Death Of Peak Oil Is Not Exaggerated (With Apologies To Mark Twain)
Written by www.investors.com
Energy: A recent report by an energy consultancy suggests that the U.S. now has oil reserves bigger than Saudi Arabia’s. Believe it or not, that might be a huge understatement.
The Rystad Energy consultancy’s latest estimates for U.S. oil reserves says the U.S. may have as many as 264 billion barrels of the crude stuff, compared to Saudi Arabia’s 212 billion barrels and the world’s total of 2 trillion barrels.
“At current production rates,” notes Reason’s Ronald Bailey, “this is enough oil to supply the world for 70 years.”
He’s right. And that’s great news. But it’s even better than that, in fact.
As we have noted on these pages many times before, the amount of oil and gas reserves in the U.S. just keeps growing, thanks to huge advances in technology. Bailey quotes from ExxonMobil’s “The Outlook for Energy” for 2016: “Technology is not just expanding our daily oil production; it also continues to increase the amount of oil and liquid fuels we can count on for the future.”
Fracking and highly sophisticated computerized geological survey software are just two advances that have boosted the amount of recoverable reserves. The U.S., as it turns out, doesn’t just have more oil than Saudi Arabia — it may have more oil than the rest of the world combined.
Recall that in March 2012, with prices above $100 a barrel, President Obama confidently told the American people in a radio address: “We can’t just drill our way to lower gas prices.” In other comments at the time, he repeatedly cited a faulty, misleading statistic: that the reason the U.S. can’t drill its way out of its energy woes was because we had “just 2% of the world’s reserves.”
Yet, what was truly funny about Obama’s statement — made with all the self-assurance of someone who didn’t know what he was talking about — was that the Government Accountability Office completely contradicted it a mere two months later. Turns out, Obama was wrong on all counts.
Anu Mittal, GAO director of natural resources and environment, in May 2012 told a stunned Congress that just one U.S. energy region — the Green River Formation, which stretches across parts of Wyoming, Utah and Colorado — contained an “amount (of oil) about equal to the entire world’s proven oil reserves.” With oil prices near $100 a barrel at the time, it was hard to believe.
Dubbed our Persia on the Plains, the Green River Formation is estimated to have four times the proven reserves of Saudi Arabia, Mittal testified. While the formation’s total reserves are 3 trillion barrels, even at the then-high prices for oil, recoverable reserves were about half that: 1.5 trillion barrels.
Now, four years later, oil prices are down more than half — in part, because global demand is much weaker than expected, but also because the U.S. fracking and petro-technology boom has created nothing less than an energy revolution. Rest assured: While much of the oil that the U.S. has underground is not recoverable under current market conditions, it will be there when we need it.
And it’s also important to remember that 72% of the Green River Formation and much of the rest of our country’s oil reserves lie under federal lands. So it will take a president and a Congress willing to “drill, baby, drill” to keep us supplied with energy for centuries to come.
As for “peak oil” proponents and their political pals who scared Americans and influenced U.S. energy policy for years with tales of vanishing supplies and soaring energy prices, it’s time to buy a new fright mask. This one doesn’t work anymore.
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