In the European Energy Review, Matthew Hulbert itemizes “The Ten Inconvenient Truths that shape our new energy world order.” It is provocative and worth reading in its entirety; here is an excerpt:
10. If consuming countries really want to reduce inherently unsound dependence on OPEC production, they have little choice but to massively expand domestic output.
Enhancing strategic reserves will only ever go so far. OPEC still controls over 30% of the physical oil market pumping out around 29 million barrels a day. It sits on over 80% of proven reserves, a figure that equates to around 1,000 billion barrels of oil compared to non-OPEC 273 billion barrels.
The upside is that current benchmark prices clearly support investment in difficult offshore prospects at the moment – not just in the enormous Brazilian deep water field finds of Tupi and Iracema, but also in technically recoverable oil in the United States’ outer continental shelf and deeper waters alongside onshore and shallower state water resources. According to some estimates 175 billion barrels of oilsands can be put to production at $80 a barrel, and a staggering two trillion barrels of shale oil could become commercially viable at $100+/b. That’s even without considering the prospects that Arctic production could hold for further US and Canadian production.
But there’s a catch here. Political risk is just as acute, if not more deadly, in the US than anywhere else in the world. Just ask BP smarting from their Macondo Presidential/Congressional lashings. The idea that offshore US production will only ever be a straight ‘home run’ is a story few IOCs will now ever believe.
Emphasis added. “Political risk” is a euphemism for stupid government policies. It is bad government policy, not lack of resources, that threatens the future prosperity of the United States.
Meanwhile, just as the importance of developing our own energy resources has become more acute than ever, oil and gas production in West Texas threatens to be shut down by the dunes sagebrush lizard:
Last December, the Fish and Wildlife Service announced that the lizard, a three-inch-long reptile native to the American Southwest, “faces immediate and significant threats due to oil and gas activities and herbicide treatments” and initiated the process to get it listed under the Endangered Species Act.
In 2002, the Center for Biological Diversity first petitioned to have the lizard, originally considered a subspecies of the common sagebrush lizard, listed as endangered. The Bush administration delayed consideration for six years. Last year, the Obama administration put it back on the fast track.
And why not? This is an administration that has ignored a judge’s order to remove restrictions on oil drilling in the Gulf of Mexico and designated vast areas in and off Alaska as protected habitat for the caribou and the polar bears, species whose only problem is one of overpopulation.
…Steven Chu, Obama’s secretary of energy, [has] expressed a fondness for high European gas prices as a means of reducing consumption of fossil fuels. In a September 2008 newspaper interview, he said: “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” Gas prices in Europe then averaged about $8 a gallon.
As gas prices here soar toward $5 a gallon, Chu’s friends at the Interior Department may help him and President Obama get the rest of the way toward their goal. If the dunes sagebrush lizard, now considered a separate species, is granted endangered status, oil and gas production in the Permian Basin in New Mexico and Texas may have to be shut down.
The Obama administration is populated with liberals who think the problem with the U.S. is that we are too rich. This is not a view widely shared by voters.
It seems clear that the Endangered Species Act, as administered, is a disaster. I am not an expert in this area and can’t say whether the defect is inherent in the statute, or comes from the manner in which is is currently administered. (Hugh Hewitt could answer that question.) One way or another, our economy must be untethered from random discoveries of “species” that seem to exist for no purpose but to bring economic activity to a halt.
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