It seems the oil drilling, SUV loving, die hard petrol heads have a few allies out on the net. Time's Curious Capitalist is wasting pixels trying to justify drilling here and here. Elsewhere the revered Robert Samuelson starts his post Leaning from the Oil Shock with a plea for, you guessed it, more drilling.
Sigh.
It's especially vexing because as I pointed out in my last post the biggest arguments against expanded drilling are ECONOMIC ones. Now I don't claim to have the credentials of Mr. Samuelson or Mr. Curious, but I do how to work a calculator and if just take the a look at the current numbers here, here and here they don't add up to more drilling. To sum up our proven reserves were at 20 billion barrels back in 2003 and our oil production at 8 million barrels a day. Now imagine if a business was a leader in sales, number three to be exact, but its expenditures were a 150% of those sales. What market analyst in his right mind would say "Well the first thing you need to do is get more sales?"
Curious capitalist? Call me a perplexed capitalist.
And neither of these esteemed gentlemen address the rather pressing issue of the current size of our proven reserves. We were at 20 billion barrels in 2003. Since then we've been draining those reserves at a rate of between 1.5 and nearly 3 billion barrels a year. (8 or 5 million times 365. I wasn't joking about that calculator bit) That means our current proven reserves could be anywhere from 12 to 6 billion barrels left. As both Samuelson and Curious point out, it could take five years or more to fully tap the offshore or Alaskan oil fields. Just in time for the last of the current crop to run completely dry. Meaning we'll have done nothing to ease anyone's burden at the pump or anywhere else.
And what exactly constitutes a "truly significant oil reserve?" Especially when you're gorging yourself to the tune of 7.3 billion barrels a year (20 million times 365). You'd need a 70 billion barrel deposit just to carry you through the next decade. Even W. says there's only 18 billion barrels offshore to be recovered. That's not even 3 years.
And these gentlemen seem to forget the basic economic principal. Namely that a barrel saved through conservation or alternative fuel counts the same as a barrel produced. If we were to cut 10% off our consumption, that's the equivalent of pumping another 2 million barrels a day only this way we're not counting the days until we run out.
No the real economics are screaming one thing and one thing only. Slash your consumption. Trim down. Get in market shape. At least that's what I think they say. But then again what do I know. I'm just a full metal dental instrument.
BMTB
Friday, June 20, 2008
Wednesday, June 18, 2008
Drill This!!! (Seriously) (maybe)
Some things never change.
I attended a young democrats convention years and years back and one of the topics for a vote was whether or not to endorse the drilling of the Alaskan Wildlife Preserve. The Alaskan delegates told us it would create a million jobs in Ohio alone, IMPROVE the environment, fight greenhouse gases and cure cancer. Who knew sending a big old drill bit deep into the earth could do all that? It sounded too good to be true and when we asked for some kind of confirmation we got "What are you, a commie? Shut up and vote for us!"
The measure did not carry.
Now that same music is playing but at a more desperate speed. Hurry up and drill drill drill. Not just Alaska but the Gulf of Mexico, the coasts of Florida and California too. Surfers, fish and grizzlies be damned! We've got $4 gas! If this keeps up I'll have to buy a hybrid or (shudder) an electric.
As liberal as I am, I never thought Ari Fleischer's crack about tooling around in SUV gas guzzlers being our "blessed way of life" was just incredibly bad speech writing as opposed to a glimpse into the Right's dark psychosis. Some people just never learn.
Well listen up. You can put the drills away. Or if you do go ahead and start shoving pipes all over this country like quills in a porcupine, don't be expecting 99 cents a gallon at your local Amco. It won't help. Price is determined by market value. Even if you tapped the Alaskan Wildlife Refuge, that oil is still going to out at MARKET value. Unless the company is going to sell it locally at a huge loss, the price of gas isn't going budge. Anyone out there think Exxon's going to sell oil domestically for half its value? (Seriously. I've got this bridge in New York for sale.)
Besides this overlooks the big fact that the US is already the number 3 oil producer in the world. That's Number Freakin' 3! Our problem isn't PRODUCING oil, we're already at 8 million barrels a day. The problem is we're BURNING through 20 million barrels a day. In order to match our current thirst, we'd have to nearly TRIPLE oil production in this country. Even the most ardent advocates of Alaskan drilling don't tout this as a possibility. That would make the Alaskan oil reserves bigger than Russia and Saudi Arabia COMBINED.
Maybe we ought to think about reducing our monstrous consumption rate. Quickly. The bottom line is that the oil game no longer favors the USA. You insist on playing it, you're going to end up like the Lakers in game six. Punked, dunked, and skunked.
That said. There IS one motivation for Alaskan drilling that makes sense; money. But not for Exxon, for us. Nationalize the oil reserves and tap them with taxpayer money and let the profits flow directly into the national coffers. (As opposed to the bloated and barely taxed bank accounts of Exxon execs) As we've seen across the world, nationalized oil reserves are turning former palookas into 800 pound economic gorillas. There isn't enough oil to change the market price of oil. The best you can do is try to ride the high price and get something out it, like money to spend of alternate energy and conservation measures. (I'm nothing if not ironic) Given that our military won't be weaned off oil anytime soon, there is a national security imperative for nationalizing any large oil reserves. Wonder how many drilling advocates would remain if this were the only option? Would they still be so keen if their Texas sugar daddies were cut out of the equation?
There's a trillion dollar question.
BMTB
I attended a young democrats convention years and years back and one of the topics for a vote was whether or not to endorse the drilling of the Alaskan Wildlife Preserve. The Alaskan delegates told us it would create a million jobs in Ohio alone, IMPROVE the environment, fight greenhouse gases and cure cancer. Who knew sending a big old drill bit deep into the earth could do all that? It sounded too good to be true and when we asked for some kind of confirmation we got "What are you, a commie? Shut up and vote for us!"
The measure did not carry.
Now that same music is playing but at a more desperate speed. Hurry up and drill drill drill. Not just Alaska but the Gulf of Mexico, the coasts of Florida and California too. Surfers, fish and grizzlies be damned! We've got $4 gas! If this keeps up I'll have to buy a hybrid or (shudder) an electric.
As liberal as I am, I never thought Ari Fleischer's crack about tooling around in SUV gas guzzlers being our "blessed way of life" was just incredibly bad speech writing as opposed to a glimpse into the Right's dark psychosis. Some people just never learn.
Well listen up. You can put the drills away. Or if you do go ahead and start shoving pipes all over this country like quills in a porcupine, don't be expecting 99 cents a gallon at your local Amco. It won't help. Price is determined by market value. Even if you tapped the Alaskan Wildlife Refuge, that oil is still going to out at MARKET value. Unless the company is going to sell it locally at a huge loss, the price of gas isn't going budge. Anyone out there think Exxon's going to sell oil domestically for half its value? (Seriously. I've got this bridge in New York for sale.)
Besides this overlooks the big fact that the US is already the number 3 oil producer in the world. That's Number Freakin' 3! Our problem isn't PRODUCING oil, we're already at 8 million barrels a day. The problem is we're BURNING through 20 million barrels a day. In order to match our current thirst, we'd have to nearly TRIPLE oil production in this country. Even the most ardent advocates of Alaskan drilling don't tout this as a possibility. That would make the Alaskan oil reserves bigger than Russia and Saudi Arabia COMBINED.
Maybe we ought to think about reducing our monstrous consumption rate. Quickly. The bottom line is that the oil game no longer favors the USA. You insist on playing it, you're going to end up like the Lakers in game six. Punked, dunked, and skunked.
That said. There IS one motivation for Alaskan drilling that makes sense; money. But not for Exxon, for us. Nationalize the oil reserves and tap them with taxpayer money and let the profits flow directly into the national coffers. (As opposed to the bloated and barely taxed bank accounts of Exxon execs) As we've seen across the world, nationalized oil reserves are turning former palookas into 800 pound economic gorillas. There isn't enough oil to change the market price of oil. The best you can do is try to ride the high price and get something out it, like money to spend of alternate energy and conservation measures. (I'm nothing if not ironic) Given that our military won't be weaned off oil anytime soon, there is a national security imperative for nationalizing any large oil reserves. Wonder how many drilling advocates would remain if this were the only option? Would they still be so keen if their Texas sugar daddies were cut out of the equation?
There's a trillion dollar question.
BMTB
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