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Former Democratic Senator Bob Graham of Florida is co-chair of the President’s Oil Spill Commission. The Commission, stacked with environmentalists and Harvard lawyers and notably absent any working industry expertise, delivered its report to the President earlier this month. Its contents were predictable, calling for more regulation and more government.
Here’s what Sen. Graham had to say this week:
This is a wakeup call to the American people. Why are we drilling in deeper and inherently more risky offshore locations? The United States is consuming about 22 percent of the world’s daily extraction of petroleum while it sits on top of less than 1.5 percent of the world’s proved reserves. If we “drill baby drill” in an attempt to go totally independent, and if our thirst for petroleum continues at its current level, the United States will drain its remaining proven domestic oil reserves by 2031.
If we stay at our current 48 percent domestic and 52 percent imported oil, that date will only be extended to 2068. Unless we develop and sustain a national energy policy which will fundamentally change our petroleum addiction, the only choice our generation will have is whether to leave to our children or to our grandchildren an America totally dependent on foreign oil producers for its national security, economy and way of life.
[Source. Formatting in original.]
Uh, I have a few problems with this.
As I’ve pointed out previously in these pages, there’s a lot of confusion between oil reserves and oil resources.
As practiced in the U.S., “proved reserves” are a conservative, audited estimate of production that will be produced mostly by existing wells. The SEC requires that American companies report reserves to their shareholders. “Resources” is the term applied to the quantities that are expected to be found by future drilling. Resources are converted to reserves by drilling (unless politicians, greens and NIMBYs prevent development of resources, which is the subject of another diary…)
Not only that, but most of the reserves in the world are owned by National Oil Companies in Saudi Arabia, Russia, Angola, Nigeria, etc. Their reserves are whatever they say they are, because they are not subject to the SEC rules. And usually they guess high. As a result, the U.S. proportion of the world total deceptively low.
Our policy makers don’t seem to understand that the U.S. is resource-rich, but reserves-poor. That is a result of policy, not a fact of life.
Imagine a situation where I had $500,000 in savings and home equity, plus $10,000 in my checking account. My living expenses are $2,000 per month.
If I told you I would be broke in 5 months, you’d say I was an idiot. And you would be right.
“Only choice?” Hardly. Sen. Graham’s case against oil is specious, while betraying a total ignorance of natural resource planning issues. That we put unqualified, biased politicians in a position to influence important policy decisions boggles the mind.
I don’t understand why such important policy has been turned over to neophytes and Leftist ideologues, but that seems to be the pattern under Obama.
Cross-posted at VladEnBlog.