June 5, 2006


Oil is well: The shortage is a myth, and not a new one (Rod D. Martin, June 5, 2006, Enter Stage Right)

In 1874, Pennsylvania's state geologist fretted that America had only a four-year supply of oil left. He was wrong. In 1914, Washington claimed we had only a ten-year supply. It was wrong. In 1940, the government announced that reserves would be depleted within 15 years. Wrong again. In 1977, President Jimmy Carter lamented that within a decade, we wouldn't be able to import enough oil, "from any country, at any acceptable price," to meet our needs. Hardly shocking, the peanut farmer from Plains was wrong too.

Truth be told, the world's estimated oil reserves grew from 60 billion barrels in 1920 to 600 billion by 1950, 2,000 billion by 1990, and 3,000 billion by the year 2000. And in the next few years, they'll keep rising.

Why? Because when demand increases and prices rise, companies explore for more. When oil is cheap, they don't. Why should they?

According to Daniel Yergin of Cambridge Energy Research Associates, from 2004 through 2010, production capacity will likely grow from 85 million to 101 million barrels per day, a 20% increase. This forecast is based only on projects already under development. So the gloom-and-doomers are about to be shown up again.

It's not just exploration either. The left consistently underestimates the power of human ingenuity -- given sufficient price incentives -- to devise new technologies which expand supply.

But in fact, researches say that today -- right now -- we could extract 150 billion additional barrels of domestic oil just by utilizing specialized software and low-cost supercomputers, 175 billion barrels locked in Canada's oil sands, nearly 300 billion barrels -- that we know of -- below the world's oceans, 377 billion barrels trapped in existing oil reservoirs, and a mind-boggling 2.6 trillion barrels embedded in oil shale across western Colorado and parts of Utah and Wyoming.

Altogether, that's more than the entire world's "proven reserves" estimates put together; and that's before we do any new exploration.

Given our high crude oil prices, it's now profitable to do all of this and more. And once done, prices will fall again, just as they did in the 1980s.

Posted by Orrin Judd at June 5, 2006 8:33 AM

The left is so clueless about humanity that they actually think that if gas prices did continue to climb far beyond current values, the public would still be somewhat ambivalent to drilling in ANWR. Heck, we'll flatten the Rockies to get that oil shale if it ever comes to that. Which it won't, of course.

Posted by: b at June 5, 2006 11:58 AM

Jimmy Carter's "windfall profits tax" was exactly the wrong economic signal to send to the domestic oil industry. It discouraged domestic oil exploration/production and aggravated and extended the 1970s oil crisis.

Posted by: Gideon at June 5, 2006 12:53 PM

Oil is Well! Missed it this am.

Posted by: erp at June 5, 2006 4:37 PM