A Time to Drill

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The average price of a gallon of gas is now $3.70—almost 90 cents more than this time last year. With instability roiling Libya, Nigeria and the Persian Gulf region—and the summer driving season still months away—it’s going to get worse. A former Shell exec predicts $5-per-gallon gas by the end of the year.

If that happens, the fragile economic recovery now underway will collapse, which helps explain President Barack Obama’s renewed focus on energy issues. In the next decade, he wants the U.S. to decrease its 11-million-barrel-a-day oil imports by a third. He plans to achieve that laudable goal with a mix of new alternative-energy technologies, conservation and efficiency, and increased domestic energy production.

It’s about time. Fully exploiting domestic oil reserves is not the only solution to our energy woes, but it must be viewed as part of the solution for the following reasons:

  • The U.S. economy, as currently configured, is dependent on oil and other fossil fuels.
  • The cost of importing oil is rising rapidly due to increasing global demand and decreasing domestic production. A quarter-century ago, by way of example, just 27 percent of America’s oil came from other countries. Today, some 60 percent comes from outside the United States. These costs, as the wars in the Middle East remind us, are not simply economic.
  • The stuff that will power the U.S. economy after oil is simply not yet ready to shoulder the burden.

Hence, the two-track goal should be maximum development of domestic oil reserves to enable America to reconfigure its supply base in the near and medium term, and investments today in the energy alternatives of tomorrow’s “post-petro economy.”

The good news is there have been a number of sizable discoveries of stateside oil in the recent years:

  • The U.S. Geological Survey (USGS) estimates that the Arctic may hold 90 billion barrels of oil. About a third of the oil is in Alaskan territory. Yet another USGS study concludes that North Dakota and Montana “have an estimated 3 to 4.3 billion barrels of undiscovered, technically recoverable oil.”
  • RAND estimates that Colorado, Utah and Wyoming sit atop a goldmine of oil-shale deposits, once thought to be too expensive to convert into petroleum. These states hold between 500 billion and 1.1 trillion recoverable barrels—the equivalent of three times the amount of oil in Saudi Arabia, according to an AP report. As RAND’s James Bartis explains, “We’ve got more oil in this very compact area than the entire Middle East.” Already, the Canadian province of Alberta is converting its oil sands into 1.31 million barrels of oil per day.
  • The American Petroleum Institute (API) reports that opening up new outer continental shelf areas “could lift domestic crude production by nearly 1 million barrels per day.” And if onshore areas were developed, “output could rise by as much as 2 million barrels a day by 2030.”
  • In the U.S. swath of the Gulf of Mexico, British Petroleum estimates a new reserve could yield 6 billion barrels of oil. Just off the coast of Louisiana, Chevron has found an oil field with perhaps 15 billion barrels of oil.

The Energy Information Administration has published findings that indicate the U.S. has 30.4 billion barrels of oil—a figure that does not include the untapped oil reserves mentioned above.

Some will use last year’s oil spill in the Gulf as reason to block new offshore drilling or even phase out drilling altogether. To do so would be to abandon a vital economic resource for which there is simply no replacement (at least not yet).

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  • Amused

    Better go talk to those "oil boys " , for the gas we're paying $4 a gallon for today , was already purchased for lower prices which should only cost us about $ 3.30 a gallon . But hey , the future traders on Wall Street gotta eat to eh ? So what if its caviar and tearing their country a new arsehole . Yea , "drill baby drill " , question is WHO ?
    Are we REALLY this naive ? ….or just pretending to be ?

    • jacob

      But it is here where a government which is truly a government and not the joke
      we have today is supposed to intervene ! ! !
      Aren't there laws galore in the books to deal with such price gouging ??
      Of course, government bureucrats are not affected by gas prices, as all of us
      pay for it and the President doesn't shy away from taking vacation breaks all
      the time on Air Force One, which flies in air but not on air and now this crap
      that we shouldn't drill because of the way it might affect the environment but
      make us pay $5 for a gallon of gas is right ??

      The same environmentalists who convinced a federal judge in Louisiana to
      stop the US Corps of Engineeers from building a spillaway because it could
      affect a minute fish in the area are the responsibles of the KATRINA tragedy
      Has anybody in the abject media bothered to dig into the issue ??
      Of course not.! ! !
      EPA et al are some of the many "sacred cows" we have in this country…! ! !

    • rdb3

      You never stop. do you?

  • Gamaliel Isaac

    The propaganda of amused against those who buys futures is really naive. They stockpile oil so that when the oil is cutoff we have it. Does Amused really think that the price of oil would not go up without futures? In fact by increasing the supply in the future they ultimately keep the price lower than it would otherwise be. It's amusing but also sad to see the lack of economic understanding of anti-futures pontificators.

  • Karl Kennet

    I don't often write in these boards, but I must, must inform you of the current rise in Canadian dollar, and why.
    C$104.45 to US$.96 – this morning.
    OIL.
    If you don't put a rig EVERYWHERE you can, and PUMP,PUMP,PUMP, you will lose your country. Canada will NOT follow… Commodities Based Economy, with huge OIL contracts in United States, China, India, C$1.09 – by years end.
    Don't think they're in any smarter up here, now that they've FOUND- Home Equity Lines of Credit, and cheap money.
    Must raise interest rates, and keep credit card rates high.
    We don't need the United States to bring us down, WE CAN DO IT ALL BY OURSELVES!
    I agree with 75% of what your Obama says, and DISAGREE with 80% of what he does.
    Help!

  • Wesley69

    A time to drill?? You got to be kidding!! Under Obama??

    While a multi-path approach to the energy problem would seem logical, this administration is anything but logical. Its emphasis on wind and solar will not produce near the energy this country will need. Rather than increasing onshore and offshore drilling, the Interior and EPA are making it more difficult through regulation to tap both resources. But it is okay for the US to give Brazil billions to drill off their coastline. Go figure. Oil shale and clean coal are treated as the step-children of this administration, though we are energy rich in these sources.

    Despite all their talk, and it is just talk, this administration wants solutions to the energy problem on its terms – Green terms. If that means rising gasoline prices, so be it. The administration figures it will force Americans to use mass transit. But like oil drilling, new mass transit schemes are 10 years away before they would be realized. In the meantime, energy costs are going to continue to rise. With the out-of-control FED printing money with Obama's approval, the cost of energy, of everything will go through the roof. Its called inflation and it is the enemy of all of us.

    Hopefully, voters in 2012 will forget the charming personality and really look at what is in that suit. Is it a person that is truly dedicated to solving the nation's problems?? Is the US better off, not only energy wise, but in all areas, under Obama's (cough) leadership? If the voters will think, this President will be numbered among the unemployed.

  • tanstaafl

    If we start drilling, the price of oil will drop. If we compete with the Saudis for oil revenue, the Saudis will have less money for jihad. Sounds like a win-win to me.

  • jacob

    ASKING A STUPID QUESTION, HOPPING FOR AN INTELLIGENT ANSWER :

    WHERE DOES THE ALASKA OIL GO TO ???

    And if it is true (which I believe is a big lie) that we "just" import 30% of the oil we
    consume, what about the other 70% which is not controlled by OPEC ?

    If this is a free for all, then what for do we need a government ??
    Since there is no explanation for this sad state of affairs, are we rather to conclude
    that the oil companies ARE ACTUALLY THE GOVERNMENT ???

  • jtbaumgart

    I work in direct support of the Oil and Natural Gas Industry. Here in Oklahoma City, there is a small community called Cushing outside Oklahoma City. This area of the country supplies 10% of the entire nation’s supply of Oil and Natural Gas. In reality there needs to be a comprehensive energy plan and includes Oil, Natural Gas, Coal, Nuclear, Wind and Solar. Putting all your eggs into one basket like Mr. Obama seems to working toward is foolhardy in my humble opinion. Here in Oklahoma, both Wind and Natural Gas are used as the main means of energy supplies. Oklahoma’s population is less than New York City so the demand for energy is spread out over a large area.
    One of the things that could reverse the squeeze OPEC has on us, would be to eliminate all food and grain exports to countries that use their natural resources to destroy us. For instance, if a country like Saudi Arabia, uses its oil revenues to support Mosques and Madras’ that advocate the destruction of America, then they get no food. They can’t eat that oil and when they get hungry, they will see things our way.

    • Jim_C

      In a sense, what you are calling for is putting all the eggs in one basket. You're talking about the creation of major instability; our policies in the Middle East–right and wrong–are all about maintaining stability–both in fuel supply and in their domestic politics.

      You could also argue that we have put all our eggs in the fossil fuel basket for a long time. And fossil fuel is vitally essential to our economy; so I'm not against a prudent increase in domestic drilling. We knew it would come down to this. If Obama can make political points by encouraging alternative energy development, so be it. If it means more people go back to work and we're less dependent on OPEC, we win.

  • BS77

    How many billions, hundreds of billions did we sink into Iraq…and how many lives were lost in an attempt to "democratize " Iraq???. We should get every gallon of oil they have for free for ten years. We should be drilling in the Gulf, in Alaska and where oil is to be pumped. Five dollar a gallon gas will wreck our economy and could even bring a Depression like the 1930s. This snail pace approach to energy independence aint cuttin it.

  • BS77

    Oh….also, there is enough geothermal energy in the Yellowstone area to supply turbines and generators with incredible amounts of power….for the western states. Why delay? Geo thermal is about the cleanest energy system there is.

  • wasicu36

    It really doesn't matter what we want to do to produce energy, the greenies will try to stop it. Windmills are ugly and kill birds. Power lines ar e ugly and make noise. Wave generators in the oceans scare seals. Solar farms in the desert ruin the pristine scenery.
    And oof course all these need power lines which are ugly and make noise. We are under the thumb of a group of self loathing gaia worshippers who actually do want us all to die for their goddess.. Us that is, not Them! I'm still waitinng for them to lead by example and commit mass suicide…

  • Jim

    Most reasonable people know and advocate drilling. Obama does not have drilling on his agenda because the other modes of obtaining energy are beneficial to him and his ideologues and financial supporters.
    Oil companies mostly will not support Obama but many of the New Energy businesses will.
    The new energy businesses need the backing of government and Obama needs them.

    It is in Obama's interest to create short supplies of oil (ie send drillers to Brazil) so as to create demand for alternate energy sources.

    Geo thermal is used where available. Yes it's available in Yellow stone and not used.
    If yellow stone were to be used it would create a roar of objections from ecologists and probably the public.

  • BS77

    There is enough geo thermal source NEAR the park…not right in the center of it, See, the Center of the Park must be kept "Pristine" : where there are wide asphalt roads thousands of cars, tourists and souvenir shoppers (Oh how Pristine!!!).

  • BLJ

    Gas prices have more than doubled under the Chosen One. The Lame Stream Media is strangely silent. When George W. Bush was in office their panties were in a wad. The Chosen One also decides to joke about these prices in one of those idiotic town hall meetings.

    Obama is more concerned with making sure his socialist buddies in Brazil get their off-shore drilling going than here in the USA. He could care less if gas gets to $5 a gallon. Anything he says is total b.s. It has been this way since he got into politics.

  • pyeatte

    Obama will never go for all-out drilling and will drag his feet on limited drilling. This just insures we will have expensive gas during the election year. Already, with the near $4 a gallon gas, people are driving less, which means there is less economic activity taking place. The cheaper gas is, the more driving and economic activity.

  • BS77

    Get working for Trump, Romney, Bachmann in 2012…..anyone capable to get our energy system going again, our manufacturing and innovation. Get the oil wells pumping!!!

  • theSeeingEyeDog

    We have the biggest oil reserves in the WORLD right here within the U.S. borders. We alo have the power to change our economy and be self sufficient with our countries oil demands. Why the debate?
    Our country is suffering because we really dont produce anything anymore, other than grains. Want to turn things around? Heres 3 of the positive byproducts.

    1. We become a major world oil supplier to other nations, which will force the Middle Easterners to reduce their oil prices in order to be competitive, ( it doesnt cost nearly as much to refine the oil as they are charging us), its the bidding war for it between us and other countries that keeps pushing the price up.

    2. It also means the other 2/3rds of the big oil purchasers will now buy some from us which results in large export profits for our government and U.S. businesses, jobs & national debt reduction.

    3. Significant stateside gas cost reduction resulting in keeping more money in the citizens pockets, as well as a push to the economy because people now have more money to spend on local goods & services rather than just sending it to the Arabs. Want to turn the economy and the country around, this is the way and probably the only way.