Print This Post
Oil Myths Risk Yielding Bad U.S. Energy Policy
There are two oil myths currently making the rounds. The public could become convinced that pursuing these myths is a solution to the energy crisis so the danger the myths represent is partially the environmental risk but more importantly the risk of our not pursuing a truly useful energy policy.
Both myths envision the U.S. being delivered from dependence on evil foreign oil sellers by one of two Fairy Godmothers. The two are:
1. drilling for oil in the Outer Continental Shelf and the Alaskan National Wildlife Preserve (ANWR) , and
2. converting “oil shale” in Colorado, Utah, and Wyoming into “billions” of gallons of American crude oil.
In regard to drilling the fact is that more drilling will have no impact on oil supplies for 5 - 10 years. The idea being put forward that just starting to drill would lower oil prices by lowering expectated future oil prices is ridiculous because serious analysts understand that even when the “new U.S oil” flows in ten years or so it will have little if any impact on the global oil price and more importantly by that time the global oil supply problem will be far more serious than it is currently - meaning that oil prices will be much higher ten years from now whether we drill or not.
I personally think we should drill OCS and ANWR (or at least give the states the right to make the decisions) for two reasons. First, by the time the oil flows we will REALLY need it. Second the environmental impacts are probably nil and can in any case be best assessed by the impacted states.
On the other hand, the true risk of a drill, drill, drill program is that people might confuse it for an effective energy policy and therefore give up doing what really is needed, which is to migrate our transportation system to electriciy. But if drilling is part of a political compromise which includes truly useful policies, that would be fine with me.
The second Fairy Godmother is more pernicious. Trying to convert the western shale into oil requires heroic unproven technologies. Serious scientists like Ken Deffeyes state that the energy return on such a venture is negative with currently known technologies and will be so until and unless we are able to produce very cheap renewable (solar) electricity.
More importantly, the environmental hazards are very real. The effort would take enormous quantities of both electricity and water resources. The electricity would be highly polluting using present technologies and the water is simply unavailable in the west. Western Congressional leaders will fight this effort tooth and nail. It is not likely to go anywhere.
Nonetheless, idiotic editorial writers in the pay of various industrial interests are pushing the public with ideas like this:
“EDITORIALS &
OPINION
Read more at: IBDeditorials.com
America Needs A (Shale) Oil Change
INVESTOR’S BUSINESS DAILY
Posted 7/22/2008
Oil Development: In boldly announcing plans to unlock the crude in America’s vast shale-oil reserves, President Bush is showing real leadership. Now only Congress stands in the way of a brighter energy future.”
The actual energy policies we need are ones that will help us get from the inevitably declining age of petroleum to the only future we can have: renewable electric energy. This transition will take a long time. If we wait for market forces to push us toward it, the social pain will be much greater than if we intelligently guide the economy in the direction it must go anyway.
Clearly, the pursuit of either one of these Fairy Godmothers is simply a distraction.
Tags: peak oil energy investments
Print This Post
5 responses so far ↓
1 Andrew // Aug 2, 2008 at 11:02 am
I’ve always thought that the Rocky Mtn oil shale was nothing more than a duplicitous talking point for GOP political interests. The oil companies have been there and tried to exploit it for decades w/o success. It is not the case of opening up federal land since there are already mineral, drilling, and mining concessions throughout the Rockies for things like natgas, coal, gold, moly, potash, rare earth metals, soda ash, etc. Additionally there is a multitude of private land with which to work with and that too is unfeasible by reasons you sight and others.
2 paultaut // Aug 2, 2008 at 1:39 pm
Everything is feasible if the price is right. Unfortunately, everyone is asking for a resource which will drive prices down. Who in their right minds will strive to invest more at current prices to retrieve something that will drive those prices down?
People want others to take the risks that they would not. Would you buy a house knowing its value would go down?
AS far as drilling is concerned, drill, drill drill. Brazil will prove that the time horizon between discovery and retrieval is less than 4 years, maybe even 3 years, if environmental Regs and Lawsuits are suspended.
Where will the lib’s run then? Think of all of the high paying future jobs that are being lost because of the uninformed and the misinformed.
3 Robert Essian // Aug 3, 2008 at 10:05 am
Respectfully Paul, but Brazil will not be ready as you state. Maybe first oil but they have a long road ahead. As stated in an article posted today by Jim, (in so many words) the rigs and staff are just not ready.
4 Olivier // Aug 3, 2008 at 4:21 pm
To paultaut’s remark ‘Everything is feasible if the price is right’, sure, but in the long run, the right price for an energy extraction strategy that has negative energy return on energy invested, is a negative price for energy…. No life form in its right mind will ever give you energy AND pay you money to dispose of it. So I think we can safely declare such energy extraction strategies to be non-feasible.
5 jimb // Aug 7, 2008 at 4:59 am
I hate to agree with our still-president but I really do think the psychological impact of opening up anwr or the ocs (or even better, both) will non-trivially impact the futures market. Considering what unbelievable political hotbuttons they’ve been for decades now, opening them up is the clearest and loudest signal america will have given that we’re prepared to start sacrificing sacred cows to this problem. Moving something that big from the “impossible” column to the “done” column would force everybody to think a little harder on what else might be shifting under the same forces.
Leave a Comment