Market Currents
President Obama's anti-drilling argument uses false statistics, argues CNBC's Larry Kudlow. The...
-
Friday, March 16, 2012, 7:43 PM ETPresident Obama's anti-drilling argument uses false statistics, argues CNBC's Larry Kudlow. The president argues that America uses over 20% of the world’s oil, but has only 2% of the world’s known oil reserves. Patently untrue, says Kudlow. The U.S. has 1.4T barrels of recoverable oil, which is enough to meet all U.S. oil needs for about the next 200 years, without any imports.
Other date
Latest Energy & Materials Articles
This news story has 111 comments:
478 more drilling rigs in operation than one year ago. Anyone subscribing to Baker Hughes (BHI) Rig Count can get even more details.
Could you share your industry source? Thanks in advance.
http://bit.ly/ziGgxz
Expanding oil drilling only makes sense if you wanna export it, it does nothing to help the energy security situation or help reduce the average american's energy costs.
Seriously, the loss of refineries is a problem large enough that drilling for oil in more places is not going to solve it. The newest, most efficient, and (arguably) most profitable refineries are being built in many places around the world, some of which don't have as much need as they output. There are many tankers on the move with refined products, including gasoline.
One of the other odder proposals from your US President was to exempt some ships from Jones Act restrictions in order to get more gasoline shipped from the Gulf of Mexico (Texas mostly) refineries to the East Coast. While there are numerous problems with that, the fact that almost no US product tankers are currently being chartered for that usage points out that this is not a viable strategy.
These proposals are feel-good proposals. They make for interesting sound bites for the ignorant masses. In a similar manner, those simpletons wanting to de-fund the EPA in the hopes that refineries will magically re-appear to replace those lost misses the economic issues faced by each (private) refining company to upgrade a refinery or build a new one.
http://reut.rs/FOJxGP
Look to your own retarded government before dissecting mine.
I don't particularly agree with cabotge laws, and the US is one of the last hold-outs in that old law, but in this particular case I don't see an exemption as effective. The unions are against exemptions of the Jones Act in this case, but perhaps you are on the side of the unions in this one, protecting American jobs. Or maybe you are you on the side of Obama on this one to create the exemption.
The new data from the Energy Information Administration, which produces nonpartisan energy data and reports, provided some relief to a White House that has taken a continual battering from Republicans in recent weeks. GOP lawmakers had alleged that President Obama’s policies have impeded U.S. oil production on federal lands and offshore, contributing to gasoline prices that have roughly doubled since he took office in early 2009.
http://bit.ly/y1aBiS
Obama is late out of bed on the economy from day 1 including energy and UE.
Could you imagine the USA not having to support Saudi Arabia, Iran, or Venezuela?
The problem is the petulant child-King has a problem with that because it would be good for the US.
It is sheer hype to claim that the US can produce enough oil to satisfy its own needs.
Look at proven oil reserve estimates before you make outlandish statements.
There are many petroleum engineers and others that believe North America can be self-sufficient within the next couple of decades.
http://bit.ly/FR7uHO
Our oil will go to the highest bidders. A billion more Chinese and Indians who want to drive.
======================...
import baby import
no more export to Chinese, Indians and anybody
:)
I have studied oil production for different nations. No country has been able to reverse a decline due to declining conventional oil reserves by moving to unconventional production.
Unconventional oil production is high cost and in many cases not scalable.
The Cubans and Chinese are drilling 50 miles off the Florida coast.
OK for them but not us?
I'm with you on that one.
I would rather it be us with the remaining oil as it becomes more scarce.
Ill stick with good Caterpillar, Giant gas guzzling machines.
And if you like, you can add on the significant amount of electrical energy (and the carbon footprint it takes to produce that electricity as well) to produce a gallon of gasoline. Do you think it magically appears in the pumps with the only carbon footprint being what comes out of the tailpipe?
And yes, there is a need for electricity to make a lithium ion battery as well. But once it's made once, it goes for years and years. That gallon of gas? You have to make it over and over and over to keep the ICE vehicle running.
Don't make stuff up!
"An electric car owner would have to drive at least 129,000km before producing a net saving in CO2. Many electric cars will not travel that far in their lifetime because they typically have a range of less than 145km on a single charge and are unsuitable for long trips. Even those driven 160,000km would save only about a tonne of CO2 over their lifetimes.
The British study, which is the first analysis of the full lifetime emissions of electric cars covering manufacturing, driving and disposal, undermines the case for tackling climate change by the rapid introduction of electric cars."
http://bit.ly/FOrDmy
http://bit.ly/FOFiXj
Also the existing US grid isn't going to support any sizable electric vehicle fleet, so back out hydro-electric generation from your figures and add in coal and nat gas and the additional electric distribution infrastructure build-out footprint. Hydro-electric dams are being pulled out, not added in the US so they can't be figured into the incremental supply needed..
Lastly, lithium and other rare earths are in short supply (China is most of the world's supply - reason enough not to go this route) and are very environmentally un-friendly to mine and process.
The only thing that's green about this is the campaign cash that Obama reaps as his reward for payoffs to the likes of Solyndra execs and GM's union workforce.
Price of oil in 2003 was 30 a barrel. Using the West Texas benchmark, oil prices have only tripled in 9 years. Using the more accurate Brent benchmark, oil prices have quadrupled.
Yet oil production, defined narrowly as crude oil production, is flat since 2004.
An economist, as opposed to a right wing ideologue, would conclude there is a fundamental supply problem since oil prices and global oil production reflect global conditions and not US conditions.
Russia is the world's large producer and their oil companies have publicly admitted that pressure is falling in their key large oil fields.
Everything is point in the same direction - depletion - not a new era of abundance.
The greater issue is infrastructure to bring supply to market. It's true in North America and elsewhere. Central Asia has oil that we've known for some time, but there's not the infrastructure to make it accessible. There's been talk for years about pipelines being built through Turkey or south through Afghanistan and Pakistan, but nothing has happened because of issues that have absolutely nothing to do with the abundance of oil present. As with Obama's blocking of the Keystone XL pipeline, little of the blame is with the explorers. Blame the bureaucrats and politicians, many of whom just like Obama use the problems they've created to push their costly green energy agendas on the public.
If anything, electric cars will reduce the operation costs of electrical utilities.
If you aren't holding something in utilities now, you should think about it.
Vis a vis production, major demand areas like NYC are using their flat rooftops for it.
I got a proposal in the works from a company wanting to put panels on my buildings and 'sell' me the electricity they generate. I could pull all my property off the grid without it costing me a nickel, creating jobs for Americans, and reducing my impact on the grid.
And oil is expensive right now not because of market forces. That's why there is a break in the oil/natgas ratio.
Or Russia where the oil companies have admitted that pressure in their big fields falling?
By the way, sputtering world oil production is precisely the reason to invest in these oil share plays. These are high cost plays - typically a well produces 60% of its oil in the first year. These plays are no justifiable at lower prices and they will not produce at lower prices. Shale oil depends critically on world oil depletion.
Anyone who believes the world is floating in cheap oil should not be investing in a shale oil play.
Now crude oil production is flat since 2004 and
An EV recharged from the existing US grid electricity emits about 115 grams of CO2 per kilometer driven (6.5 oz(CO2)/mi), whereas a conventional US-market gasoline powered car emits 250 g(CO2)/km (14 oz(CO2)/mi) (most from its tailpipe, some from the production and distribution of gasoline).
======================...
money grow on trees
electricity is cleanest source of energy for your car when extracted from somebody else electrical outlet
Correct,
Lithium is not toxic, nor a "Rare Earth' element.
Boliva has huge, easy to harvestreserves, that have yet to be exploited.
5 to 6 times to produce? Are you kidding?
Is Japan subsidizing the cost of building the Nissan Leaf? Really?
And no footprint? Who claims they have no footprint? They have LESS footprint and the wonderful side effect of not paying offshore countries for the privilege of buying their oil. I'll buy my fuel from North American power companies, thank you very much.
Agreed and that is why we cannot pursue strategies of other countries. They are just not applicalbe.
I seen the Italian Fiat girl on the TV commercial slap that guy across the face. I think I dated her once.
Coal - #1
Oil (including shale-oil reserves) - #1
Natural Gas - #12
So, right, we shouldn't do anything. We should just quiver in a corner and do with less. And "save the planet." And, feel guilty, too.
This is entirely the argument of the left, which wants to promote weakness and dependency on Big Government, which, in their view, should be all-powerful and decide for all what should be provided, to whom, how, when and at what cost. It's disgraceful that we have engendered such an ignorant, uneducated populace that vast masses buy into such self-defeating delusional behavior.
Shale oil used millions gallons of water which is then polluted, gas for car but no food.
Is English your first language? You seem challenged.
You know damn well that oil reserve estimates are soft numbers. We don't even have good conventional oil reserve numbers and now are you throwing up numbers as though you went into the mountains and God revealed this to you?
The only was you can conclude the US is number one in proven or probable oil reserves is to include a very generous estimate for shale oil, which is extremely dangerous because we still don't know much about the geology of many of the shale formations nor the costs of extracting it.
What we do know is that shale oil as well as tar sands are marginal sources of oil - it is not profitable to produce these kinds of 'oil' unless prices remain at current levels. Conventional oil is the type of oil that America was built on - cheap and high quality.
Proven conventional oil reserves for the US is about 35 billion barrels - far below the much cheaper to produce OPEC oil reserves. You will probably get about an additional 3.5 billion barrels of oil from shale.
So explain to me where the other trillion barrels going to come ...
You are going to wave your magic wand and conjure them out of thin air?
AIP, with so much information available on the web with some typing and a few clicks of a mouse you've got to be retarded to believe that crap like this is going to fly.
The Bakken alone is expected to yield at least that using nothing more than present technology. One USGS paper estimates the total resource in the Bakken at 270 to 500 billion barrels. Even among the low estimates they are at 100+ billion. Even if future technologies only get at 20 to 50% of that it's well more than your figure for just the Bakken.
What are you on this morning, spiked the kool aid a wee bit too much.
USGS rarely provides oil reserve estimates. They provide resource estimates. Technical feasibility is not the same thing
Moreover, USGS is not taken seriously today because they have produced a whole series of inflated estimates.
You need to come to Jesus. There is no cheap oil on America soil or offshore. Everything left after a century of exploration and development is high cost, locked in difficult geological formations, and in most cases not scalable. Saudia Arabia produces most of its oil from a few thousand wells. Try doing the same in the shale oil fields. Ain't going to work.
The world today is critically dependent on old oil fields in Russia, Iran, Saudia Arabia, Kuwait, etc. Many of the big fields have been producing oil since the last 40s. They are advanced in age and will not producing twenty years from now. Add to that Mexico, the US, Great Britain, Norway and China and the picture becomes really clear.
World oil production has peaked and without clear alternatives, that is the reason to invest shale oil.
A politician actually LIED to me :(
And the moratorium in the Gulf wasn't temporary, much of it is effectively still in place, and it will take years to recover the accumulated lost capacity due to the nearly two year shutdown that we've suffered through so far.
Obama is the most anti-oil, anti-drilling, anti-jobs, anti-energy president we've had (albeit I'd concede Jimmy Carter was his equal if pressed).
Obama had very little to nothing to do with the expansion, nor did Bush. Many of the leases had been sold many years ago. Technology improvements allowed for drilling to be more profitable in some areas. Combine that with continued high oil prices and you get companies that want to drill. Continually low natural gas prices has a bit of an opposite effect in that it hinders companies from wanting to drill in some places due to profit margins. I suggest you visit the Houston/Galveston area sometime. You'll find drilling activity has picked up.
My opinion on Obama is that he talks allot and states many things and quite often doesn't do what he states. I don't particularly like him, nor did I have much of any regard for Bush, though his father was better. I'm an investor, and I dislike nearly all politicians. I do not base my investment decisions on promises/threats made by politicians, nor do I suggest anyone else do that. I honestly don't care who wins your next election, and I seriously expect continued deadlock in government. If nothing else, that will allow companies to get on with business.
I've already stated that the current expansion is due to drilling on private lands, so you've added nothing there. My point was that Obama has shutdown drilling and new production on federal lands. The drilling you're seeing in the Bakken, Eagle Ford, etc. is being done on private landholdings, not federal lands.
My opinion on Obama is that he's a German plant, most likely from the SDP, and is fanatically obsessed with furthering German domination of North America. It mirrors a disturbing online trend with Germans making a nuisance of themselves in US policy discussions.
First of all, there is no real evidence that the US has more than 40 billion barrels of oil that can be extracted using existing technology
I don't know of any country (and there are more than 45 countries post peak now) that has been able to reverse depletion driven declines in oil production.
US oil production has been falling since it peaked in the early 70s and it is very unlikely at this stage that any technological breakthrough is going to reverse. When Alaskan oil came online in the early 80s, it produced a boom in the local economy, but again did nothing to reverse long term decline.
The logic is pretty clear - the easy to find and produce oil is found first and hence more recent discoveries tend to have higher costs and hence represent marginal sources of production highly dependent on high oil prices.
And everyone knows the shale oil wells have short lives producing most of their oil in the first year.
That implies it will be very difficult to get big, sustained increases in production because the base erodes rapidly and offsets much of the new production.
Companies I work with have complained about the permitting process, which is now often three times as long as it use to be. It really is ridiculous. The only bright spot in that is that many of those companies are finally now starting to do well again. This type of insight helps me make investment choices, and I've done quite well following this sector. I don't get any amazing inside information, but I get a realistic overview of where things are headed. If you (or anyone else) think it's really that bad and going to get worse, then short the entire sector.
All the problems this country is facing have to do with OIL..
We either have to use more of our natural resources to offset importing it or else find an alternative fuel....
But who on the political horizon has the intestinal fortitude to do it??
We know BHO does'nt, a change of leadership is needed in the country!!
The "shale oil" in the Green River deposits isn't oil, isn't found in shale. It's kerogen, a pre-petroleum substance trapped in marlstone, It has to be mined or heated in-ground or in an above-ground retort. This to make synthetic oil at a high energy input to low output ratio. This article is 99% crap coming from a propaganda outfit. Good luck with your Magic Oil, dreamers. Also, will one of you explain why oil companies would want to invest billions to lower the price of oil?
The folks here who are frothing desperate to promote more drilling usually fall back, when challenged, to the argument that it creates jobs, without acknowledging that any investment in any energy production of any type creates jobs.
Even if we do have a lot of oil we should still be innovating and exploring alternatives. Have any of you pro-oil guys spent any real time understanding the potential consequences of global warming? Go read "Hot, Flat and Crowded" It will blow your mind.
Why would Obama be anti-jobs and anti-drilling? This is just silliness. They want to drill responsibly. Do you like oil in your fish?
Larry Kudlow is a loud, rude, loose-with-the-facts TV commentator.
Obama has one good quality after another. Highly intelligent, highly educated, industrious, honest, a gifted writer. The average joe doesn't became President of the Harvard law review and then President of the country before he's 50. Obama 2012.
So Uncle Larry is off by a factor of 10 from the wildest guess for the total amount of recoverable US oil.
Kudlow is then just an innumerate stock market prognosticator.
The definition I have seen looking at USGS 'reserve estimates' are almost entirely technical feasibility.
A record number of rigs are now drilling for oil in the U.S., the most in 25 years. SEARCH: 'Baker Hughes Rig Count Hits Record'
More rigs are now drilling in the deepwater Gulf than before the BP Deepwater Horizon explosion in 2010. SEARCH: 'More Oil Drilling Rigs In Gulf'
The U.S. consumes about 19 million barrels of oil per day. Currently the U.S. produces an average of 7.5 mbd. Our oil production peaked in 1970 when we produced an average of 9.6 mbd. About half of our imported oil is from Canada, Mexico & Venezuela. There is plenty of oil available to meet our needs, in fact the U.S. is now a net exporter of over 400,000 barrels of refinery products per day. SEARCH: 'U.S Exports Refined Fuels'
The U.S. has about 1.5% of the world's known reserves of crude oil, this simply is not enough to effect the price of oil on the world market. SEARCH: 'Drill Baby Drill Won't Lower Gas Prices'
One million acres on the U.S./Mexico maritime border has just been opened for new offshore drilling. SEARCH: 'US, Mexico Agree To Cooperate On Energy'
http://bit.ly/xFyYNr
The American Petroleum Institute replied that "we are hearing a lot about the administration's leadership in driving oil production up. The fact is that production on federal offshore and onshore areas is down."
According to API, "There are certainly positives, however, today's production increases relate to projects begun before the administration came into office and progress happening on state and private lands. The most significant oil production that the administration has control over is the offshore, and that has been restricted to the Gulf."
API cited figures from the U.S. Energy Information Agency indicating that oil production in the Gulf was down 22% in 2011 and projected to be down 30% in 2012 as compared to production forecasts before the Obama administration imposed a moratorium on deepwater drilling after the BP disaster.
While Salazar described a Gulf teeming with rig activity, API said that "in the Gulf of Mexico, rigs have left to work in other parts of he world taking jobs with them." It was the same line of attack that Rep. Steve Scalise, R-Jefferson, took in questioning Energy Secretary Steven Chu at a House Energy Committee hearing last week.
Take the EIA global oil production and strip out liquid natural gas and condensates. The resulting figures, which includes both conventional and unconventional oil is flat since 2004. It fluctuates in a narrow range of 4 million barrels since that point and shows no sustained upward trend.
There are EIA sourced figures for GoM in this article. Cinninnatus choses sources I would seldom use to make investment decisions, but he is not completely wrong. However, it's not as bad as the rhetoric would lead some to believe.
After the Challenger Horizon accident some rigs did leave, but many companies did not want to go through the hassle of declaring force majeure on their contracts. The rigs that did leave are unlikely to return for quite a while, because once they are moved they tend to stay in one location for a time.
http://bit.ly/zAEce4
I'm still bullish on the drilling sector, though through companies that are more global, and less GoM centric. Ensco looks interesting, but a bit too GoM centric for me to start a position. However, things are much better than after the Challenger Horizon accident, and slightly better than last year. I'm expecting improvement to continue throughout this year, barring any unforeseen rig accidents.
Still, with the Billion Dollar Propaganda Machine you do get your money's worth even if they play fast and loose with the facts. Same (type) false arguments that have been used for many, many decades.
Republicans get so emotional and defensive with their talking points don't they? (BTW I do vote for INDIVIDUALS from both party)
BTW I do vote for INDIVIDUALS from both party
======================...
but when it comes to your talking points, they are always from the same single source
Nothing the lefty liberals ever do "makes senses"