Don’t Buy the Snake Oil Coming Through the TV

Ever since the American public exploded with rage over gasoline prices and demanded that Congress stop the nonsense and let an American industry go back to work, we have seen a procession of Democrat talking heads and spin meisters trying to undermine the push for more oil drilling. They say, “no oil for 10 years” (not true, but so what?); they say, oil companies already have 68,000,000 acres on which to drill (not true, these leases are dry); and they say, “not enough oil to be concerned about” (NOT TRUE).

The Institute of Energy Research (admittedly a group favorable to energy companies) points out that the Democrats are using deceptive figures supplied by the Energy Information Administration (EIA). The naysayers say that the amount of oil we could produce on the Outer Continental Shelf (OCS) if the drilling ban were lifted to be approximately 200,000 barrels per day. This is just not true. I quote from the report excerpted below: “200,000 barrels per day is roughly equal to the daily production rate of just one new offshore platform in the Gulf of Mexico. The Thunder Horse oil production facility, which will be on line this year, is designed to produce 250,000 barrels per day. The Atlantis oil platform currently producing in the Gulf of Mexico has a production capacity of 200,000 barrels per day.”

Report from The Institute for Energy Research August 8, 2008 (Excerpt)

“Despite these facts, the EIA projects that lifting the bans that prevent production on 85 percent of the OCS acreage surrounding the lower 48 states will yield an amount equal to that which can be produced from just one of these platforms. Obviously, the projections are flawed.

The EIA assumed that technically recoverable undiscovered oil resources in off-limits areas of the OCS total 18.2 billion barrels, based on the Department of Interior’s Mineral Management Service’s Report to Congress (February 2006). But technically recoverable resources are based on current technology and economics.

Historically, technological improvements and on-site exploration and development have increased technically recoverable resource estimates. For example, world proved oil reserves were estimated to be 521 billion barrels in 1971 when oil was $1.25 per barrel ($6.61 in 2007 dollars) and are estimated under present technology to be 1,317 billion barrels at an average price per barrel in 2007 of $67.

• EIA’s analysis is based on crude oil prices averaging around $50 per barrel in 2005 dollars (or around $80 per barrel in 2030 assuming a 2 percent per year inflation rate), well below the current price of around $120 per barrel.

• EIA’s analysis assumes that exploration, development, and production of economical fields (drilling schedules, costs, platform selection, reserves-to-production ratios, etc.) in the OCS are based on data from fields in the western Gulf of Mexico that are of similar water depth and size. Since the majority of the resources under moratoria (55 percent) are off the coast of California, the analysis should have used data from the Santa Barbara Channel, which would have provided more realistic assumptions and higher production levels.

• EIA’s analysis assumes that leasing would begin no sooner than 2012, and production would not be expected to start before 2017. Yet, off the coast of California, some of these resources have already been leased. A report from Wall Street research house Sanford C. Bernstein says that California actually could start producing new oil within one year if the moratoria were lifted. The California oil is under shallow water and already has been explored. Drilling platforms have been in place since before the moratorium. Further, Department of Interior Secretary Kempthorne announced in July a new 5 year plan that will allow leasing to start 2 years earlier, in 2010, implying production from currently unleased areas could begin as early as 2015. This new 5 year plan includes the areas under Federal moratoria.” Institute for Energy Research

Nancy Pelosi, Harry Reid, Barack Obama and other leading Democrats do not want any domestic drilling for oil to proceed. This goes against their agenda, despite the fact that American companies have made great strides in environmentally friendly technology and despite the fact that Cuban-sponsored drilling using Chinese and Indian firms are ready to drill in the Gulf a few miles from Florida. The American people must turn back this propaganda campaign and take the steps necessary to regain our energy independence. This means a combination of renewables, nuclear, natural gas, coal and especially, oil. The world has just witnessed a pitiful Europe, dependent on Russia for energy, standing by helplessly during the rape and occupation of a free country. We must all gain all possible energy independence to remain free and prosperous.