Tag Archives: Oil Production

Is Obama telling the truth about U.S. oil reserves?

The Department of Energy's own figures

The Department of Energy’s own figures

Investors Business Daily explains. (H/T Master Resource)

Excerpt:

When he was running for the Oval Office four years ago amid $4-a-gallon gasoline prices, then-Sen. Barack Obama dismissed the idea of expanded oil production as a way to relieve the pain at the pump.

“Even if you opened up every square inch of our land and our coasts to drilling,” he said. “America still has only 3% of the world’s oil reserves.” Which meant, he said, that the U.S. couldn’t affect global oil prices.

It’s the same rhetoric President Obama is using now, as gas prices hit $4 again, except now he puts the figure at 2%.

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

The claim makes it appear as though the U.S. is an oil-barren nation, perpetually dependent on foreign oil and high prices unless we can cut our own use and develop alternative energy sources like algae.

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

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

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

At least 86 billion barrels of oil in the Outer Continental Shelf yet to be discovered, according to the government’s Bureau of Ocean Energy Management.

About 24 billion barrels in shale deposits in the lower 48 states, according to EIA.

Up to 2 billion barrels of oil in shale deposits in Alaska’s North Slope, says the U.S. Geological Survey.

Up to 12 billion barrels in ANWR, according to the USGS.

As much as 19 billion barrels in the Utah tar sands, according to the Bureau of Land Management.

Then, there’s the massive Green River Formation in Wyoming, which according to the USGS contains a stunning 1.4 trillion barrels of oil shale — a type of oil released from sedimentary rock after it’s heated.

[…]All told, the U.S. has access to 400 billion barrels of crude that could be recovered using existing drilling technologies, according to a 2006 Energy Department report.

When you include oil shale, the U.S. has 1.4 trillion barrels of technically recoverable oil, according to the Institute for Energy Research, enough to meet all U.S. oil needs for about the next 200 years, without any imports.

Please share this article, because it is unlikely that Obama’s Solyndra-supporting buddies in the mainstream media will report the facts on domestic energy production.

Production of oil, gas and coal on federal lands sinks to 9-year low

Obama claims that production of oil, gas and coal is up since he took office. It’s true that areas under state control are producing more, but what about energy production on federal lands? That’s the part of the country that Obama is responsible for.

Let’s see what two recent studies from the Energy Information Administration and the Institute for Energy Research found.

Excerpt:

The updated EIA report revealed a 12 percent decline in production for coal, oil, and natural gas on federal and Indian lands from fiscal 2003 through fiscal 2011.

During this same period, production on state and private lands has increased, boosting overall production numbers for the United States. That’s a point even President Obama will acknowledge: “Under my Administration, domestic oil and natural gas production is up,” he said upon announcing his rejection of the Keystone XL pipeline.

Obama is correct. He just can’t rightfully claim the credit, since the vast majority of America’s new oil and gas production is happening on private lands in states like North Dakota, Alaska and Texas.

The administration, meanwhile, has also taken several steps to limit production…

  • Withdrew areas offered for 77 oil and gas leases in Utah that could cost American taxpayers millions in lost lease bids, production royalties, new jobs and the energy needed to offset rising imports of oil and natural gas.
  • Cancelled lease sales in the Western Gulf of Mexico, the Atlantic coast and delayed exploration off the coast of Alaska and kept other resource-rich areas off-limits.
  • Finalized rules, first announced by Secretary Salazar on January 6, 2010, to establish more government hurdles to onshore oil and natural gas production on federal lands.
  • Withdrew 61 oil and natural gas leases in Montana as part of a lawsuit settlement over climate change.

“The big picture is clear that government policies undertaken by the Obama administration have produced a significant decline in offshore oil production on federal lands in fiscal year 2011,” the Institute for Energy Research said in response to last week’s updated EIA analysis. “That is certainly not a way to increase domestic production of oil and keep oil and thus gasoline prices in check.”

While it was waiting for EIA to update its numbers, the Institute for Energy Research conducted its own analysis of Department of Interior data in February. It came to the same conclusion: “Production on federal lands is down, while production on state and private lands is up.”

That’s the real story behind Obama’s claims about higher energy production. He’s doing his best to block energy production in the areas under his control. His energy plan is Solyndra, Solyndra, Solyndra – paying off his rich Democrat buddies with taxpayer money.

Obama raises taxes on oil and gas to stop global warming

UPDATE: Welcome, visitors from the Cato Institute! Thanks for your link from here. New visitors, interested in economics make want to check out my posts on card check, the deficit, Stephen Harper, tax hikes for the rich, cap and trade, porkulus 1, porkulus 2, conscience rightsschool choice and the subprime crisis.

This Reuters article explains how Obama is going to attack energy producing oil and natural gas companies in order to save the planet from global warming. Here is the exact quotation from Reuters:

U.S. oil and natural gas producing companies should not receive federal subsidies in the form of tax breaks because their businesses contribute to global warming, U.S. Treasury Secretary Timothy Geithner told Congress on Wednesday.

In the same article, Senator John Cornyn explains the consequences of this policy:

Senator John Cornyn of Texas criticized the tax increases, saying they would hurt independent energy companies that provide a large share of U.S. oil and gas supplies.

“My view is that higher taxes on small and independent producers here in America will make us more dependent on imported oil and gas while we transition to cleaner energy alternatives, a goal we all share,” said Cornyn. “And it will also hurt job retention and job creation in the energy sector, which provides an awful lot of jobs in this country.”

Let me also note that consumers are going to pay the price for raising taxes, because energy producing companies are just going to raise their prices to pay for the tax increase. And if Obama either fixes prices or nationalizes the energy industries, (like he’s nationalized health care), then you can expect energy supply shortages.

When you raise taxes on the producers of a commodity, you get less of that commodity. When supply decreases and demand stays the same, you get a shortage. The price of that scarce commodity rises. If you respond to the rising prices by fixing the prices lower, you get line-ups outside of gas stations. This is what we saw in 1973 with price controls on gas.

Jerry Taylor of the Cato Institute explains why price controls on oil and gas didn’t work in 1973:

Let’s begin with a review of what happened the last time Congress tried to protect consumers from “Big Oil.” When Richard Nixon enacted his strict retail price-control regime in 1971, service stations ran out of gas and motorists were forced to wait in staggeringly long lines to get what fuel remained. Burned by the fiasco, Congress adopted the Emergency Petroleum Allocation Act of 1973 (EPAA), which essentially removed price controls from the pump and instead applied them upstream into the wholesale domestic oil market.

Indeed the gasoline lines and physical shortages disappeared, but the cap on profits from domestic oil production discouraged investment in new domestic supply, increased reliance on imported oil, and increased the upward pressure on world crude prices. The Energy Policy and Conservation Act of 1975 (EPCA) tightened the wholesale oil price controls established in the EPAA and exacerbated the economic dislocations associated with it.

Read the whole article. As Santayana urged, we need to learn from history and from the mistakes of other socialist countries, so that we do not repeat their mistakes.

Now on to the secular religion of global warming. Gateway Pundit completely destroys the idea that the earth is even warming:

Arctic sea ice growth finished the year in 2008 at the same level as 1979.
The oceans have been cooling since 2003.
Sea ice is growing at the fastest pace on record.
Greenland’s glaciers are stabilizing.
There are growing fears of a coming freeze worse than the ice age.
Alaskan Sea Glaciers are advancing for the first time in 250 years.
And, for the second straight year the Earth is, in fact, cooling… not warming.

I stole this graphic from his post as well:

US Climate Map October 2007-November 2008

Warning! Now is a good time to stop reading, as I am about to become mean and snarky.

<snarky>So what we have here is a faith-based initiative introduced by Obama in order to appease his favored secular special interests groups, who  substitute recycling for the rigorous demands of traditional, reality-based religion and morality. Do we really need a religious nut in the White House catering to this crowd of anti-science fanatics? Should these dogmatic eco-fascist fundamentalists be influencing the policy of the most powerful nation on earth with their anti-reality delusions? Should we really be acting on the religious doctrines of non-scientists like Al Gore and his Big-Environmentalism-backed propaganda films, which are even now shown to our children in public schools as fact, fact, fact? What happened to the separation of church and state?</snarky>

For my Christian readers, Jay Richards of the Acton Institute did a great lecture on basic economics for Christians and another great lecture on what Christians should think about global warming.

Obama introduces cap and trade scheme in budget

I was browsing over at Nice Deb and found this story about the budget that really upset me. I am really beginning to fear for the future of the American economy. I don’t think we can handle all of these bad decisions in such a short period. We may be looking at a new Depression.

Nice Deb cites this article from Human Events as follows:

The Department of Energy estimates that S. 2191, the Warner-Lieberman cap-and-trade proposal, will increase the cost of coal for power generation by between 161% and 413%. DOE estimates GDP losses (see chart) over the 21-year period they forecast, at between $444 billion and $1.308 trillion, with particular damage to the manufacturing sector…

Winegarden estimates that this bill could increase unemployment by 2.7% or about 4 million jobs. In fact, companies are already preparing to avoid increased level and volatility of American energy prices by setting up factories and partnerships in countries which won’t be subject to cap-and-trade restrictions…

In addition, we can expect 1 trillion dollars in new taxes. Here are the individual tax hikes from an ABC News article that Nice Deb links to in her post:

On people making more than $250,000:

$338 billion – Bush tax cuts expire
$179 billlion – eliminate itemized deduction
$118 billion – capital gains tax hike

Here are some of the tax hikes on businesses from the same post. I picked the ones that are specifically going to affect energy production.

$5.3 billion – excise tax on Gulf of Mexico oil and gas
$3.4 billion – repeal expensing of tangible drilling costs
$62 million – repeal deduction for tertiary injectants
$49 million – repeal passive loss exception for working interests in oil and natural gas properties
$13 billion – repeal manufacturing tax deduction for oil and natural gas companies
$1 billion – increase to 7 years geological and geophysical amortization period for independent producers

Oil and gas? Isn’t that what people use to heat their homes and power their vehicles?

UPDATE: The Anchoress says that the price hikes on individuals making $250,000 or more also apply to small businesses, as well as individuals! Bye-bye jobs!