More Oil, More Imports - The Genius of the Obama Energy Plan
I knew Bob Samuelson slightly back in the 1980s, and he always struck me as a reasonable liberal, one for whom facts matter. His most recent piece in em>Newsweek <is of the type that those of us in the energy industry wish we could generate. I especially like the way he makes clear a distinction that our industry just can't seem to get across to the MSM (and thence to President Obama), namely, that wind and solar have practically nothing to do with oil. More than 70 percent of the oil the US uses goes to transportation fuels (gasoline, diesel). Wind and solar produce electricity, which in the US is generated by coal, natural gas, nuclear and some hydro. Practically none comes from oil. So even if we could somehow generate most of our electricity from solar and wind (har-dee-har-har), we'd still be using an awful lot of petroleum.
Electric cars? Even if the public could be persuaded to buy them (and, at nearly $100,000 a pop for a Tesla, they won't be), there's going to be a tailpipe somewhere. The demand on the electric grid would skyrocket as those cars were recharged every night. Where would the electricity come from? If not nuclear (and Energy Secretary Steven Chu's decision to shut Yucca Mountain as a nuclear waste storage facility shows it won't be), then it will have to come from bad, evil fossil fuels.
So where's the petroleum going to come from? If Obama has his way, it sure won't be America. American domestic oil production has fallen by about half since 1970, to around 5.3 million barrels per day. If it weren't for incredible technology developed by companies like the one I work for, the situation would be far worse. One in six barrels of US domestic oil now comes from the deep waters of the Gulf of Mexico. (Practically none did in 1992.) The North Slope of Alaska was scheduled to start playing out about a decade ago. That it is still going strong is due to anonymous petroleum engineers working miracles in the sub-zero temperatures of the Brooks Range.
But it is unwise to keep counting on such miracles. Those wells are running down and will ultimately go dry. Unless they are replaced - most likely by drilling off of California and Florida - US domestic production will continue to decline. Under the pressure of $4 a gallon gasoline last summer, Obama grudgingly agreed that some offshore drilling might be needed. But now that the price pressure is off, he seems to feel no need to redeem that promise. Bet on US domestic production continuing to fall.
So the shortfall will have to be made up by imports. From where? Mexico could increase its production if it invited the multinationals back into the country to revitalize its wheezing wells, but when I once asked a former US ambassador to Mexico if he thought there was any possibility of that happening, he thought for a moment and replied, "I think they would sell the Virgin of Guadalupe first."
Saudi Arabia, of course, has no such compunctions. They are opening new fields. Unless he pulls a shocker and resorts to common sense -- that the purpose of energy policy ought to be the production of more energy -- it seems that Obama’s "energy policy" is likely to end where every president since Nixon's has ended: with higher oil imports and less energy security.