussion of the relationship of future oil production and current drilling activity here.

 

More Straws in Increasingly Smaller Cups

The overall quantitative picture for United States oil production today is one where the effect of increased drilling is essentially like putting more straws into the same cup. 

Actually, it’s worse than that:  if it were only that bad the slopes in the graphs would be -1, and they are actually steeper than that. This is a bit counterintuitive, because what’s actually happening is rather complicated. Some drilling activity really is just putting another hole into the same old reserves. But drilling certainly does find new, previously untapped, resources, too. The problem, as Ken Deffeyes has pointed out in his book Hubbert’s Peak, is that all our new technology, and the recent increase of drilling activity, is mostly going into smaller and smaller discoveries. Our domestic oil supplies are pretty well picked over, and the “low-hanging fruit” remaining—the shallowest, lightest, most-permeable, and largest reserves of domestic oil—are few and far between.

The fact that the slopes of all the power laws are more steeply negative than -1 can be illustrated by a short parable. You’re on a first date in high school, and your date orders a chocolate malted right as you both slide into your booth. When the malted arrives you find that you’re really hungry and it looks really good. You’re tempted to just pop another straw into her shake and suck as hard as you can. But, no, you don’t really know her that well and, besides, you don’t want to look cheap. So when the waitress swings by you order a malted yourself. America’s a land of plenty, after all: there are malteds enough for everyone, right? However, when it finally arrives, you find that your malted is actually less than half the size of your date’s, it’s in this little bitty cup, and what’s more, it’s also too thick somehow and it tastes really gritty and nasty.

That’s where the United States is in regard to oil: most of the untapped reserves we have left are smaller, deeper, farther offshore, less permeable, increasingly sour, and generally more expensive to bring to market. And the more we drill, the more this will be the case.

 

Diminishing Returns of Oil, But Not Of Money, in the Oil Patch

Upon a little reflection, anyone who did not entirely sleep through their introductory economics class should be able to make sense of this. With a nonrenewable resource, of course one will reach a point of sharply diminishing returns.

Does this mean the oil industry is finished? Not at all. There is good money to be made in drilling for a long time. As prices go up, oil drillers and producers can make very good money on the diminishing resources. The scarcity value can make up for the fundamental scarcity for a very long time. That is, of course, the economic reason why drilling activity has recently increased despite the diminishing return of oil production: the price is higher.

For example, say you think ANWR is likely to be opened to oil companies, and you think significant oil reserves will be found. Because even the largest likely finds there are unlikely to significantly lower world oil prices (even the most optimistic daily production estimates are OPEC rounding error), precisely for that reason, there is a lot of money to be made. Likely beneficiaries of such an event include many of the majors, especially current North Slope producers: names like Chevron (CVX), ConocoPhilips (COP), Shell (RDS.A), Eni (E), Veritas (CGV) and BP (BP).

Similarly, if you think previously untapped offshore waters are likely to be opened, offshore specialists like Transocean (RIG) and Diamond Offshore (DO) are likely to benefit, long term. Also, because in an over-the-hill region it takes that much more drilling to produce the same amount of oil, drillers and equipment makers are likely to be busy. A company like Baker Hughes (BHI) will find it easy to increase its top line, and a basket like the Oil Service Holders (OIH) is likely to be a good long-term investment. With $100-a-barrel oil, a little goes a long way, when it comes to making money.

The parts of our economy most vulnerable to the domestic oil decline are not the oil companies themselves, but are things like airlines, Hummers, and jet skis—the consumers, not the producers—which will be in trouble long before the drilling industry winds down (like now, for instance).

But the hard facts do have a very important strategic implication for the United States. The facts clearly show that people who believe that by simply ramping up drilling we will substantially improve our diminishing domestic oil production, well, these people—to use an expression not uncommon in oil country—are very much pissing in the wind; in fact, they are pissing directly into a very strong geological headwind.

Given the diminishing returns on domestic oil (in energy terms, if not in terms of profits) I believe that developing alternative energy is our nation’s only real option to significantly improve our domestic energy production and strategic energy independence. For this reason, I think that baskets of alternative energy stocks, despite their inherent risk and volatility, are likely to be good long-term bets. The best way for most individual investors to invest in this young and volatile industry is through relatively diversified ETFs like the PowerShares WilderHill Clean Energy ETF (PBW), Progressive Energy ETF (PUW), Cleantech ETF (PZD), or the Market Vectors Global Alternative Energy ETF (GEX).

 

Strategic Implications of the Increased Drilling’s Inability to Solve our Energy Problems

The data show that the sentiments behind “Drill, Baby, Drill!” do not translate into a rational or effective national energy policy. In fact, aggressively developing our nation’s late stage oil reserves is arguably precisely against our long-term national interest. The data are clear: ramping up domestic drilling will at best only slightly slow the rate of decrease of our domestic oil production, but it will rapidly exhaust our remaining precious domestic oil reserves. And the faster we use up the little oil we have left, the quicker OPEC will be the only one at the table with any chips left.  Strategically, this is a loser’s strategy.

Increased drilling is not the basis of a reasonable strategic energy policy, it is simply the chant of special interests who want to make money for themselves from our nation’s limited oil resources. I am sure that many drilling proponents genuinely would like to believe that increased drilling will solve our energy dependency, but they are simply wrong. The data are shockingly clear.

Being skeptical about our ability to drill our way out of energy dependency is often portrayed by oil lobbyists as an inherently politically position—a position that only environmentalists with ulterior motives would take. But the data I have analyzed are oil industry data and the conclusions are unequivocal. Though some of my quantitative techniques are novel, I am certainly not alone in my general conclusions.

Similar logic led some smart veterans of the oil industry, men like T. Boone Pickens and Ken Deffeyes, to see the writing on the wall some time ago. And it is a welcome development that, recently, more conservatives have come to understand the reality about oil. Not long ago, an article by former CIA Director R. James Woolsey and the brilliant Anne Korin argued forcefully that we are not in a position to drill our way out of dependence on foreign oil. They made this argument in the National Review, which is hardly an environmentalist hotbed.

So “Drill, Baby, Drill!” may have a nice ring to it, but Woolsey and Korin put it nicely in their National Review piece: “Speechwriters’ tropes shouldn’t be taken as serious policy proposals. Geology will not cooperate in any such fantasy.”

Disclosure: The author currently (September 2008) has long positions in PBW, XTO, XEC, COP, and SU in the energy sector.

Comments

[Oil Geo:]

The production per rig post 1990 is misleading. It is controlled by the inevitable decline in older fields discovered well prior to 1990. With this indicator the best way to increase the production per rig is to reduce the rig count (stop drilling).

We will never be self sufficient in oil with current consumption, As we keep drilling we must conserve and look for meaningful alternatives.
Oil Geo

2008 Sep 22 02:43 PM

[ValueInvestor:]

To be energy Independant the US would have to offset their imports of approx. 12 million barrels a day. This is a monsterous amount thats larger than the peak of 10 million bbl/day that was produced in 1970. With current production at 5 M bbl/day drilling would need to increase domestic production to 17 M bbl/day. Do these drilling advocates know that this is impossible?

2008 Sep 22 03:03 PM

[mdmrjsds:]

Oil geo is right on the money.

I suggest the alternative we have to develop is the direct use of electricity for transportation. And we should encourage the development of alternatives by putting a floor on fuel prices and taxing them increasingly over time.

2008 Sep 22 03:07 PM

[epeon:]

Of course, drilling for oil offshore will not solve America's energy problems. We will, according to most of the studies I read, get about 1 million bbl/day. But, it is a good first step and I would sure rather have that $100 million/day flowing to US companies.

In the longrun we will be moving to electric cars. We really don't need an energy plan by the government. First, five year plans almost always don't work. Secondly, the last government energy plan was based on ethanol. We know how that worked.

The market is moving us away from oil as long as oil is at or above $100/bbl. It is going to happen

2008 Sep 22 03:25 PM

[huangjin:]

The information is useful, but I think you're attacking a straw man. I don't know of any Republican politician who thinks drilling is the only solution. The "drill" line is simply a slam against those who use ideology in place on pragmatism on energy. The Boehner plan, which most Republicans support, is an "all of the above solution". Do everything possible to increase energy production: nuclear, wind, coal, solar, tidal, oil, hydro, natural gas, biofuels, etc.

I could write an article about how solar is not the solution, tidal is not the solution, wind is not the solution, natural gas is not the solution, etc. (I'm not sure that nuclear and coal couldn't single handedly provide the nation's energy needs.) Isolating any energy will show that it can't solve the problem.

2008 Sep 22 03:36 PM

[happycajun:]

Nowhere do I see any reference to Nat Gas, or is your "oil" volume actually BOE? I don't think so, because 10MBOD back in 1970 was OIL not BOE. Today, Nat Gas plays in increasing role in domestic production, and yes, it is drilled for. This is rather puzzling that you do not mention gas, when you do go out of your way to discuss workover rigs - which are not considered "drilling" by anyone in the upstream business.

Drilling in the U.S. will never make us "oil independant." Drilling internationally has its ultimate limitations. Alternate energy talking heads arrogantly believe that they somehow invented the concept in the last five years - when in reality geothermal, oil shale, oil sands, wind, nuclear, coal gassification, coal liquifaction (GTL - Fischer Tropsch), and numerous other techniques have been tried for a very long time, with only limited commercial success. The reason - simple - abundant "CHEAP" oil keeps killing the alternatives. As the inevitable growth in demand exceeds the ability to supply, the alternatives become more economically viable.

Ethanol is a political toy. "Bio-diesel" likewise. The ultimate supply will be delivered via electricity in all likelihood. The motive force to provide the electricity will be natural gas, wind, nuclear and coal in the immediate timeframe. Later on - fusion???? who knows - but to get there, we will be "drilling-baby-drillin... or fighting world war III over the oil in the remaining producing basins.

2008 Sep 22 03:37 PM

[Alex Filonov:]

Misleading header: who defines if energy policy is efficient? As far as I know only market tells you if economic policy is efficient or not. Which means that you can't declare any economic policy, including energy policy "efficient" until long time after it was decided.
As for drilling/extraction relationship, it ignores one well-known fact: rotary rigs are also used to drill for natural gas, and natural gas production is increasing.

2008 Sep 22 03:37 PM

[Brian Pursley:]

Like the peak oil cultists Simmons and Pickens I'm actually invested in oil and I profit from the myth of scarcity based upon ignorance of modern Russian petroleum science. Domestic drilling should be illegal forever. And you should pay me $1000 per barrel for my oil.

2008 Sep 22 03:48 PM

[hotforoil:]

The lack of success for the current drilling is because they can't drill where the untapped fields are. Always the same refrain, it will be "whatever so many years" before it will ba available, so why bother! Todays Drilling technology is miles ahead from ten years ago. Wells are drilled in a quarter of the time required than then and the new enhanced recovery techniques and production proceedures are vastly expanding the amount of hyrocarbons recovered from new field discoveries.

Ostriches!

2008 Sep 22 03:56 PM

[Tadpoles_UK:]

Oil Geo and Happycajun have shown the fallacies in the 'statistical analysis' done for this article. (Typical of what financial analysts do across many industries they don't understand.)

The biggest fault though, is the assumption that the federal government is capable of creating a sensible energy policy. It's not - irrespective of which party is in power. As already mentioned by several above - market forces are the best mechanism.

Destin Dome is an example of known deposits (mostly gas) that are currently off-limits because the formation lies off the coast of Florida. Drilling there WILL pay dividends, even though it will not solve the 'energy problem'.

2008 Sep 22 04:23 PM

[Geol:]

The only question I have is, what percentage of the rig increase from 2000-08 were drilling for natural gas and not oil. I am betting it is a higher percentage than in the past, which would account for some of the continued decline in oil production. An important point left out was that our domestic natural gas production continues to increase and will for years to come and a lot of those rigs were probably being used for that purpose.
No one with a brain thinks or proposes that we can drill our way out of this, but as was stated, we could decrease the rate of decline, which is better than not decreasing the rate of decline. Drilling is one small part of a comprehensive effort which should include, alternative, nuclear, wind, solar and conservation. Most importantly increased drilling could make a real difference in natural gas production and natural gas should be a major component to energy independence.

2008 Sep 22 04:34 PM

[Chris B:]

You'll never convince some people that oil will end one day. It's like a religion to them that oil is plentiful and just waiting to spurt trillions of barrels out from under the seabed off Daytona beach and that this will drive gasoline prices back down to $0.70/gal. They just know it's there. They have faith, and care little about what science or economics has to say. You might as well be a biology teacher trying to teach them about evolution. They don't care about your facts or your thousands of studies. The idea itself is too threatening.

Instead of using North America's last remaining oil reserves to build the post-petroleum infrastructure of transit rail and compact cities, it looks like we'll use it to maintain the GMC Tahoe 50 mile commute lifestyle for another few months. It will be interesting to see how the economy functions when $25/gal biofuel is the only fuel available and everybody is crammed into our deteriorated inner cities because personal transportation is too expensive. That will be the price of denial.

2008 Sep 22 04:38 PM

[American in...:]

Market forces are not necessarily the best mechanism. Market forces encorage pollution - only government accomplished a rollback of air and water pollution in the US.

As an American living in France, I think the Americans could learn something from looking outside their national borders. The French get 80% of their electrical power from nuclear and another 12% from hydro. Per capita French energy consumption is 60% per cent of the Amerian level and the average Frenchman emits six tons of carbon dioxide versus twenty one tons for the average American.

You can live in France and live well without owning a car due to one of the best public transport and train systems in the world. I can hope on a train and be in London's center in 2 hours and 15 minutes.

And this system, which clearly to superior to the American system in terms of energy independence, global warming, and efficiency, was not a market developement, but a political decision.

As an economist, I regret having to remind some of you that markets are means to ends, not sacred cows.

2008 Sep 22 04:53 PM

[elcopone:]

What about the environmental (and possible economic)impact of consuming more oil? I'm not even talking about the impact from drilling. It seems the environment takes a back seat again.

2008 Sep 22 04:53 PM

[User 243904:]

Misleading chart. Rotary rigs in service does not represent only oil drilling. In fact, gas rigs make up 79% of the total rigs in service.

2008 Sep 22 04:55 PM

[dondon:]

You emphasize that between '99 and '08 there was a threefold increase in drilling but that domestic production continues to decline. If companies were actually allowed to drill where there were substantial amounts of oil would the decline have occurred?

2008 Sep 22 05:17 PM

[Chris B:]

User 267315,

I've seen France / Germany and you're exactly right. Perhaps these economies and parts of Asia will be the survivors in a world of scarce oil. They've already built the infrastructure. Meanwhile, here in the US, we are still in denial that there even is a problem. I'm afraid we won't make the transition to an inevitable future gracefully.

Americans feel privledged to pay thousands of dollars a year in depreciation, insurance, fuel, and maintenence so we can sit in traffic for hours. Plus tens of thousands of us are killed each year in cars but because cars are such a cultural institution, we never question them. Imagine what our economy could be like if we could reduced these wastes of life and money.

2008 Sep 22 05:17 PM

[Geol:]

We need to pursue energy independence on all fronts, oil, nuke, coal, nat gas, solar, wind, hydrogen, and conservation. An important and often overlooked part of conservation is population control. Every problem we have pertaining to natural resources and commodity scarcity is exacerbated and further complicated by an exploding population. We aren't very smart as a species.

2008 Sep 22 05:18 PM

[Jakester:]

U.S. Natural Gas Production was up 9% from Q1 2007- Q1 2008. As others have pointed out, your article by not including gas is somewhat misleading.....

2008 Sep 22 06:18 PM

[Jimbo:]

I have to second the ideas of Huangjin and HappyCajun. Nancy Pelosi, who recently was quoted as "saving the planet" has let the cat out of the bag. She voted against the ANWAR drilling resolution in 1996 and Bill Clinton vetoed it, saying it would be ten years before we got any oil. Well, it is now TWELVE years and and we are still degrading our currency by buying oil from countries who hate our guts. For the benefit of other posters and readers, I rode a bicycle to work, 3 to 6 days a week, for the last 19 years of my full time employment. We have composted our household garbage for at least 30 years. We have a very efficient solar water heater that is saving us at least 50 dollars a month. I was an early contributor to Green Peace until I began paying close attention to their material. The author may not be a member of what I call the "greenie conspiracy" but there is a significant element of the green movement that would drastically cut the world population and take us back to the 18th. century with sail, animal, and human power as the sole means of transportation. This group are really neo-fascists who seek to remove national sovereignty in favor of "world government". If you want to know how that will work, just look at the current U.N. Lest you think I am a nut case, log onto "the Green Agenda". I have fought urban sprawl all my life. In 1962-65 I taught at a college in upstate New York and road bus transportation almost every day. Yes, Europeans do have very good public transportation systems, but in my frequent trips to Europe in the past , I saw almost empty buses and rail cars, (except at rush hour), and the Euros do like their cars.I see natural gas as the logical fuel for heavy trucks, busses, and taxis. I would be delighted to have alternative fuels for vehicles but there has to be a transition for technical and infrastructure development. Lastly< I would place an import tax on all hydrocarbons for outside North America and Columbia. The tax should be rigidly tied to development of alternative energy.

2008 Sep 22 06:45 PM

[Energy Analyst:]

I would hope everyone noticed the author’s investment position in alternative energy, and the need for all energy prices to remain high in order for his companies to have any chance of a big return. Many of these firms may become the failed dot.com’s of this decade. To use his own words, alternative energy “is not the basis of a reasonable strategic energy policy, it is simply the chant of special interests (like Tim) who want to make money for themselves” while steering us down a grossly overpriced and underpowered road of alternative energy. Beyond that fact, his statistical analysis misleadingly and nefariously focuses on just US oil production, and attributes the “Drill, baby, drill” statement to increasing just US oil production, which is a massive misrepresentation of the phrase. I know, I was on the floor at the RNC in Minneapolis, leading the cheers as a Texas delegate, which were not just yelling to drill for US oil. We were calling for US drilling in general, and thus for US natural gas drilling, as well. Clearly, natural gas drilling is probably the biggest threat to the economics of the author’s alternative energy companys' investments. In fact, most rigs in America today are drilling for natural gas, not oil.

Let’s be clear about one certain fact: if the incredibly manipulative Democrats in Congress (and the White House) 10-15 years ago had lifted the ANWR & other Alaska coastal plain (NPRA) drilling prohibitions, as well as the offshore moratorium, the Alaska pipeline would probably be filled today to its old capacity of 2 million barrels/per day, with nearly an additional 1 million barrels/per day (5% of US oil consumption).

If you go to Boone’s website, and see his goal of displacing that amount of foreign oil with “alternatives” (which his biggest one is clearly stated as natural gas) , we’d already be there. What’s even more absurd in the energy debate is the fact that Boone also correctly states on his website that every one of his giant wind turbines produces energy equivalent to just 12,000 barrels per YEAR; yea per YEAR, not per day. That equals the equivalent of 32 barrels per day per windmill, nearly equal to a stripper well in America today. That means you’d need 31,250 giant wind turbines 24/7 year round in constant wind, to equal 1 million barrels per day. What a farce! Where would we put 31,250 wind turbines???? The greenie freaks would scream “Not in my backyard” (NIMBY) across America. In response to many questions, he publicly states his main push is truly for more natural gas drilling, and windpower is secondary to that.

What’s even worse is that if we had lifted the offshore moratoriums 10-15 years ago, our major eastern/midwest US cities and manufacturing businesses would right now have billions of cubic feet of more offshore natural gas available daily, and prices for that commodity would likely be lower. Remember, the five producing platforms off Nova Scotia Canada produce a whopping half a bcf per day. Our offshore East & Florida coast areas likely contain many dozens of trillions of cubic feet of gas, when combined with similar giant onshore natural gas resources, could power America’s electrical utilities, manufacturers, and residential communities for half a century. Just imagine another hundred or so of those platforms randomly scattered up and down thousands of miles of our East and Florida coastline, and you’ll understand the true intent of the phrase “Drill, baby, drill”, of those of us that yelled it: to benefit our oil AND natural gas supply.

Ultimately, the substitution effect of energy economics should drive each energy application in the economy toward the lowest priced fuel, whether it be coal, natural gas, oil, or nuclear. You’ll notice, I did not mention any so-called “alternatives”. That is because they are still frightfully expensive, even inconvenient to use, and require high oil and gas prices. Sadly for the economy and citizens of our great country, Democrats, liberals, and most all greenies quietly want to keep oil (read: gasoline) and natural gas prices high by restricting access to new natural resource supply sources all across America. They believe that this is the critical foundation of making many alternative energy applications magically economic. Horribly and devilishly, they continue to use the power of government to restrict our access to new, cheaper supplies (large (very economical) undiscovered reserves) from historically more economic sources, in order to try and make widespread use of alternative energy sources artificially commercial. Thankfully, the market for energy from coal, gas, oil, and nuclear, could save us from their high prices, if we only reject their nefarious leadership.

However, Biden/Obamaites are already telling us that paying much higher prices for energy/alternative energy products (electric cars etc.) is somehow “patriotic”, like Biden’s statements on higher income, capital gains, corporate, and estate taxes. Most all of the alternative energy applications will be hard pressed to be economic for major, widespread applications to our nationwide industrial, commercial, and residential consumption. That is why America must continue to “Drill, baby, drill”, as one of the few, reasonable energy engines for our economy for decades to come. To produce pages of statistics, as was done for this self-serving article by an alternative energy investor, just proves once again, the old adage of “Figures don’t lie, but liars can figure”. Beware America! Coal, nuclear, and “Drill, baby, drill” are our only real hope for decades to come. We’ll need the cheapest BTU’s we can generate, and no alternative is likely to contribute in a major way, without government market manipulation to raise the cost of historically more cost effective sources. Drill, drill, drill, drill (oil & gas), dig, dig, dig, dig, (coal), and build, build, build, build (nuclear)!

2008 Sep 22 07:04 PM

[carbonates:]

Okay, record rig counts this year in the US have only produced 8% year on year production increases in natural gas, creating the possibility of lower natural gas prices for some time to come. Most of those wells were not even planned over two years ago. Many of them weren't even planned a year ago. Current estimates of total natural gas reserves in the US are up dramatically from only a year ago.

I think your premise is radically WRONG. It seems to me the facts are already there to support more drilling as both a way to increase domestic production, drive down prices for hydrocarbons (already happening for natural gas), and reduce the trade deficit. Increases in production this year certainly support that. You don't seem to understand that the period you are using to prove your data includes significant periods of oil prices near $12 a barrel and longer periods below $25. Next you are going to tell me that having sex does not lead to more babies.

I think you've done a good job of choosing your data in such a way that it matches your hypothesis. As an exploration geologist, I disagree with most of your "facts."

2008 Sep 22 07:15 PM

[kblake:]

I totally agree with carbonates where would nat.gas production be if we didn't have this extra drilling. I've heard just a few years ago that we were running out of nat gas. Now all of the sudden we have a 100 year supply.

2008 Sep 22 07:59 PM

[carbonates:]

Yet another example of how your premise is so WRONG, North Dakota, which has also experienced new levels of drilling activity in the past couple of years, is setting new records of oil production (natural gas is NOT included in these numbers). North Dakota produced 5,324,274 bbls of oil for the month of July compared to the 4,985,773 bbls of oil produced a month earlier. These are all-time high levels for North Dakota, and the direct result of DRILLING. Proven reserves for North Dakota are on the upswing, showing that through effective modern exploration it IS possible to reverse long-term declines. Both new engineering technology and new geologic concepts made it possible to recover tremendous amounts of oil from the Bakken, which has been drilled through and ignored for decades. Many more examples exist, and the new wave of oil drilling is only beginning to be apparent to the investing community and even much of the oil industry. You know very little about what you are talking about.

EOG Resources, the principal operator of Parshall field, reported production of 854,119 bbls of oil from 53 wells in July. NONE of these wells existed two years ago.

Large percentages of these new record production levels in North Dakota are being produced from Federal leases. This is something you would have us stop leasing, since apparently 5 million barrels a month isn't enough to matter to you. At only $100 per barrel, that translates into $500 million dollars of revenue that went into the US economy; new wealth created by US oil companies, and money that was NOT part of the US trade deficit. That $500 million of revenue also may have provided as much as 12 1/2 percent of the gross revenue (the Federal royalty payment) to Federal tax coffers, effectively reducing the need to tax US taxpayers by millions of dollars (which would have been needed if we had bought imported oil instead.)

You really need to rethink your numbers.

2008 Sep 22 09:18 PM

[Alan von Al...:]

I concur with the data and analysis presented in the article, but not the concluding thesis about alt energy. Oil is vital for heavy transport, rail, OTR, jet aircraft, construction, mining, etc. There will never be a solar Dreamliner.

hotforoil wrote: "The lack of success for the current drilling is because they can't drill where the untapped fields are."

Correct. Offshore California, offshore Washington State, Lake Huron, Lake Michigan, and the Bering Sea/offshore western Alaska have significant potential. However...

hotforoil continues (wrongly): "Todays Drilling technology is miles ahead from ten years ago. Wells are drilled in a quarter of the time required than then and the new enhanced recovery techniques and production proceedures are vastly expanding the amount of hyrocarbons recovered from new field discoveries."

Drilling costs have risen exponentially in the past decade, partly because remaining reserves are offshore in deeper plays, partly because exploration and construction costs ballooned, but more importantly because the oil business has sacrificed and blunted its scientific and entrepreneurial edge. Candidly, the geologists (now retired or dead) who explored in the 1970s were far superior to the high tech boat anchors and touchy feely corporate "team members" who survived the merger frenzy of the past decade. I know this to be a stone fact. We routinely see bad work at the majors. Exploration has become a lost art, and billions are being wasted attempting to make phony Monte Carlo guesswork into profitable production. That's why the majors have cut back on E&P. They fired or retired their best people.

Ultimately, what the domestic oil business needs is better financing. M&A deals do not grow production. If the US musters the political will to drill "environmentally sensitive" prospects, there has to be a change in tax laws, too. Make it profitable for VC start-ups to wildcat.

2008 Sep 22 09:42 PM

[prospect1:]

Nowhere is it mentioned that the natural gas production in Texas has been increasing at a rate of 1% per month. Who says drilling doesn't work? Most of the easy oil has been found but new fields like the Barnett shale field in the Ft. Worth basin (drilled through for years) is now a long life source of gas.

2008 Sep 22 10:47 PM

[happycajun:]

Alan makes an excellent point - "drilling technology" in the last decade has not really made the old process cheaper - the developments in horizontal drilling and particularly in completion methods have improved the economics of development in certain circumstances, but "drilling" is certainly not cheaper. Lost expertise and increased demand have increased the cost of drilling. A conventional vertical completed well in a traditional oil sand has not become cheaper as a result of technology in the last ten years. I would appreciate hotforoil citing his/her sources for those assertions.

Improved seismic interpretation (which dates back more than 10 years) has permitted discovery and development of relatively small oil reserves. But these are all incremental technologies that improve what has always been done, and the loss of expertise has more than offset the improvement. Horizontal drilling has been more of a paradigm shift in allowing development of the gas shales such as Barnett, Haynesville, Fayetteville, etc.

I personally believe that real technological innovation will come from smaller companies (largely using "retired" expertise from the majors) taking risks, and then the larger producers using M&A to acquire the fruits of their efforts - not unlike the model that larger computer tech leaders have done (Oracle, Microsoft, AMD for example). As we used to say, sometimes it is more economical to acquire reserves with the checkbook than the drillbit, but it is always better to "find" oil.

2008 Sep 22 11:16 PM

[Alan von Al...:]

Thanks Cajun. I wanted to add my highest sincere respect for the G&G work done in the 70s by geologists, engineers and exploration managers at Sun, Amoco, Arco, etc -- excellent companies that were wiped out in the 80s along with most of the rig owners. I swear to God, there's no one left who can read and correlate 1" paper logs. When we plot them out from digi files, the cubicle people scold us for "killing trees again!"

2008 Sep 23 02:24 AM

[PeteK:]

Timothy, how stupid can you get ? Of course if we don't drill, there won't be a drop of oil 10 years down the road. If we start now, there will be oil, 5, 13 years, doesn't matter, there will be oil. Just like saving for retirement, if you don't start putting a few dollars in, you won't have anything. Instead, you keep asking "if I start saving now would I have enough money to retire ?" How dumn !!

2008 Sep 23 04:05 AM

[Paul B.:]

Tim,

Your basic analysis is flawed. Since most of the drilling in the last fifteen years has been to develop gas wells, any sound analysis must include gas production also. There are other factors currently impacting the success of the drilling activity including 3D seismic, horizontal drilling, shale fracing techniques, and accelerating declines in large older fields. If the analysis is to have validity it must also delineate production for newly found oil in current production.

I would like to see some modification of your data, to include gas production at a minimum.

Regrettably, the analysis does not yet arrive at a conclusion to the "great debate" of the decade.

Nice try though!

2008 Sep 23 07:58 AM

[User 202870:]

The answer is "all of the above" as Sarah Palin says. We need to drill and increase nuclear energy, etc etc etc. This is not a them or us decision. It must be "all of the above".

2008 Sep 23 10:03 AM

[cjwirth:]

The McCain drilling strategy is a win for the Republicans, maybe just in time for the November elections.

More drilling will the lower the rate at which the U.S. is increasingly dependent on imported oil at some time in the distant future.

Drilling for oil in ecologically sensitive areas is a partisan political issue.

The impacts of Peak Oil, however, will soon shift the focus of debate toward how to survive high oil prices, maybe as soon as an attack on Iran.

Increasingly, average Americans will not be able to afford both fuel oil for heating and gasoline for commuting to work (starting in to be felt more in November). When unemployment increases in the ever worsening global recession, a larger and larger percentage of people will not be able to pay for fuel oil to heat their homes. These realities will shock the nation with big increases in home heating bills this winter (starting in November). Oil prices will be higher for the winter of 2009.

In such an environment, the Democrats are making a mistake with their “no drilling” position on this issue. As Peak Oil becomes more widely known as the cause of economic malaise, public attitudes will shift away from environmental concerns and toward more drilling.

According to energy investment banker Matthew Simmons and other independent forecasters, global crude oil production will now decline, from 74 million barrels per day to 60 million barrels per day by 2015. During the same time demand will increase 14%.

This is equivalent to a 33% drop in 7 years. No one can reverse this trend, nor can we conserve our way out of this catastrophe. Because the demand for oil is so high, it will always be higher than production; thus the depletion rate will continue steadily until all recoverable oil is extracted.

Alternatives will not even begin to fill the gap. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment.

We are facing the collapse of the highways that depend on diesel trucks for maintenance of bridges, cleaning culverts to avoid road washouts, snow plowing, roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, transformers, steel for pylons, and high tension cables, all from far away. With the highways out, there will be no food coming in from “outside,” and without the power grid virtually nothing works, including home heating, pumping of gasoline and diesel, airports, communications, and automated systems.

This is documented in a free 48 page report that can be downloaded, website posted, distributed, and emailed: www.peakoilassociates....

I used to live in NH, but moved to a sustainable place. Anyone interested in relocating to a nice, pretty, sustainable area with a good climate and good soil?
clifford dot wirth at yahoo dot com or give me a phone call which operates here as my old USA-NH number 603-668-4207. survivingpeakoil.blogs.../

2008 Sep 23 10:03 AM

[User 202870:]

The answer is "all of the above" as Sarah Palin says.

2008 Sep 23 10:05 AM

[NOWHEREMAN:]

Why are all of you picking on this guy, he writes children's books, he likes to fish.

2008 Sep 23 10:34 AM

[Philip Obal:]

Even with higher crude prices, there are major time delays before a well is spudded. First, find it and make sure has good prospective reserves (time), Second, get leases (times). Third, get the equipment, people, roads, infrastructure to begin drilling (time).

There is NOT an infinitie number of rigs to go around... So you have two major constraints (rigs available for that type of operation) AND time it takes to get permits and permission.

2008 Sep 23 10:40 AM

[scottm1207:]

"As an American living in France, I think the Americans could learn something from looking outside their national borders. The French get 80% of their electrical power from nuclear and another 12% from hydro. Per capita French energy consumption is 60% per cent of the Amerian level and the average Frenchman emits six tons of carbon dioxide versus twenty one tons for the average American"

And the French produce nothing that the rest of the world wants, and the french work about 12 hours a week, if they can find a job, so it's not surprising they consume less energy.

2008 Sep 23 12:12 PM

[OilDaddy:]

Given the opportunity, individuals who walk around with their heads in a fog and, therefore, cannot see the forest for the trees will always come up with assinine conclusions based upon illogical reasoning rather than upon actual work experience in the subject business or industry they're trying to convince readers they know something about! What's missing from the graphical presentations to explain the declines in drilling activity between 1958-1973 and 1986-2003 is the non-inflation adjusted prices of oil which in the 1960's, seriously dismantled the domestic oil industry's infrastructure and in the late 1980's and 1990's completely destroyed the domestic and seriously dismantled the international oil industries' infrastructure leaving the world in today's oil supply shortage situation with the necessary manpower and equipment needed to bring about an early reversal.

Had the U.S. Congress not gotten the Supreme Court in 1955 to give it the right to control natural gas prices at the wellhead and then use imports rising from 1MMBPD to 6MMBPD of cheap foreign oil to hold domestic oil prices under $3/B from 1958 to 1973, U.S. oil production would not have peaked in 1970, OPEC would not have been formed and steady expansion of U.S. and Middle East oil production would have taken place to prevent the world oil supply shortages that occured in 1973 and 2003 as a result of the industrialization of Japan and the Rest of SE Asia during the 1960's and the industrialization of China and India during the 1990's.

Illogical government policies derived by brain-dead, socialism breathing, college professors with grudges against the industrial world which refused to hire them due to their lack of competence and common sense is what resulted in destroying the Country's once healthy energy mineral producing industry. How do I know? Because for forty years I was involved in positions having to work with such imbeciles who would accuse me of being too logical when I objected to their manner of reasoning. I've even had them respond when I accused them of wanting to destroy the domestic oil industry with their "low oil price to stimulate economic policies" with "Japan built its economy without an oil industry, so the U.S. doesn't need one either"!

2008 Sep 23 01:09 PM

[RonJL:]

What a convoluted argument. So, lets just throw up our hands and run off the cliff with the rest of the lemmings.

2008 Sep 23 01:13 PM

[NOWHEREMAN:]

If a bunch of people run off a cliff with the Head Lemming, Global warming would be reduced and their would be plenty of energy for all.

Tuff, you don't like what you have, either change your lifestyle or move elsewhere. I prefer here so I'm adjusting. Life is hard and then you die.

2008 Sep 23 01:52 PM

[Alamo:]

I own mineral rights in the Haynesville Shale play in East Texas.

So if there is a national reliance on natural gas by Americans for some, much, or virtually all of the nation's transportation needs, that increased demand will of course benefit me directly.

That said, I believe that any energy source that is American based will have a tremendously beneficial effect on our economy. Especially so if that primary energy source can be provided at a reduced cost to that of an increasingly less available source, ie, gasoline and diesel. Adding the significant benefits that natural gas brings to the environment should make it our number 1 transportation fuel of choice.

No matter how much additional oil is discovered, it is not going to be done cheaply so the massive capital costs involved will require that those costs be passed directly to the consumer. It's not a reach to look forward and see future pump prices at $5.00, $6.00 or more. Under the rosiest of scenarios, the OCS and ANWR exploraton might supply us with another 4 or 5 years' crude supplies at the present rates of consumption---that's 1500 to1800 days. What then? Can we have additional nuclear plants permitted and operational in this time frame? Hardly in this environmentally conscious atmosphere. 1000 MW power generating plants---under the best cases require 5 to 10 years' construction time without considering the permitting headaches involved. We can though, build up the re-fueling facilities that will support a compressed natural gas (CNG) transportation system in less that 5 years time if we embrace it on a national basis.

Boone Pickens said yesterday before the National Press Club that 10 strategically located re-fueling stations could enable a heavy truck to go coast to coast---3500 miles.

Its abundant, clean and 40 percent less expensive that gasoline but the thing that recommends it above all is the simple fact that it is 100 percent American. Keeping a significant portion of that annual $700 billion dollar cash flow out of OPEC's greedy hands and into American hands is the best aspect of it by far.

2008 Sep 23 02:37 PM

[Michael L:]

Drill Baby Drill, may not be very poetic but it sure seems necessary. Until you can stick some french fry grease or a hunk of coal into your gas tank we are gong to need petroleum. The transition period from petro to alternatrive sources of "car power" will be long and costly. Let the transition go forward with all due haste, but during the interim we should not be paying $x per gallon for gas when there is oil to be had by drilling, thus making the cost to consumer somewhat less than $x, probably considerably less.

2008 Sep 23 02:42 PM

[mrsgreenjeans:]

paultaut,
your comment about children's books caught my eye, so i went looking. all i found was a book about how kailing taught his kids to read before they were three. not exactly child's play. i think he's right about the long term, and so what if he's invested in alternative energy. i also noticed a bonified oil company on the list, too, he's probably just trying to invest for his kids' college educations (though they sound like they could get scholarships anywhere...)

2008 Sep 23 02:52 PM

[Fearing for...:]

Good God, I read these comments and want to throw up. 95% of them don't even mention the raw reality that WE IMPORT 12 MILLION BARRELS OF OIL A DAY. A trickle from North Dakota (5 Million barrels in a month, WHOO HOO) is used to illustrate that business as usual is just around the corner. DRILL A FEW MORE HOLES AND WE'RE SAVED!

Look at reality. Exports from Mexico, who used to be our #2 supplier, are down 16% in the last year, and they will cease to be an exporter by 2011. As recently as last year we got 1.5 Million barrels per day from Mexico. Now we get just over 1 Million. Within two years, we will have to replace that 1.5 Million barrels from the world market that is also in decline. Can you say $200 a barrel?

Exports are declining from Russia, North Sea, Nigeria, Saudi Arabia.

Drilling every possible source on and offshore will not even get us back to the 10 Million barrels a day that we produced in 1970. Which means we will NEVER get even half our current demand from the US.

Do you 1d10ts understand this?

The only solution is to actually change the way we live. I know that (the) Dick said that the American Way Of Life(tm) is non-negotiable, but when you negotiate with REALITY, you lose. And the REALITY is that the EXPORT declines from all of the world's major exporters except Canada, will far outweigh anything we will get from within our boundaries.

We don't have to do anything to reduce our consumption. The price will do it for us. With the consequence that our economy will completely implode. Oh wait, it already has.

2008 Sep 23 05:18 PM

[briechelx:]

BIOLOGICAL EXPERIMENT #1: Take a Petri dish (a sterile glass bowl), fill it with nutrient, then add a culture of bacteria.
ACTIVITY #1: The bacteria will multiply without restraint while they consume all nutrient.
OUTCOME #1: The bacteria die in their own waste.

BIOLOGICAL EXPERIMENT #2: Take a Planet Earth, fill it with renewable resources as well as with fossil fuel. Then add a few humans.
ACTIVITY #2: The human population increases to 2 billion while it lives sustainably on renewable resources for a long time. But when they discover fossil fuel, they are able to increase food production 3X. (Made possible by artificial fertilizer, pesticide, herbicide, medicine, transportation. All are made from fossil fuel). The additional food allows the human population to increase 3X (to 6 billion and up).
OUTCOME #2: As fossil fuel is depleted, the human population shrinks by 2/3, back to 2 billion. There is worldwide starvation as well as wars over resources.
No telling what effect global warming will have. It could decrease, or increase, food production.

2008 Sep 23 06:01 PM

[carbonates:]

Okay, Fearing, I'll take the bait. By your logic I should stop drilling in the US, as the US production is going into decline anyway. That's fine with me. I can take my skill set to Saudi Arabia and get paid more anyway. My quality of life will decline slightly, but my personal finances will be greatly improved by reductions in taxes and higher income. My work will be slightly easier, because I will not have to deal with any sort of environmental standards, and even fewer regulatory hurdles. You will still be paying my higher salary (but you will be receiving far less of my income in the form of taxation), so it makes little difference to me. I could have provided my services inside the US, creating high paying jobs and huge amounts of tax revenue in the US, but it seems you feel you would be better off to buy imported oil. By the way, the MMS is the second largest source of revenue to the Federal government behind income taxes. As US oil production declines, your tax rates will increase.

Likewise, I can shift my investment portfolio from US oil producers to foreign producers that will benefit from having a larger market share in the US. As US production goes into even higher declines, oil will no doubt go higher and I will continue to benefit in my portfolio. I can even start collecting my paycheck in Euros or Swiss francs!

Also inherent in your position is the shift away from environmentally responsible oil and gas production within a strongly regulated framework, to production in areas where there is no environmental regulation. Russia still considers plowing on-shore oil spills under with a tractor to be "spill remediation." Other countries I have worked in tolerate lakes covered with 12 inches of oil as the cost of doing business. Your attitude only supports this lack of responsibility and will hasten the decline of the worldwide environment.

Meanwhile, you seem to suggest the US stop using oil, or alternatively import more oil, as for some reason drilling seems to upset you. You would prefer to take the point of view that since we can't produce all of what we need, we should not even try.

I can easily change the way I live. It will not be beneficial to you however, but will be very beneficial to me. Can you change the way you live? Call me an idiot, but at least I have a positive suggestion on how to make the transition to renewable energy and alternative raw materials that will be needed to replace oil and gas. As is often repeated quietly in the oil industry "you can all go freeze in the dark" if you don't want my help. I'm not the cause of your digestive problems.

2008 Sep 23 07:00 PM

[Alan von Al...:]

"Illogical government policies derived by brain-dead, socialism breathing, college professors with grudges against the industrial world which refused to hire them due to their lack of competence and common sense"... like Ben Bernanke?

The comment by 'carbonates' above is absolutely true, at least among the oil people who know what they're doing. Rugged individualism still exists. We don't give a damn what happens to the world as such. And if you get in the way, we go elsewhere.

2008 Sep 23 08:17 PM

[Thomas Smic...:]

Misleading. Acceptance of this lenghty piece means that you can indeed baffle folks with B.S.

2008 Sep 23 11:04 PM

[happycajun:]

I must admit, I enjoy watching the world's chicken littles running around shouting about the sky falling and all, without a clue what to do about said problem. I love hearing people who don't know $h!t about that which they advocate (borrowing a form of encryption from the !D!0T above who is fearful to continue with life) ranting about what NOT to do. "Fearing for my country" sounds distraut over realities that I saw back in the '70s. Hell, I'll bet that the clown doesn't even realize how stupid his/her solution sounds, asserting that "the only solution is to actually change the way we live." Well duhhhh, that happens with the passing of every minute of every day. HOW are we going to change? WHAT does that mean? Hell, as his/her name demonstrates, he/she is only scared, not uncommon through history.

Carbonate - don't get too worked up. We'll make money off of the 1d1ots (I would just say idiots, but I get some satisfaction from mimicking ol' fearful) along the way! Now, I take exception to your assertion about some foreign countries having lower environmental standards - some have the same high standards, they just don't enforce them! You and I both know that a dozer and gradeall can do wonders with 5 million barrels of oil and a bunch of sand - hell, that is what you call stabilized drift sand.

Alan - there is those of us who understand, and there is them that don't. This whole thread of commentary addresses the rather sophisticated statistical analysis of the author, noting in particular that he knows nothing of the underlying subject matter as evidenced by the complete absense of discussion of natural gas. In that analysis, the author concludes that drilling won't "solve the probleml." Without defining what "the problem" is, I believe that a majority of the commentators have pointed out that drilling is PART of any solution of an ENERGY problem. But hey, what do I know, I'm only a lowly engineer. Who happens to be an attorney. Who has spent a decade or so in the Middle East. I'm sure I'm not as smart as ol' scared ass "Fearing" is. Alan, you live in Houston Tx, thus you are obviously backward. Carbonate, based on your name, you have G&G knowledge, thus probably live in some backward place like Louisiana, Texas, Oklahoma, Colorado, or some other such hell hole. We are all inferior - so let's not argue, we need to just go make $$$$$$$. The other folks? They will be the source of that $$$$$$$!

Laissez Les Bon Temps Roulez!

2008 Sep 23 11:53 PM

[Alan von Al...:]

"you live in Houston Tx, thus you are obviously backward"

(laughs hard) Y'all don't use linen table napkins at lunch I reckon?

2008 Sep 24 02:22 AM

[Chris B:]

The plentiful oil religion continues, with anecdotal evidence (Bakken, Brazil, etc.) used to argue that oil is not getting more scarce or more costly to obtain. The world's flat or declining oil production, they say, is all the fault of those dammed hippie environmentalists (you know, the ones who controlled all three branches of government for most of the last decade). At least they've mostly given up on the ethanol fad.

I'm tempted to say "OK, fine, put your faith in drilling, build your house 40 miles from work, drive a gas-guzzler and let me know how that works out for you in the next 10-20 yrs." The problem is that the oil-is-everywhere cult stands in the way of developing an economy that can survive the $250-$500 bbl oil that we will probably see in our lifetimes. The folks who think $0.70 gasoline is right around the corner are the ones opposing light rail transit in and between our cities. They are the ones mocking wind, solar, and geothermal energy solutions. They are the ones who think anyone who prepares for the likely future by driving a small car or a hybrid is a granola-chewing fruitcake. They are the ones advocating wars in Asia and the Middle East to, in theory, obtain control over oil (despite plenty of evidence that such wars disrupt production, raise prices, and result in dictatorships). Finally, the oil-is-everywhere kool-aid-drinkers were the ones buying Ford Expeditions and GMC Tahoes to drive back and forth from their exurban homes to work. The plummeting average US fuel economy in the 90's and 00's plus the increased average commute distance during that same time is largely responsible for the quickly increasing US demand that drove up prices for ALL of us. Thanks a lot.

2008 Sep 24 10:26 AM

[oldoilman:]

The oil companies employ some of the brightest and most creative minds in the world. These minds are paid very well to find one of the most elusive commodities on Earth, namely hydrocarbons. I know that first hand because I was an exploration geologist for many years. I'll tell an interesting story to the "drill-baby-drill" crowd: the gigantic Caspian oil and Qatar gas deposits have been known for a long time. However, they were not developed until recently due to economic and logistical constraints. It can take decades before known deposits are developed once they are discovered by the drill bit. Development wells, surface facilities, pipelines, shipping, etc., are costly and may take many years to put in place. Just look at Prudhoe Bay, the largest oilfield ever discovered in North America: it took over a decade before the oil reached refineries in the Lower 48, at a cost of many billions of the 1960s and 70s. And Prudhoe Bay is declining very rapidly. The people working for the oil companies understand the business very well and are laughing at the millions of fools who believe that drilling today will result in $0.60/gallon gasoline tomorrow. Pity! I suspect we will see oil in the $250-$400 barrel in a few years. So, even an oilman like me, realizes that the only way to solve the energy crisis is to start developing alternate sources of energy. Not only that, but also start using efficiently the remainig oil. Let's forget about driving an 8,000 lb vehicle to carry a 200 lb person. Mass transportation should be part of the equation as should be limiting urban sprawl. I hope we start doing this before it is too late.

2008 Sep 24 02:00 PM

[crypt2121:]

Drill everywhere is not a strategy; it's a fall back plan in case alternative energy does pan out in time. Downside Management, not a bad idea.

2008 Sep 26 11:12 AM

[AlexS:]

"Drill, Baby, Drill" is not claimed to be (at least by Republicans) the total of a national energy policy. It is one thing we can do. Actually, the exact proposal is to allow drilling in new areas that we expect will produce a good amount of oil for the effort expended. The author's data supports this in a way, by pointing out the areas that are allowed to be drilled are getting so worked over that production declines. That's why we need to explore in new areas (coastal plain ANWR, offshore U.S. OCS). But if you want to compare slogans, it would appear that the Democrat's slogan is "Don't Drill, Baby, Don't Drill". Perhaps you could have a column on why that is not effective national energy policy, or even a small piece of a national energy policy.

2008 Sep 28 11:52 AM

[BlueDome:]

AlexS, I would love to see any evidence for your belief that the position of the republican party and the Bush administration is not just Drill. Cripes, we're spending 10 billion a month fighting a war partly because that region is an important source of oil and we need control over it!
Republicans have always advocated subsidizing the oil business, and fought subsidizing alternative energy. That is historical fact and you shouldn't deny it just because oil prices have suddenly gone up in the last year and it now looks dumb. A year ago you wouldn't have seen any reason to support alternative energy and neither would your party, because it doesn't look ahead.

2008 Oct 01 12:01 PM

[petersterling:]

Damn, this article is so far off base in facts. 80-90% of all the rigs are drilling for natural gas. Mostly on private land where government can't stop them. So now we have over 100 years supply of natural gas. All the dumbies in Congress have to do now is mandate the $25 billion gift they gave to the car cos is used to make all new cars flexi-fuel CNG or gasoline and Americas transport fuel problem will be largely solved....

Add to this opening up ANWAR and the shelf and oil shales and America would have all the fossil fuel it needs for 4oo years.... yes 400 years.

see; www.strategicnine.com/...

PROPOSED ENERGY EMERGENCY EXECUTIVE ORDER:

“THE BUSH AMERICAN ENERGY-ECONOMY FREEDOM PROJECT”

1. Declare an energy emergency and set aside the OCS permitting requirements so as to fast-track various critical new energy developments. Immediately Grant new ANWR, OCS and Oil-Shale “Energy Emergency” leases on a first come first served basis allowing smaller American companies to participate. This will blunt the complaints that big oil is being pandered to.

2. Exempt the new lease areas from any and all State and Federal lawsuits, imposts and delays. (See Senator DeMint’s proposed “Drill Now” Act.)

3. Offer low-interest loans for new energy projects production equipment, even more for natural gas projects, a cleaner low C02 fuel.

4. Grant a tax holiday for projects in declared special "American Energy Economic Zones" (AEEZ) to stimulate immediate action on the ground.

5. Temporarily eliminate up-front oil and gas lease payments and other imposts, in return for an increased royalty (20%) on the back end; after production commences.

6. Mandate that all new cars sold (not just made, but sold) in the United States within 3-4 years to be flexible fueled—operable on any combination of Natural Gas, Compressed Natural Gas, (CNG) or Gasoline. Alternatively alcohol (including both methanol and ethanol) or gasoline fuel.

The Democrats are secretly sticking with a flawed nation-killing, anti-carbon theology that opposes all new oil production. The ultimate cost of their policies if implemented, will be the destruction of the American economy.

2008 Oct 05 01:09 PM

[mantis2k:]

To say "Drill Baby Drill" means 'all of the above' to solve the energy crisis is simply false. It is just another republican slogan that fosters devisiveness in our country and does nothing to make a real difference. The point is oil production is a dead end game, so why keep putting the focus on "drill baby drill" - why not a slogan of "renew baby renew"? Well, that would make too much sense and build bridges between people instead of devisiveness. Can we ever put 'being right' aside so we can actually making a difference in the world to meet long term common goals?

2008 Oct 23 12:21 AM