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U.S. Oil Production Beginning to Boom

Posted by Steve Markowitz on June 27, 2012

Since the late 1960s the mantra from politicians government bureaucrats, particularly those on the Left, has been that the world with the United States in particular is running out of fossil fuels.  This claim, like so many other dire warnings of Progressives, was dead wrong.

One of the earlier manifestations of the United States depleted energy claims came from Pres. Jimmy Carter in the 1970s.  Carter claimed that the United States would run out of natural gas in 10 years.  Approximately 35 years later not only has the United States not run out of the gas, but we are in the midst of a natural gas glut with prices dropping significantly.

Another of Carter’s infamous calls was for the creation of the US Department of Energy created specifically to lessen America’s dependence on foreign oil, specifically oil from the Middle East.  When the Department of Energy was created, the United States imported less than 35% of its oil annually.  Three decades later the US imported over 60% of its oil per year.  Along the way, Department of Energy wasted tens of billions of dollars and is larger today than ever.

Now, the US is turning the corner on its reliance on imported oil.  This has is not occurred due to any action of the Department of Energy, but instead came from advancing technologies that includes fracking, which has unlocked huge reserves of oil and natural gas.  For example, these newer technologies have turned North Dakota into a major oil producer, now surpassing Alaska.

The Wall Street Journal published an article about America’s resurgent position in world energy production that reviews the following:

  • America’s reliance on Middle Eastern oil will be cut in half by 2020 and may completely end by 2035.
  • By the end of this decade half of America’s crude oil needs will be produced in the United States with over 80% coming from the side of the Atlantic.  Canada alone has the world’s third largest proven oil reserves.  Money spent within the Hemisphere is better for America’s security and economy.
  • America currently imports 4 million barrels of oil a day from the Middle East.  That amount will decrease to about 2.5 million barrels by the end of the decade.
  • During 2011 the United States became a net exporter of refined energy products.  Experts predict this will continue for at least another 10 years.
  • Between October 2011 and March 2012, US oil production rose by 6% to more than 6 million barrels per day for the first time in 14 years.  This remarkable increase occurred after a nearly 40 year decline.

While advancing technologies played a large role in increasing America’s oil and gas production, the action of the free market also played a substantial role.  As energy prices skyrocketed in the late 1990s, liberal politicians screamed foul and attacked suppliers suggesting regulating profits to address increasing energy prices.  Such regulations would have been exactly the wrong approach and ultimately would have hurt consumers.  Instead, the increasing prices made Canada’s oil sands-reserves profitable with investment in extracting this oil skyrocketing.  In addition, worldwide investments in oil and gas exploration jumped due to the increase prices.  In North America, this investment surged to 48% of global oil investment to $320 billion, up from only 39% of the worldwide investment in 2003.  Similar examples can be shown in other Western Hemisphere countries including Brazil.

The increased energy prices that began in the late 1990s is beginning to cause production increases and lower energy prices.  Raymond James has recently forecasted 2013 crude prices at $65 per barrel, down from its current $83.  Lower demand only explains part of this decrease.  Increasing production is a significant issue.

Pres. Barack Obama and the radical environmentalists have thrown many roadblocks in the way of developing America’s vast energy reserves.  A recent example is Obama’s decision to shelve the Keystone XL pipeline that would have brought more Canadian oil to the United States.  These roadblocks were made to further Progressives’ goal of promoting green energy.  They have failed on two fronts.  First, solar and wind energy are not ready for prime time and will not be major sources of energy for years to come.  The President’s failure to promote green energy over fossil fuels again proves the futility of politicians’ attempts to manipulate markets.

Incredibly, President Obama recently attempted to claim responsibility for America’s fossil fuel boom stating: “We’ve added enough new oil and gas pipeline to encircle the Earth and then some.”  Now that’s chutzpah!

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