J. D. Pendry

J. D. Pendry

Democracy demands that little men should not take big ones seriously; it dies when it is full of little men who think they are big themselves. – C. S. Lewis

Happy Birthday to the United States Army, Established June 14, 1775.

We transfer about 400 billion dollars in national wealth each year to nations not so friendly toward us to buy oil. Not very many politicians complain about that. However, daily they are heard to complain about the money spent fighting the ideology born in those nations that manifested itself in the murder of 3000 innocent people in a single act.

A couple of weeks past, following this post, I was sent an email telling me that I was peeing into the wind to suggest that we might be energy independent because the United States does not have enough of its own oil to be independent of OPEC. That is partially true. We do not have it in the pipelines now, nor is it sitting in the refineries that we failed to build since 1976, but we have it.

The offshore areas of the United States are estimated to contain significant quantities … of oil and gas resources in undiscovered fields on the OCS (2006, mean estimates) total 86 billion barrels of oil and 420 trillion cubic feet of gas. Offshore Minerals Management, U.S. Department of the Interior (DOI)

China, India, Cuba and Canada currently drill within 50 miles of our coastline. It is oil that the United States Congress will not allow American companies to get. If you are an oil company and you are not allowed to explore for oil at home, you will go elsewhere to get it. Just keep in mind that it was Western know how and Western companies that developed the OPEC oil industry that has made many terrorist supporters fabulously wealthy.

DOI estimates that “in-place resources” range from 4.8 billion to 29.4 billion barrels of oil. Recoverable oil estimates ranges from 600 million barrels at the low end to 9.2 billion barrels at the high end… Alaskan National Wildlife Reserve (ANWR)

Using a geology-based assessment methodology, the U.S. Geological Survey estimated mean undiscovered volumes of 3.65 billion barrels of oil, 1.85 trillion cubic feet of associated/dissolved natural gas, and 148 million barrels of natural gas liquids in the Bakken Formation of the Williston Basin Province, Montana and North Dakota.

Estimates of the oil resource in place within the Green River Formation range from 1.5 trillion (Smith, 1980; Dyni, 2003) to 1.8 trillion barrels (Culburtson and Pitman, 1973; Federal Energy Administration, 1974). … consider that current U.S. demand for petroleum products is 20 million barrels per day. If U.S. oil shale resources could be used to meet a quarter of that demand, 5 million barrels per day, the recoverable resource would last over 400 years!…Advances in thermally conductive in-situ conversion may cause shale-derived oil to be competitive with crude oil at prices below $30 per barrel. –Rand Report on the Green River Formation

And that does not include the world’s largest coal reserve and its potential for liquid fuel production.

We have plenty of energy resources in our country. Resources that could sustain us while we fully develop more technologically advanced energy sources. The problem is our energy companies that would develop our resources are not allowed. They are not allowed because of the Faustian relationship between members of Congress and their big environmentalist donors. The money in your pockets is less important to little men than the money that is in theirs.

We are offered these solutions. We can sue OPEC. That one doesn’t do it for you? Isn’t that the new American way? We can investigate market speculators. Market speculation is what keeps free markets growing and moving. Speculators are betting their wealth on future prices for commodities. The future for oil as it stands now is that demand will steadily increase while supply remains relatively constant. The price will continue to go up. If you are a company like an airline that uses massive amounts of fuel, you are happy to buy it at $130 dollars a barrel today betting that it is likely to be much higher in the future. We can place a windfall profits tax on oil companies. On the world oil market, U. S. companies are tiny and competing with a largely nationalized world industry. They cannot affect the market price, but they can transfer the cost of higher taxes to you and me – and they will. We can harp on the salaries that CEOs make, but to what end. Most Americans with retirement plans are invested into some sort of stock fund. There are probably a lot of energy company stocks in those funds. I want the best CEO, producing the highest profits and paying me the highest dividends for the stock I own in the company. So does everyone else and CEOs who can manage that consistently are worth the price paid for their services. Envy of another’s wealth will not reduce the cost of gasoline at the pump.

Unless you count the ethanol debacle and compact fluorescent light bulbs, those are the solutions that I hear coming from Congress and our contenders for the Presidency. Not a single one of those solutions will produce one drop of energy or reduce the price at the pump by one cent. If you study the OPEC oil embargos of 1973 and 1979, you will learn something quite interesting. When we went after the oil in Alaska and companies began investing in shale, the price of a barrel of oil fell.

There is only one way to reduce the cost to Americans and that is to increase supply. If the United States Congress announced today that all restricted areas are open to exploration and that we have a Manhattan style project to secure our energy freedom the price of oil would drop. It would drop before the first drill rig ever went active. The question is whether that is important to the little men who think they are big themselves.

Copyright 2008 J D Pendry All Rights Reserved

This entry was posted on Sunday, June 15th, 2008 at 9:16 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.