June 17, 2009: A World Afloat on an Ocean of Oil

By Alan Caruba

Considering how much untapped oil is known to exist, not just in the United States, but worldwide, one would think that its current price was some kind of anomaly and it is. It is more the result of speculation than anything else.

The most fundamental fact about oil worldwide is that there is lots of it. Though frequently overlooked, the ability to refine crude oil plays an essential role in the supply and demand equation. More refining capacity is needed worldwide. Finally, there’s the fact that, in general, oil is very expensive to get at and often found in the most inhospitable places on Earth.

For sheer insanity, however, consider a nation that has an estimated 31 billion barrels of oil offshore of its coasts and 117 billion barrels of oil under land owned or managed by the government, plus 139 billion barrels beneath privately held land.

In just one area, a desolate place designated a wildlife refuge, there’s an estimated 7.7 billion barrels untapped. The nation with this abundance of oil is, of course, the United States of America. Most of the areas where oil is known to exist have been ruled off-limits to any exploration or extraction by the government.

In the areas where it is accessible, drilling for it is hugely encumbered and often denied by the National Environmental Policy Act, the Clean Water Act, the Endangered Species Act, and the National Historic Preservation Act.

If, however, you connect the dots, you will have noticed by now that America’s energy problems, namely the price of a gallon of gasoline or heating oil, is making everyone miserable thanks in great part to environmental legislation designed to make it impossible to access oil on both public and privately held lands. Then, just to make matters worse, the government requires that every gallon of gasoline include the additive, ethanol, which reduces its mileage and increases its cost.

Further, we’re told that Sen. Barack Obama, if elected, intends to seize “windfall profits.” This is sufficient reason for American oil companies to decide to drill anywhere else. The last time a windfall profits tax was implemented was at the end of President Carter’s term. It had such a negative impact on U.S. oil companies that drilling for oil domestically dropped dramatically. It has stayed that way since the 1980s. Their actual profits are now less than pharmaceutical, high tech, and other elements of the economy. Imagine how thrilled they were to hear Rep. Maxine Waters’ threat to nationalize them.

No profits. No exploration. No drilling. And no domestic oil with which to correct our dependence on foreign oil and thus provide a measure of security to a nation that runs on oil.

If you wanted to bring the United States to ruin, you could not have designed and implemented a more perfect scheme. Along with too many members of Congress, environmentalists are America’s Fifth Column.

As my friend, Seldon B. Graham, a veteran petroleum engineer and oil industry attorney, and a graduate of West Point says of oil, “If it is worth dying for in the Near East, it is worth drilling for in the United States.”

As to the claim that the Earth is running out of oil, that can be easily dismissed simply by reading information available in respected publications such as Business Week that, “The Saudis have embarked on an ambitious expansion program that should see more than 2 million barrels of new production capacity come onstream by the middle of next year.”

Those of us who follow energy trends read the Energy Tribune because it has some of the best information available on what is really occurring. In its May edition, Matt Pickard wrote about the expansion worldwide of offshore drilling, noting that today’s prices are being driven by increased demand from rapidly developing nations such as China and India. This demand is going to increase over the next two or three decades.

Unless the United States begins to free up its own oil and natural gas reserves, Americans are going to be paying more at the pump and in their homes for a very long time to come.

The good news is that the offshore oil and gas industry, despite the huge risks and costs involved and despite an aging, understaffed workforce, is making strides to meet demand. Whether it’s in the Gulf of Mexico or the North Sea, the icy waters of the Barents Sea or offshore of Brazil and Africa, massive new reserves of oil are being found.

“Large discoveries offshore Brazil, the continued progress in every region’s major projects, and the ongoing push for Arctic exploration and production point to the industry’s potential for growth over the next 20 to 30 years,” wrote Pickard. Brazil is poised to become a major producer. In its Tupi field, “Petrobas announced an aggressive development plan, with an early production system possible within two or three years,” reports Pickard. The nearby Jupiter field has gas reserves to rival Tupi.

None of this is a secret! Both privately owned U.S. and foreign national oil companies are going to find more oil and gas.

Neither candidate for President is telling the truth these days because both believe global warming is real and both keep blathering on about “alternative” energy. The big problem for the rest of us is that you can’t pour wind or solar energy into a gas tank.

The U.S. mandate for ethanol as a gasoline additive has already significantly put the world’s food supply in jeopardy, but most Americans are blissfully unaware that it requires 1.5 gallons of ethanol to produce the same energy as a gallon of gasoline. It actually emits more carbon dioxide than gasoline. It is an environmental hoax.

The world is afloat an ocean of oil. Meanwhile, the United States continues to rule 85% of its offshore oil off-limits to exploration and extraction. This is occurring while the Chinese prepare to pump oil just offshore of Cuba, a mere 90 miles from Florida. It is occurring while the Russians are looking to plant their flag on potential reserves of subterranean oil in the Arctic.

The next time you hear a politician say we need to be “energy independent”, ask him or her why Americans cannot have access to the oil reserves known to exist in California, in Alaska, and in many of our other States or off the coastlines of Florida and elsewhere.

Ask them why the fate of the condors and little known species is more important than the family budget of Americans forced to make choices between more food and more gasoline.

Ask them why they continue to claim that global warming is a threat when the entire Earth is now in a decade-old cooling cycle.

Ask them why they insist on blaming investor-owned oil companies whose own reserves are barely four percent of the world’s known oil reserves? Ask them how they expect these oil companies to compete in the global marketplace when they threaten to seize their profits.

Energy is the master resource. It determines which nations thrive and which lag behind. For now, America is being ill-served by a Congress that refuses to permit access our own energy resources.

Ask yourself how we have arrived at a point in time when both candidates for President believe in a non-existent global warming and whose proposals offer no practical solution to our current and future energy needs.

(c) Alan Caruba, 2009

Posted on The National Anxiety Center's website.