Obama’s incoherent oil policy [Reader Post]

Whoa Doc! this one’s out of the park. If every American could read this, especially the ones who are wondering why their cost of living is going up with the cost of filling their tank, while their standard of living is going down incrementally, the exalted Ditherer might not be so mythical. I hope this article gets some exposure in the web. Well done, thank you.

Thanks, Skook! I can live for two months on a good compliment. 🙂

Just saw this:

Obama push to double conservation spending draws critics
………..
Toward that end, the president wants Congress to double spending — to $900 million next year — on a conservation fund that’s used to buy more property for the federal government. Currently, the government owns 635 million acres, or roughly three out of every 10 acres, with the largest chunk in Alaska
………….

http://www.washingtonpost.com/politics/obama-push-to-double-conservation-spending-draws-critics/2011/04/03/AFdJdQYC_story.html

Any guesses as to the real reason for this increased interest in land for the federal government?

“America consumes 20.8 percent of the oil produced in the world each year and 20.9 percent of the natural gas production. But we only have about 1.6 percent of the proven oil reserves and only about 3.8 percent of the proven gas reserves. We could tap all our reserves and we would still be importing oil. And, at our current rate of consumption and importation, our reserves are estimated to last less than six years.”

“Six years” is probably an exaggeration, but the above paragraph accurately describes the nature of the underlying problem. Misinterpreting the meaning of diagrams and tables in documents such as the Congressional Research Service’s U.S. Fossil Fuel Resources doesn’t make that underlying problem go away. Our domestic reserves of economically recoverable petroleum would only be good for a decade or two at our current rate of consumption. Nor would full production have a significant impact on domestic gasoline prices. That’s because prices are determined by a global market.

“Drill baby drill” isn’t really about long-term energy independence or lower gasoline prices. It’s about a few private corporations exploiting our remaining economically recoverable domestic petroleum reserves for a decade or so of maximized profits. After which they’re gone, and during which we will have failed to transition to sustainable alternatives.

These people might just be the next generation’s worst enemies.

Greg: “…..we only have about 1.6 percent of the proven oil reserves…..”

This is a perfect example of lying with statistics.
Obama was last quoted as saying 2%.

Obama knows that most people assume that “proven oil reserves” equals oil known to be in the ground.

Truth is a bit different.
In Saudi Arabia, for example, “proven oil reserves” are whatever the government announces they are.

In the United States, “proven oil reserves” is a legal term, not a scientific term.

It is defined by the Securities and Exchange Commission.

This is the definition, unique to United States law, of “proven oil reserves:”

Proved reserves.
The quantities of hydrocarbons estimated with reasonable certainty to be commercially recoverable from known accumulations under current economic conditions, operating methods, and government regulations.
Current economic conditions include prices and costs prevailing at the time of the estimate.
Estimates of proved reserves do not include reserves appreciation.

So, the definition is in part economic; every time the price of oil rises, our “proved reserves” rise, too; likewise when the price falls.

Most important, however, is that “proven oil reserves” only counts the petroleum that is available for development under current government regulations.

So, to take two obvious examples, the petroleum in ANWR is not included in our “proven oil reserves,” even though the petroleum there is known to be vast, nor is the offshore petroleum in those areas–the large majority–where drilling is not permitted by current law.

It is not nature, but Barack Obama and Congress that are limiting America’s energy resources.

Obama is willing to deliberately mislead the American people in order to justify billions, if not trillions, of dollars in wasteful, politically-motivated greendoggles.

See more here.

@Greg: Grege

The sooner we run out of oil the sooner we’ll develop alternatives. Now go buy an SUV. Help the cause.

@Greg: Greg, your info is very out dated. The natural gas in the shale formations are estimated to last for more than 20 years. Your data doesn’t include the off shore oil either nor the AK oil deposits. When we add in the coal resources, the US has more proven energy resources than any other country. Those alternative energy projects (wind and solar) your hero financed greatly increased the number of jobs (in China).

Your hero has also shut down coal fired projects that had already been approved. Now, you can tell me with out your nose growing longer that exploiting our energy resources instead of importing said energy will make no difference in moving us more towards energy independence.

Nan in #6 you mentioned GWBs enviro-home. At my work they changed all the bathrooms (a lot of bathrooms) to be “greener”, with mixed results. The sink which was supposed to conserve water and was motion activated, it worked well. The matching soap dispensers were also motion activated and seemed to have a mind of there own, dispensing soap without anybody activating the sensor, although I’m not sure if that’s an environmental concern. They chose not to use a regular hand dryer or supply hand towels but instead bought hand dryers where you actualy insert your hands into a cylinder and as you pull the hands out a strong wind at the top of the cylinder actually blows the water right off the hands and they worked great! And are also more sanitary then other options. The big mistake was the toilets, they used almost no water, I never actually got the chance to use one because shortly after they had installed them, the bathrooms stank… bad!.. I chose to instead use the non environmentally friendly janitors restroom instead. The toilets were removed after a week. Experimenting with toilets can have crappy results.

You’re right Zac. Vancouver, the something for nothing, feed me crowd, rules the province. Meanwhile we have thousands who live in the BC interior and work in Alberta. They got climate and money.

@Zac, #15:

The big mistake was the toilets, they used almost no water, I never actually got the chance to use one because shortly after they had installed them, the bathrooms stank…

Somebody probably neglected to do their product research. High efficiency toilets vary in efficiency from “it hardly works at all” to “it flushes so powerfully that loose objects on nearby shelves may vanish”. This difference doesn’t seem to directly relate to the cost of the fixture. I don’t know why the big box stores carry so many low-efficiency “high efficienty” toilets, but they do. Buyer beware!

@Greg:
A very true observation, Greg.
Our condo complex was trying to conserve water when the City decided to give away free low flow toilets if you gave them your old one.
Only the absentee landlords went for those as Consumer Reports had put out their study ranking the City’s free offering brand and model as lousy.
Resident owners, like ourselves, paid for our own but got something more top of the line (efficiency-wise).
We went for a Kohler (non-electric motor) version.
Not that expensive, but really great reviews.
As the ”free” ones break or need repair they are being replaced by better-working ones.

A few weeks ago we had a thread up that mentioned San Fran’s problems with too little water mixing in with the raw sewage, leading to odors and the need to add bleach at the city’s reclamation plants.

@Greg:

You know, your arguement falls on the ‘currently recoverable’ phrase. As in – if we only had what oil was ‘currently recoverable’ in 1950, we’d be out by now.

In fact, our reserves have at least doubled with our new ‘currently recoverable’ discoveries – the Bakken, etc.

So take your silly little green unicorn farts and go home.

Q: what did the low flow toilet say before he left his owner?

A: I’m sick of your crap.

definition of resource – A person, asset , material, or capital which can be used to accomplish a goal .

Did you ever wonder why it’s okay for us to use everyone else’s natural resources but for some reason it’s not okay for us to use our own? If we can’t use them, then by definition they are not resources and we shouldn’t refer to them as such.

This can be argued from many points of view. Both “sides” can make perfectly valid arguments for their respective points of view.

But let’s get one thing straight. “Drill baby, drill” will do nothing — nothing of any consequence — to the price we pay for gasoline, heating oil, diesel, and jet fuel. US produced oil is ALWAYS sold at world market rates — oil futures as well as spot purchases for immediate delivery. The cost of oil transportation is negligible (less than 4 cents per gallon for transport by tanker); so we don’t save anything in transportation costs by drilling in Alaska vs Saudi Arabia. No matter how much we ramp up production, we can’t produce enough to seriously impact the global oil supply and — even if we did — we would obtain NO unique advantage from producing more, price wise. The rest of the world (e.g. China) would benefit just as much as we’d benefit, price wise — the Chinese would simply say “thank you very much” for allowing them to buy oil at the same lower price as we’d buy it and, since they will shortly be burning much more oil than we, they’ll benefit much more than we’ll benefit from pumping every last drop out of our land and sea, leaving nothing for Americans 200 years down the road who may wish to produce petrochemicals.

Now, there are benefits to increased domestic drilling. Balance of payments. Jobs for oil workers. Profits for Exxon Mobil and Haliburtan. But lower prices for petroleum products is NOT one of the benefits. And “drill baby drill” is always sold on the basis of lower prices at the pump, and not on the basis of balance of payments (if so, why not a campaign to discourage purchase of iPads and flat screens?) or oil industry jobs or corporate profits.

A little intellectual honesty would improve the quality of the drilling debate.

– Larry Weisenthal/Huntington Beach, CA

openid.ayol.com/runnswim hi, you have not mentionned the PRIDE of the AMERICANS not counting
the multiple jobs that direct or indirectly would be sprouting from that drill baby drill.
the pride of AMERICANS having their own resource to benefit them first, and your and theirs future is bleak if it’s resources are not explore for the people by the people, those resources belong to the people of the USA, the government is obviously favoring ther COUNTRYS AND NOT THE USA,
THE PEOPLE dont beleive the bulls.,,t from them anymore,.

@DrJohn: You can legitimately argue it on balance of payments, but not on price at the pump.

Releasing a glut of oil onto the domestic market from the strategic reserve will have a short term moderating effect on the price of gas at the pump — ONLY because the US government is willing to sell the oil to refiners for LESS than current world market rates. But Exxon Mobil and BP won’t sell the oil they drill for less than world market rates, nor should they be expected to do so, if you are a true capitalist. Venezuelan oil is dirt cheap for Venezuelans, because the government controls production and owns the oil resources and sells it at below market rates. Maybe that’s how it will work in Brazil — I don’t know what the policies there will be.

Maybe you think that there should be a law that all oil pumped domestically must be sold at less than world market rates. Something that’s never been done. I’d like to hear your argument for this.

With respect to JohnGalt’s arguments in #36, simple math proves that US production has a negligible effect on world prices. We produce 9% of the world’s oil. How much can this be increased — realistically? To 13.5% (if we up production by 50%). That’s trivial. And we consume only 20% of the world’s production; so if we do the heavy lifting and work overtime to exhaust our own reserves, 80% of the benefit, cost of oil wise, will flow to the rest of the globe.

Whether we have 2% of the world’s oil or 4% or whatever, it’s still only a very small share. Even at 9% of the world’s production, we are burning through our reserves faster than the rest of the world, as a whole. Some day, we are going to be just like Japan and Germany. No more oil. It’s a matter of philosophy, which I don’t think can be argued strictly on an intellectual basis. Is it moral for the current generations of Americans to leave little for generations to follow? Is conservation really such an evil word or evil concept? I don’t expect you to agree with me; I’d be happy if you could just understand that I do have a different point of view.

– Larry Weisenthal/Huntington Beach, CA

@johngalt: Oil production is like electrical generation. Use it or lose it. The world doesn’t have a practical means of storing oil — there is no real equivalent of grain silos for oil. So the price of oil is very sensitive to real time supply. When there’s a glut, the oil has no where to go, and the price drops. When there’s a shortage, the refiners will pay whatever price they have to to maintain their supplies.

The US doesn’t have the capacity which Saudi Arabia has. Saudi Arabia can keep a lot of their oil fields out of production and then increase production when there is a shortage in the supply chain. The US doesn’t have this reserve capacity and never will.

If the US increases production by 50% from current levels, this will increase our contribution to world oil from 9% to 13.5%. This will have a trivial effect on the world price of oil — and, whatever benefit is to be had will flow 80% to the rest of the world and only 20% to the USA.

P.S. @DrJohn: About the Venezuelan oil cost: Once again, the only reason it’s cheap for Venezuelans is that the government nationalized the oil industry and sells the oil domestically at less than world market rates. That’s not how US oil production works. US oil is drilled by private companies who sell their oil to US refiners at world market rates. World market rates are determined by world production levels and not by US production levels.

– Larry Weisenthal/Huntington Beach, CA

@DrJohn:

World market rates are determined by world production levels and not by US production levels.

Isn’t the US part of the world?

Yes, but we are a small part of the world. We produce 9% of the world’s oil. Even a 25% increase above today’s levels would be huge and it would take ten years to get there and it would only increase the world’s oil supply by 2.25%. A 50% increase would probably be impossible, but even that would only increase it by 4.5%.

And, once again, China would benefit more, price wise, than we’d benefit, as they now burn more oil than we do and their rate of oil burning is increasing much faster than ours.

– Larry Weisenthal/Huntington Beach, CA

openid.ayol.com/runnswim, OIL CONTOL BY THE WORLD MARKET,
well this is just too bad, because when things get tuff, we look upon our own first,
and IF we want to favor our own COUNTRY, they will have to get it, or not.

As several of you have noticed, Greg and Larry are impervious to facts that contradict their beliefs. As the saying goes, you cannot rationally talk someone out of a belief they did not arrive at rationally.
Greg and Larry are excellent examples of that. No matter how many times thier claims are disproven they trot them out over, and over, and over. It’s like self induced amnesia. You’ll also notice the posturing as the savior of America Greg displayed while declaring those that disagree with him as the enemy. Classic leftist egotism.