"John Galt" <whoisjohngalt@[EMAIL PROTECTED]
> wrote in message
news:9u5Sj.117458$6i4.15628@[EMAIL PROTECTED]
>
> "Larry Hewitt" <larryhewi@[EMAIL PROTECTED]
> wrote in message
> news:fva97k$kc8$1@[EMAIL PROTECTED]
>>
>> "John Galt" <whoisjohngalt@[EMAIL PROTECTED]
> wrote in message
>> news:AgWRj.123983$Tj3.106837@[EMAIL PROTECTED]
>>> http://www.realclearpolitics.com/articles/2008/04/start_drilling.html
>>>
>>> Article Highlights (well, almost all of it is a "highlight"):
>>>
>>> (...) The truth is that we're almost powerless to influence today's
>>> prices. We are because we didn't take sensible actions 10 or 20 years
>>> ago. If we persist, we will be even worse off in a decade or two. The
>>> first thing to do: Start drilling.
>>> It may surprise Americans to discover that the United States is the
>>> third-largest oil producer, behind Saudi Arabia and Russia. We could
be
>>> producing more, but Congress has put large areas of potential supply
>>> off-limits. These include the Atlantic and Pacific coasts and parts of
>>> Alaska and the Gulf of Mexico. By government estimates, these areas
may
>>> contain 25-30 billion barrels of oil (against about 30 billion of
proven
>>> U.S. reserves today) and 80 trillion cubic feet or more of natural gas
>>> (compared with about 200 tcf of proven reserves).
>>>
>>> What keeps these areas closed are exaggerated environmental fears,
>>> strong prejudice against oil companies, and sheer stupidity. Americans
>>> favor both "energy independence" and cheap fuel. They deplore im****ts
--
>>> who wants to pay foreigners? -- but oppose more production in the
United
>>> States. Got it? The result is a "no-pain energy agenda that sounds
>>> appealing but has no basis in reality," writes Robert Bryce in "Gusher
>>> of Lies: The Dangerous Delusions of 'Energy Independence.'"
>>>
>>> Unsurprisingly, all three major presidential candidates tout "energy
>>> independence." This reflects either ignorance (unlikely) or pandering
>>> (probable). The United States now im****ts about 60 percent of its oil,
>>> up from 42 percent in 1990. We'll im****t lots more for the foreseeable
>>> future. The world uses 86 million barrels of oil a day, up from 67 mbd
>>> in 1990. (...)
>>>
>>> The best we can do is to try to influence the global balance of supply
>>> and demand. Increase our supply. Restrain our demand. (...)
>>>
>>> Increasing production also is im****tant. Output from older fields,
>>> including Alaska's North Slope, is declining. Although production from
>>> restricted areas won't make the U.S. self-sufficient, it might
stabilize
>>> output or even reduce im****ts. No one knows exactly what's in these
>>> areas, because the exploratory work is old. Estimates indicate that
>>> production from the Arctic National Wildlife Refuge might equal almost
5
>>> percent of present U.S. oil use.
>>>
>>> Members of Congress complain loudly about high oil profits ($40.6
>>> billion for ExxonMobil last year) but frustrate those companies from
>>> using those profits to explore and produce in the United States.
Getting
>>> access to oil elsewhere is increasingly difficult. Governments own
>>> three-quarters or more of proven reserves. Higher prices perversely
>>> discourage other countries from approving new projects. Flush with oil
>>> revenues, countries have less need to expand production. Undersupply
and
>>> high prices then feed on each other.
>>>
>>> But it's hard for the United States to complain that other countries
>>> limit access to their reserves when we're doing the same. If higher
U.S.
>>> production reduced world prices, other countries might expand
>>> production. What they couldn't get from prices they'd try to get from
>>> greater sales.
>>>
>>> On environmental grounds, the alternatives to more drilling are
usually
>>> worse. Subsidies to ethanol made from corn have increased food prices
>>> and used scarce water, with few benefits. If oil is im****ted, it's
>>> vulnerable to tanker spills. By contrast, local production is probably
>>> safer. There were 4,000 platforms operating in the Gulf of Mexico when
>>> hurricanes Katrina and Rita hit. Despite extensive damage, there were
no
>>> major spills, says Robbie Diamond of Securing America's Future Energy,
>>> an advocacy group.
>>>
>>> Perhaps oil prices will drop when some long-delayed projects begin
>>> production or if demand slackens. But the basic problem will remain.
>>> Though dependent on foreign oil, we might conceivably curb the power
of
>>> foreign producers. But this is not a task of a month or a year. It is
a
>>> task of decades; new production projects take that long. If we don't
>>> start now, our future dependence and its dangers will grow. Count on
it.
>>>
>>>
>>
>> This author is being misleading.
>>
>> First, his claim that, because some exploration of untapped reserves is
>> old the estimates may be off is totally bogus. It isn't like an oil
field
>> is like a bathtub capable of filling or emptying.
>
> Larry, the technology used to estimate these reserves improves all the
> time. That's one of the reasons that Houston (IIRC) has more
> supercomputing capacity than anyplace in the world --- the companies
work
> overtime on these capabilities.
>
> Now, GRANTED, the old estimates might be spot on, as you argue below.
All
> Samuelson is saying is that they're old, and since they were taken with
> old technology, MAY be off.
>
Exp;oration is a very simple. relatively low technology process.
Holes are dug, samples taken, oil density calculated, and aa map of rock
strata made.
Adjustments to known fields is mostly from experience with pumping. Maybe
the extent of hte field is found to be different than inital estimates. Or
maybe new technology can extract more oil than originally planned.
The former cannot be detected by exploration, the latter does not need
exploration.
Intrestingly, from the EIA data, adjustments are pretty much a wash.
>> UNless he is claiming that new technology (forget it) can be used, the
>> estiimates are stable. Check the adjustments in reserves at
>> http://tonto.eia.doe.gov/dnav/pet/pet_crd_pres_dcu_NUS_a.htm
>> Net changes in total reserves are less than a tenth of a percent.
>>
>> Note also that, despite the rhetoric, new ex****ation and tapping of new
>> fields _does_ occur every year, especially in the Gulf.
>>
>> Despite what this author stated.
>>
>> And again, despite what this author asserts, proven reserves are not
that
>> great. Despite his assertion that there are untapped reserves equal to
>> current known reserves, the EIA doesn''t believe that. They put
untapped
>> reserves at about 20% of tapped reserves. Most of that is in producing
>> fields and will require secondary extraction techniques, is too small
to
>> be of significant interest (fields in Arizona, Missouri, Nevada, New
>> York, South Dakota, Tennessee, and Virginia), f ex., or for other
reasons
>> (quality) is not exciting commercial interest.
>> http://tonto.eia.doe.gov/dnav/pet/pet_crd_pres_dcu_NUS_a.htm
>>
>> This is a key factor of the author's exaggeration.
>>
>> Much of what he claims to be "reserves" is tied up in tar sands. But,
as
>> the Canadians are finding out, extraction is an expensive, energy
>> intensive process adn the net ouput is small, trading huge amounts of
>> coal for the low quality oil. Add the massive investments for minimal
>> profits, even at $120 a barrel, and it is understandable why the oil
>> companies are silent.
>
> That is quite correct, BUT remember his prime premise -- that $120 is
> likely to look cheap in a few years. The cost of extraction won't
change,
> the price per barrel will. If the price per barrell goes
> up........well........
Except even the oil companies are betting against this.
In congressional tstimpny oil execs indicated no desire to increase
capacity, indicating that they expect alternative fuels and conservation
to
reduce demand to the poijt that new capacity would be unnecessary.
>>
>> Even at full production of known, untapped fields, the effect on world
>> markets would be small. The loss in Iraqi production due to the war is
>> about the same amount.
>
> Yes, BUT (again) his point is simply to say that we need to exploit all
> known sources or quit whining about prices (of course, stability in the
> Middle East, Nigeria, and less sabre rattling by Iran and Venezuela
would
> of course help as well.)
I agree, quit whining.
But there is no indication that even increased supplies will reduce
proices.
Jus tlike economists are saying about the McCain/ CLinton gas tax hiliday,
lower prices/increased supply will do o more than increase demand, forcing
prices up again. The net result wpuld merely be more moeny for he oil
companies.
>>
>> And all of this begs the central question of why oil/gas prices are so
>> high.
>>
>> Note that world demand, because of the failing US economy, is actually
>> falling and recently has lead to an easing of crude prices. Yet despite
>> the reduction in cost of a barrel of oil gasoline prices continue to
set
>> records.
>>
>> In truth, factors other than supply and demand are behind the high oil
>> proces, which is why little can be done in the short term to lower
them.
>
> I'm in India right now. In June, Tata will go to market with their $2000
> auto. It gets great gas mileage, but its target market will be
> autorickshaws (which get even better mileage, and often use propane or
> LPG), motobikers (who will also go to a vehicle with poorer gas mileage
> than their bikes) and **new users**, of which there are hundreds of
> millions about to stop using their legs to get around over the next few
> years. This is a significant supply-and-demand factor that I have yet to
> see modeled in any economists forecasts ---- and then the Tata car oes
to
> China, Indonesia, Malaysia........
>
That specific example, noo.
But forecasts _do_ prioject significant increased demand in countries
like
CHina, India, and Braxil (despite their huge ethanol program).
> It's not wrong to say that currency is an issue. However, it's
misleading
> to not note that worldwide usage is fated to skyrocket as the developing
> world continues to come "online."
>
Except rising prices lower demand.
AS prices rise, unfortunately, poor countires/peoples stop burning oil.
Already we are seeing conversions from oil to wood --- or nothing --- in
parts of Africa and centrral asia. Yeah, the amounts are small.
But as prices rise more changes will lessen demand.
Larry
> JG
>
>
>>
>> According to economists and the oil ministers of OPEC, for ex, 20% or
>> more of hte cost of a barrel is because of Bush's weak dollar policy
that
>> has put the dollar in free fall. With the dollar continuing to set
record
>> lows against foreign currencies oil producers add in a hedge against
loss
>> of wealth as the dollar continues its free fall.
>>
>> The second biggest factor, accounting for as much as a quarter of teh
the
>> cost of a barrel, is the US financial crisis caused by Bush 's and the
>> Fed's economic policies. AS mortgage investments died and investors got
>> hinckey about investing in complex funds, and as US interest rates
>> plummeted, money has flown from stocks to commodities. This explains
why
>> the cost continues to remain high, even increase, while demand falls.
Too
>> many dollars betting oil and gas will continue to go up in price.
>>
>> In truth world demand and supply is very similar to waht it was when
oil
>> was selling for half of what it is today.
>>
>> Larry
>>
>> Larry
>>
>>>
>>
>>
>
>
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