Obama: Oil Companies To Blame For Lack Of Drilling. No, Really

It's understandable that the President feels defensive about gas prices, but that's no excuse for trying to sell the public a bill of goods.

With gas prices skyrocketing even as the administration appeals a federal court order that it must actually act on drilling permit applications, it’s understandable that Obama feels a bit defensive about the subject. But the line between everyday spin and complete nonsense is not a subtle one.

Case in point:

There is more we can do, however. For example, right now, the (oil) industry holds leases on tens of millions of acres–both offshore and on land–where they aren’t producing a thing. So I’ve directed the Interior Department to determine just how many of these leases are going undeveloped and report back to me within two weeks so that we can encourage companies to develop the leases they hold and produce American energy. People deserve to know that the energy they depend on is being developed in a timely manner.

In other words, Obama is arguing that the oil companies themselves may be to blame for the fact that there isn’t more drilling. For some reason they’re ignoring making a profit. It’s a bizarro-world inversion of the usual complaint against oil companies — that they are reckless and all-too eager to despoil pristine lands in search of black gold.

I can claim no particular expertise in the subject of mineral leases, but I knew before I’d finished reading the first sentence of his quoted remarks what the underlying reason was. And, sure enough, IBD provides it later in the post:

But is any of this true? Technically yes, says the oil industry, but the claim is extremely misleading. As Richard Ranger, a policy analyst with the American Petroleum Institute, has explained:

“The process of looking at an area that might have oil and gas potential and narrowing your search over time and over a sequence of steps to actually producing oil and gas involves kind of casting a big net first and over time through geologic work,” Ranger said. “[Y]ou prioritize some over others, you may be lucky on those first ones you drill, you may not — then you drill prospects further down your priority list.”

Ranger also explained it’s not always a cut-and-dried situation. Some areas will have oil and gas, some won’t and some might have it, but it may not be economically feasible to pump it out of the ground.

“When you drill, you have results that are either sufficient oil or gas to allow production or a dry hole or somewhere in between where you think we may have production but we may need some further work to determine whether this formation, this target, is economic to produce. Those steps consume several years from the point of leasing to a point of decision.”

Of course, I knew that there are lots of leases out there not being exploited because they aren’t exploitable (or because they’re are listed as “nonproducing” because they’re still in the 5-10 year process of being developed) because, as IBD notes, this talking point has made the rounds before.

Either Obama is so completely ignorant of the relevant facts that he had no business making this speech or he knew that this assertion was “extremely misleading” before he made it. And, frankly, it beggars belief that the President of the United States is unaware of this rather basic point about the subject*. Determining which is the case here is left as an exercise for the reader.

UPDATE: Obama also repeated Interior Secretary Salazar’s claim from last week that oil production in the Gulf of Mexico “remained at an all-time high.” Turns out this is also an attempt to mislead by carefully selecting how to frame facts, this time by referring to “rigs in the Gulf” but eliding over how many are actually, you know, producing. So, even if we assume the numbers of rigs he claims are present is accurate, this “political sound bite” (to borrow the President’s phrase) is designed to create a patently false impression.

UPDATE: And another: Obama’s claim that the US “has only 2-3% of the world’s oil reserves, but consumes 25% of global production” is “deliberately designed to mislead.”

Geologists and engineers make estimates of petroleum resources, the total potential future recoverable quantity of oil and/or gas. Right now, the U.S. has considerable potential resources in places like the Outer Continental Shelf, ANWR and the Colorado Oil Shale. Reserves, on the other hand, is the term applied to that subset of resources that have been proven to exist by drilling and can be recovered with existing technology. Since we’ve made a policy decision to keep ANWR and 85% of the OCS pristine, those resources will never be “promoted” to reserve status. Until and unless someone figures out a way to exploit the oil shale profitably (and secures the blessings of the sate and the Feds), those resources will not be counted as reserves, either. [Emphasis in the original.]

Even if one completely disregards the suggestion that NOC reporting is inherently unreliable, the attempt treating the two concepts as equivalent is pure, unadulterated sophistry. So much dissembling in one place cannot just be written off as sloppy speechwriting.


* Note that he is at pains to remind us mere moments later that “[e]ven if we started drilling new wells tomorrow, that oil isn’t coming online overnight.” Which reminds one that those opposed to drilling in ANWR a few years ago were heavily invested in the meme that it wouldn’t do any good because it would take years to get any of that oil to market. As we get closer and closer to the time when that oil might’ve been flowing and still have the same problems, the short-sightedness of that talking point is even more obvious than it was then. and yet, we’re still hearing it.

FILED UNDER: Barack Obama, ,
Dodd Harris
About Dodd Harris
Dodd, who used to run a blog named ipse dixit, is an attorney, a veteran of the United States Navy, and a fairly good poker player. He contributed over 650 pieces to OTB between May 2007 and September 2013. Follow him on Twitter @Amuk3.

Comments

  1. Wiley Stoner says:

    I wonder if this fool thinks he can get reelected with $5.00 per gallon gas. I’ll bet his slivery tongue lets him down.

  2. Michael says:

    At the rate things are going….Ron Paul could beat him.

  3. wr says:

    Gee, on the one hand we have Obama. On the other hand we have the oil industry, which spends millions of dollars buying Republican congressmen every year to gain billions in government subsidies. I thnk I can figure out who to trust here. Unfortunately, Dodd isn’t quite capable of thinking that deeply. He sees “Democrat bad” and jumps for the bait.

    What does it feel like to go through life as a sucker?

  4. Dodd says:

    Gee, on the one hand we have Obama. On the other hand we have the oil industry, which spends millions of dollars buying Republican congressmen every year to gain billions in government subsidiesreality. I think I can figure out whowhich to trust here. Unfortunately, Doddwr isn’t quite capable of thinking that deeply. He sees “Democrat bad”“someone said something bad about Obama” and jumps for the baitto insult his intelligence without the slightest concern for the facts.

    What does it feel like to go through life as a suckertroll?

    FTFY.

  5. G.A.Phillips says:

    Drill dummy drill!!!!!

  6. steve says:

    If Anwar was pumping oil, how would that change anything? The USGS downgraded reserve estimates pretty severely last year. Even if those estimates are wrong, there is not enough to significantly alter prices. We will still be importing oil. OPEC can raise and lower production as needed, so they can pretty effectively set prices if they wish. We would, for a few years, send less money out of the country. Natural gas is probably the way to go.

    Steve

  7. Andyman says:

    steve,

    Oh silly, you forgot. If only we were drilling in ANWR, oil would be free by now. In fact we’d all be showering in it.

    Dodd,

    It’s not at all obvious that “produce as much as you can” is the profit-maximizing strategy for Big Oil. Indeed, it may be strategic thinking on their part to drag their feet on Gulf drilling in order to make ANWR seem like the only viable course. Then, once they get their way on Alaska, the supply “crisis” can quietly disappear and drilling will commence at full speed in both regions. Obama’s doing the prudent thing by exercising responsible oversight.

  8. JKB says:

    Obama the “daydream believer and homecoming queen”

    Look, he’s a community organizer. As soon as one target turns into a dry hole, say, demonizing drilling, he switches to another target, say, blaming oil companies for not drilling. Next week it’ll be unicorns for not spreading enough fairly dust. And then he’ll rail against the blatant waste of fairy dust all over the place.

    But the one thing he knows for sure, those evil, rich, corporate barons are plotting against him. They’re scheming and twirling their mustaches. They’re the reason his melodious words bringing forth a new land.

    And michael – the way things are going, Sarah Palin could beat him

  9. Wiley Stoner says:

    The answer to your first question is, we don’t know because we are not drilling in Anwar. We are not exploring for oil anywhere. Look at all the places placed off limits for drilling. This so we will be forced to buy magical green energy? Cannot wait until 2012 when a realist President gets elected.

  10. It really is amazing that we can only choose between heaven and hell, isn’t it?

  11. Dodd says:

    Dodd, It’s not at all obvious that “produce as much as you can” is the profit-maximizing strategy for Big Oil. Indeed, it may be strategic thinking on their part to drag their feet on Gulf drilling in order to make ANWR seem like the only viable course. Then, once they get their way on Alaska, the supply “crisis” can quietly disappear and drilling will commence at full speed in both regions.

    Silly me. Here I thought long-established facts about the realities of oil drilling were somehow relevant to this topic. But those facts are just a smokescreen for a huge, oligarchical conspiracy to rape the pristine Alaskan wilderness.

    Consider me appropriately chastized.

  12. JKB says:

    See there, Andyman, has seen through their plottin’ and possibly their schemin’. Grab the mustache wax and head for the hills.

  13. Tano says:

    Not at all surprising that the best that Dodd can do is to cut and paste someone elses argument and just nod along. And whose argument? IBD, of all places – the WSJ for retards.

    Lets see what the oil industry hack says:
    “Ranger said. “[Y]ou prioritize some over others, you may be lucky on those first ones you drill, you may not — then you drill prospects further down your priority list.”

    Hmmm. In other words, the oil industry has a long list of potential sites for drilling. Which means, of course, that if the wells they are now exploring do not pan out, then they have plenty of others to explore. By their own admission.

    So what is the issue here? The charge against the Obama administration is that they are so energy-corporation-unfriendly that the poor guys are being inhibited from doing their job, providing us with fuel.

    Obama objects – no, we are not anti-energy industry. They have plenty of drilling opportunities all lined up.

    The industry basically admits this is true.

    “In other words, Obama is arguing that the oil companies themselves may be to blame for the fact that there isn’t more drilling.”

    No. Apparently Dodd is unable to see through the BS of hacks that he sees as being on his side of things. Obama is arguing that his administration has not robbed the industry of opportunities for exploration and drilling. And the industry essentially agrees that they have plenty of places to go on their list of priorities.

    “I can claim no particular expertise in the subject of mineral leases, but I knew before I’d finished reading the first sentence..”

    This is just classic. “I don’t know what I am talking about, but I sure as hell am certain of my opinion, and I knew it right away”.

    Rarely does one see a more eloquent description of the conservative mind.

  14. Dodd says:
  15. ponce says:

    Isn’t it a little too soon after the BP spill for the oil industry shills to come out of hiding?

  16. Andyman says:

    It doesn’t take a rocket scientist to see that if oil companies exploit the leases they already hold in the Gulf, they make money the old-fashioned way, which nobody is interested in doing anymore.

    If, however, they slow-walk production a little bit, they can reap the benefits of higher prices *and* increase the credence of their “we need access to Alaska” talking points, leading to the sort of regulatory capture that practically prints money far out into the future. You may have heard Joe Barton making a fool out of himself this week with his buffoonish claim that, without subsidies, Exxon would go bankrupt. Why not keep crying poor and try to produce a dozen more Bartons? Rent-seeking is where the real money is.

    You’re a sucker if you think Big Oil is lobbying for the opportunity to make an honest buck. What they’re angling for is the government teat. Opening up ANWR is just the first step towards tax giveaways designed to “encourage development” in ANWR, then subsidies towards “making Alaskan oil more competitive, because you know the nasty unions drive up our labor costs”, then a regulatory blind eye, because “the endangered species are too expensive to hose down every year”, etc. Actually moving oil to the surface and then to refineries is just the window dressing.

  17. wr says:

    Good ol’ Dodd, using a strike though as some kind of argument. I bet you were laughing yourself silly a few years ago when the terrible Democratic government of California was so rotten that our energy prices went through the roof. And it was all because Democrats were stupid.

    And then I bet you were dead silent when those Enron audiotapes were released where you could hear them committing criminal conspiracy to jack up our rates.

    Because in Dodd-world, industry is the Easter Bunny, all goodness and fluffiness. The hilarious thing is he thinks he’s a deep thinker.

  18. mpw280 says:

    The democrats and big oil are in bed with each other, it is all in their master plan. We are going to use up all other oil first then we will drill for what is laying there ready for us to take at home, then big oil and the democrats will control the world (queue Dr Evil laugh). mpw

  19. anjin-san says:

    > See there, Andyman, has seen through their plottin’ and possibly their schemin’.

    Yea, they would never plot and scheme. They are just businessmen out to make an honest buck.

    Actually, as those who are familiar with history books know, Standard Oil, Phillips Petroleum, GM & Firestone plotted and schemed quite successfully to destroy public transportation in this country after WW2 so as to increase market share.

    Obviously, if you are JKB, it feels pretty good to be a sucker…

  20. Ben Wolf says:

    If ANWR and the OCS contain the maximum estimates, together they would provide a three-year supply of oil.

    And we actually consume 27% of global oil production, not 25%.

  21. michael reynolds says:

    Obviously the problem is that Obama — in office for two years — has not caused more US oil to be pumped to make up for the shortage caused by the revolt in Libya.

    The fact that Republicans have spent the last 30 years opposing every effort to curb oil dependency is irrelevant. As is BP’s reckless negligence.

    Nope. 8 years of an executive branch run by oil men who laughed at the idea of conservation is NOT the problem, but 2 years of Obama — under whose watch we actually pumped more domestic oil than before — IS the problem.

    Clearly the GOP was right to sneer at cutting the use of oil, and clearly they were right to laugh at the idea that some irresponsible corporation might blow out an oil platform to save a few bucks on safety, and just as clearly Obama should have been capable of time travel to go back in time and authorize more drilling.

    Another Dudd.

  22. Dodd, they’re just doing it to make The Won look bad. Then again, his friends are doing a damn fine job of that as well.

  23. Scott says:

    How would more drilling here affect gas prices here? The market for oil is global. Suppose 10 years ago all areas were opened for drilling and were now producing. I can see that perhaps gas would have been 50 cents cheaper a month ago but I think we would still have had the recent spike in price.

  24. glasnost says:

    Dodd, I appreciate some recent attempts at minimal civility on your part, but you’re still the weakest link here, and this piece is as dumb as its echo was on Hot Air.

    Here are some things you should know about US oil production: We peaked in the freaking 1970’s. At 3.5 billion barrels a year. Every five years since than, we’ve produced less than five years prior. Across the entire GWB III administration, we declined from 1.5 billion barrels a year to about 1 billion barrels a year.

    That’s decline through a time span that includes five republican presidential administrations. Tell me, was their bleeding-heart environmentalism the cause of the relentless decline?

    Meanwhile, worldwide oil production is humming at 70 billion barrels a year. If you think marginal supplies in the wastes of Alaska and the Continental Shelf are going to bring us back to even our Texas days of the 1970’s, you are, no offense, a fool. There’s not a country in the world that has replaced a production decline of that size. But even if we could, we’d expand global production by all of about one percent. That’s what all this hyperventilation is about, a possible fall in oil prices by three cents a gallon.

    I mean, the giveaway here is right there in your quote!

    Until and unless someone figures out a way to exploit the oil shale profitably

    What we have left, like the oil shale, is the dregs. Expensive, difficult, and slow. ANWR, the OCS, and permits in the gulf are are tinsel on a dead dog. You didn’t even bother to bring up the fake quotes (in reality, estimates, and bad ones) about how many more hundreds of billions of barrels there are in these places, and how many years we could power the country on such things, thank God. But using “resources” to dispute figures about reserves is cross-eyed bullpuckey because no one knows what’s in the “resources” areas, that’s the whole point of their unexplored nature. So by not factoring them in, Obama was avoiding relying on what we call “wild guesses with every cause for inflation by venal, dishonest oil PR men”. That’s the opposite of dishonest.

    Meanwhile, when President Sarah Palin and her republican supermajority arrive, US production will still fail to recover. They don’t call it the “Outer Continental Shelf” because of the ease of bringing it to market. In the meantime, crap like this fools people stupid enough to listen to you into thinking that we have, oh, hey, plenty of oil, all the oil we need, if only Obama’s political games would stop hiding it from us!

    It’s dishonest, and it’s harmful.

  25. epistorese says:

    Do remember, boys and girls, that some of this discussion may well be moot because, unless the situation has changed dramatically during the past two or three years, during the 80s our infrastruture to utilize and transport domestic oil in country was dramatically curtailed so that we could use the comparative advantage of our oil being more valuable on the global market than it was in the domestic market. If you will allow, we traded our oil for cheaper (and higher profit) oil from other regions. This point complicates the issue far beyond the bumper sticker talking points of the current debate, so feel free to discard the information if it is inconvenient.

  26. Pug says:

    Richard Nixon talked about “ending our dependence on foreign oil” more than 40 years ago. In those intervening 40 years, what have we done, Dodd?

    Right wingers always have a simple solution. We’ll just drill ANWR. That might help increase production marginally, but it’s no answer to the long-term problem.

    We can’t drill our way out of the fact that the vast majority of the world’s oil reserves are in the MIddle East.

    I’ve worked in the oil industry for many years and I seem to remember oil at $148 a barrel (good times!) with two oil men in the White House and a drilling boom in the deep water Gulf. How’d that happen, Dodd?

  27. steve says:

    glasnost- This is a hit piece. I see no evidence that Dodd is willing to deal with data. He could have put it in his original piece. It is not hard to find. He could have published US oil consumption per day, global production per day (or month or year, whatever) then noted how much oil is estimated to be in ANWR. hen he could have noted how uch oil is thought to exist outside of ANWR.

    The sources I read and people I know think that we are a long way from being able to extract oil from shale in appreciable amounts at a realistic cost. I tend to think that natural gas is our natural bridge. On that front I dont know if the current administration is helping or hurting. I suspect that it does provide infrastructure issues.

    Steve

  28. Herb says:

    “I see no evidence that Dodd is willing to deal with data.”

    Not true. Dodd deals with data all the time. Sometimes it’s bad data, but hey….nobody’s perfect.

  29. Ben Wolf says:

    Dodd, I’D strongly recommend you get your energy information from some place other than red state. Drilling every last well in U.S. Territory would lower gasoline prices by a few cents at most. This is yet another non-story, and factually very little is correct.

  30. JKB says:

    Actually, as those who are familiar with history books know, Standard Oil, Phillips Petroleum, GM & Firestone plotted and schemed quite successfully to destroy public transportation in this country after WW2 so as to increase market share.

    Did they? That was mean. And here, Obama just saved GM from it’s rightful death. They must be a very powerful cabal.

    Or could we lay the blame on Ford, Henry Ford, to be exact. His diabolical plan to build a car affordable by the Masses, stole those same masses from their socialist masters. Hard to organize a revolt when everyone is hitting the open road every weekend, enjoying the freedom of personal transportation. Turns out the rubes would forgo a lot of things to buy a car, even a socialist utopia. But we can blame them all, in some respects, because what really did public transportation in was the closed car. In 1916, only 2% of the cars manufactured in the US were closed, by 1926, 72%. And after that Americans never looked back, except to jump in the back seat for a little necking and, well, conceiving.

    Faced with this, American urbanistas abandoned their trolley plans to buy busses, which were more flexible, adaptable and didn’t require special infrastructure save a bus stop painted on the curb.

  31. JKB says:

    Dodd, I’D strongly recommend you get your energy information from some place other than red state. Drilling every last well in U.S. Territory would lower gasoline prices by a few cents at most.

    If this is true, then it makes Obama’s comments even more troubling since surely someone in his administration knows this and therefore, we can only view the comments as a desperate attempt to divert attention by Obama from his disastrous foreign policy indecision.

  32. Ben Wolf says:

    Sorry I keep coming back to this, but the misinformation Redstate is peddling troubles me. Reserves are not proven. They are estimates of recoverable oil. Hence oil in areas where drilling is not permitted are in fact included in estimated reserve figures.

    If the president is claiming the current gas prices are the result of oil company laziness or collusion the guy is a lying liar, but that’s nothing new from an American politician. But relying on a group who also are lying liars to counter him doesn’t somehow bring the equarion into balance.

  33. Ben Wolf says:

    Having now read the original quote I don’t see that the president is blaming anything on the oil industry. He appears to be engaging in PR to attenuate the anger of the spoiled rotten American public which seems to believe it has a right to inexpensive gasoline. How is offerring to find ways to encourage more drilling (meaning giving money to the oil industry) an attack on the industry?

    More and more this looks like a contrived hit piece by the same know-nothings who breathlessly warn us of muslim traitors under every bed.

  34. john personna says:

    Are you a cornucopian, Dodd? Because that’s the only way your piece makes sense.

    I accept that Obama told some selective truths when someone tried to pin oil scarcity on him (seriously?), but to go all in with a fat smelly pile of further selective truths hardly improves the situation.

    Optimists and pessimists in the oil industry accept Peak Oil in broad strokes. The optimists (CERA, etc.) think that means 20 30 years of “undulating plateau” where production doesn’t get much higher (or lower).

    It’s not the government. It’s not the oil companies. It’s the geology.

  35. john personna says:

    “a desperate attempt to divert attention by Obama from his disastrous foreign policy indecision”

    lolz. what you really want is for him to reverse Bush decisions, faster, right?

    Funny failing for a conservative to cite.

  36. JKB says:

    It’s the indecision that is bad. True that indecision is leaving Bush’s decisions in place but those watching see that Obama has no policy and won’t make a decision. Therefore, they test, or now we’re past the pilot program stage, to see what they can get away with.

    Embrace Bush’s policies or put in his own, but the worst decision is indecision.

  37. steve says:

    ” Therefore, they test, or now we’re past the pilot program stage, to see what they can get away with.

    Embrace Bush’s policies or put in his own, but the worst decision is indecision.”

    Who is they? What exactly do you propose we do? We really cannot afford to invade every country. We cannot say magic words and make things happen. Sometimes other countries have to solve their own internal problems. Sometimes we do not have an overwhelming interest and sometimes there is just not much we can do. We stood by and watched Saddam kill many thousands of Kurds. This was when Reagan was president, so we had an experienced president with an experienced defense team. I dont think we did nothing because we were indecisive or evil. There just werent any good options or major US interests at stake.

    Make your case for what you think we should be doing and support it. Otherwise, just say “Obama Sux”. It is just as valid a complaint and likely more cathartic.

    Steve

  38. Ben Wolf says:

    You can see here that domestic production has sharply increased during the Obama administration:
    http://www.ft.com/cms/s/0/8698ae80-4503-11e0-80e7-00144feab49a.html#axzz1FXvTX1ED

    As for the right-wing shibboleth of drilling on the OCS, you can see here that it would have minimal impact on fuel prices:
    http://www.eia.doe.gov/oiaf/aeo/otheranalysis/aeo_2009analysispapers/aongr.html

    For those who won’t bother to look (and you know who you are), the parts of the OCS under moratorium contain about 20% of total OCS recoverable oil, about 18 billion barrels. That represents about six months of supply at the current rate of consumption.

    I expect that Redstate will not be used again for energy information. I mean it.

  39. john personna says:

    JKB, it may be optimal for Obama to choose a pace of change that frustrates some mildly, but that most people don’t notice.

    Consider withdrawal from Afghanistan. Obama didn’t get us in, and history won’t really care what month he gets us out. It may be optimal for him to wait until everyone accepts withdrawal and it is no big deal. Because by then people will accept that they left by consensus, rather than one man’s decision.

  40. Davebo says:

    Dodd,

    Idiotic posting.

    Caption Contest.

    Enough said.

    James, as much as I appreciate the low hanging fruit isn’t there an organization behind this site?

  41. anjin-san says:

    > He appears to be engaging in PR to attenuate the anger of the spoiled rotten American public which seems to believe it has a right to inexpensive gasoline.

    Dude, cheap gas is in the constitution. Obama is taking our freedoms. They don’t have cars in Kenya anyway.

    Gee, I guess I could join the tea party if I wanted to.

  42. Dodd says:

    Davebo says: Saturday, March 12, 2011 at 10:38

    James, Just shy of 15 hours.

    Definitely a new record.

  43. Eric Florack says:

    With failure after failure in foreign policy, with the overt “environmental” devotion now showing the true damage that such nonsense causes, and with Obama coming very close to, if not surpassing, Jimmy Carter has the worst president in United States history, yes I can imagine that he would be somewhat defensive.

    That said, however, that does not change the raw fact that energy prices are direct result of Obama policy. Keep in mind, he stated during the campaign that raising energy prices was a goal of his. He got his way. America is now reaping the “benefits” of that.

  44. reid says:

    It’s because of hateful, arrogant, reality-inventing boobs like Florack that I will never consider voting R again.

  45. john personna says:

    Eric, which is it. Do you want energy subsides, or do you want lower prices?

    You can’t have both, and net-net energy is currently subsidized, not taxed, in the good old U S of A.

  46. john personna says:

    BTW, if I say “auto transportation” is subsidized, that doubles down! You know right that fuel taxes do not at all cover roads and that local, state and federal taxes subsidize those?

    Free market bozos think its all free.

  47. sam says:

    FWIW

    Oil-Drilling Boom Under Way

    Oil-drilling activity in the U.S. has accelerated to a pace not seen in a generation as energy companies, oilfield contractors and landowners rush to exploit newly profitable sources of crude.

    The number of rigs aiming for oil in the U.S. is the highest since at least 1987, according to Baker Hughes. The 818 rigs tallied by the oilfield-service company last week are nearly double last year’s count and about 10 times the number in the late 1990s.

    While the drilling surge is unlikely to yield enough crude to alter the global oil-supply picture, analysts predicted that the new activity, centered on so-called unconventional reservoirs, could greatly boost domestic oil production and help offset declining output in Alaska and the Gulf of Mexico.

    These reservoirs, trapped in tight shale-rock formations, were deemed too hard to crack a decade ago. But in the past two years, breakthroughs in drilling technology, combined with high oil prices, have led companies like Chesapeake and Petrohawk to switch rigs formerly devoted to drilling for natural gas to emerging oilfields like the Eagle Ford shale formation, which stretches from the outskirts of Houston and San Antonio, Texas, south into Mexico….

    The Eagle Ford experienced a more-than-tenfold increase in the number of wells drilled last year over the 94 completed in 2009 and is slated for even more development this year. And the trend is playing out nationally, in formations such as the Bakken Shale in North Dakota and the Monterey Shale in California.

    Oil production from these sources is expected to reach 1.5 million barrels a day by 2015 from fewer than 500,000 barrels a day now, according to energy consultancy Wood Mackenzie. That is similar to the amount of crude produced in the offshore Gulf of Mexico, and the equivalent of nearly 30% of current U.S. production. That extra million barrels per day could help replace some expensive oil imports as conventional oilfields in the rest of the country decline.

    To extract the rock-bound crude, explorers and producers will boost spending this year by an estimated 8.1% to $93.6 billion, according to a Barclays Capital survey of 210 companies.

    Does this militate against the Obama-hates-oil-companies theory?

  48. Ben Wolf says:

    Does this militate against the Obama-hates-oil-companies theory?

    No. There is literally nothing Barak Obama can do that will convince Right extremists he doesn’t hate America.

  49. anjin-san says:

    > No. There is literally nothing Barak Obama can do that will convince Right extremists he doesn’t hate America.

    Well Ben, he is you know … a negro.

  50. Eric Florack says:

    BTW, if I say “auto transportation” is subsidized, that doubles down! You know right that fuel taxes do not at all cover roads and that local, state and federal taxes subsidize those?

    With lower amounts of social spending, they could be. The fact of the matter is that previous democrat Congress is felt themselves compelled to dip into highway funds, to pay for such social programs.

    The democrats have dug our grave on this one. The question is whether not the republicans are going to allow us to be stuffed into it.

  51. Eric Florack says:

    Does this militate against the Obama-hates-oil-companies theory?

    No. To what you don’t mention, or perhaps more correctly, what the article fails to mention, is that this administration (to say nothing of the left in general)has prohibited us from drilling were the oil actually is. In the ANWR, or gulf of Mexico, for example. Now, In the case of the latter, our prohibition was apparently don’t matter to the the Chinese who are currently drilling with wild abandon in that region, based on land claims by their buddies, the Cubans.

    What idiot thought it would be a good idea to restrict America’s access to its own energy reserves? You know the answer to that one, don’t you?

    And I note with some degree of amusement Anjin-fool hasn’t departed from that line. he seems to feel increased energy prices is a good thing. A look around at the economic destruction that such is causing, must make him feel all warm and fuzzy inside.

  52. wr says:

    And Eric demonstrates his ignorance by falling for an obvious and frequently debunked Fox like, that the evil commies are drilling for oil off the coast of Cuba. People here have warned me that he’s smart, and maybe he is — he just chooses to believe lies to make himself feel good. I guess that’s what they mean by “stupid is as stupid does.”

  53. john personna says:

    Eric, no gas taxes go to social spending. On the other hand general (income) taxes do pay for roads.

  54. Scott says:

    “the Chinese who are currently drilling with wild abandon in that region”

    As far as I know this is complete BS but if you can back this up please do

  55. Ben Wolf says:

    . . . he is you know . . . a negro.

    There was a time I hoped to find some common ground with the Right. I am forced to admit that was little more than a fantasy.

    You’re probably correct. They hate him for robbing them of their right not to have a black president.

  56. anjin-san says:

    > And I note with some degree of amusement Anjin-fool hasn’t departed from that line. he seems to feel increased energy prices is a good thing

    Actually, it’s a little more complicated than that, though I realize grasping complex ideas is not your strong suit.

    Unlike you, I don’t feel like my own comfort, well being, and disposable income (or those of people who happen to be pretty much exactly like me) are the most important things on Earth. I am not willing to embrace the outright rape of the environment simply so I can have cheaper goods and services. Is the economic hardship related to higher energy costs real? Of course. But Dodd’s cartoon argument about Obama and energy prices, which you appear all too eager to embrace, has already been totally debunked here, so we can move on from that.

    We’ve know about the problems associated with oil dependence for what, almost 40 years now. As a society, we have chosen not to do much of anything about it. Guys like you take the position of “I don’t give a shit, I want to drive a big truck”. So here we are. Why don’t you tell us what a wonderful thing nuclear power is now? Then you can tell the guy in Japan who is giving his kids iodine pills as we speak.

    Got to hand it to you bit, you are a true believer. In another time and place, you would have made a fine low-level Soviet party apparatchik, faithfully spouting party dogma, never questioning the party line, dreaming of the day you might catch the eye of an Andrei Gromyko or Yuri Andropov so that you might claim the rewards you see yourself as so deserving of.

    You missed your true calling. It’s little wonder that you seem perpetually angry in a country like America, where freedom of though and association are such fundamental concepts.

  57. G.A.Phillips says:

    Sigh….

  58. steve says:

    ” In the ANWR, ”

    The latest US Geological estimates.

    “In 1998, the USGS estimated that between 5.7 and 16.0 billion barrels (2.54×109 m3) of technically recoverable crude oil and natural gas liquids are in the coastal plain area of ANWR, with a mean estimate of 10.4 billion barrels (1.65×109 m3), of which 7.7 billion barrels (1.22×109 m3) lie within the Federal portion of the ANWR 1002 Area.[17] In 2010, the U.S. Geological survey lowered this estimate by 90 per cent to 896 million barrels as it was found to contain much more natural gas than previously thought. In comparison, the estimated volume of undiscovered, technically recoverable oil in the rest of the United States is about 120 billion barrels ”

    http://en.wikipedia.org/wiki/Arctic_Refuge_drilling_controversy

    So, we are pumping our highest levels of oil since 2002, ANWR has about 40 days worth of oil and somehow we made oil prices rise. People need to look beyond the US. World wide demand has increased. There are also concerns about supply because of the ME issues.

    Steve

  59. john personna says:

    I did my part Steve. I left the car in the driveway and walked to the market. Of course, I’ll drive 200 miles for some fishing tonight and tomorrow, so I’m not a saint.

    If you want lower prices, drive less. Or buy one of those sissy Prius.

  60. steve says:

    My 6000 SUX is getting up to 9 mpg now.

    http://www.youtube.com/watch?v=fl8mQhxhE_Q

    Steve

  61. Eric Florack says:

    As far as I know this is complete BS but if you can back this up please do

    http://www.americanfreepress.net/html/china_starts_oil_drilling.html
    http://www.tampabay.com/news/politics/stateroundup/article1085129.ece

    For openers.
    So far production has been limited, or non-existent, depending on the specific area under discussion. But agreements are in place and exploration is underway based on those agreements.

  62. Eric Florack says:

    Actually, it’s a little more complicated than that, though I realize grasping complex ideas is not your strong suit.

    So I’m not subtle enough for your leftist tastes, huh? Amusing.

    Unlike you, I don’t feel like my own comfort, well being, and disposable income (or those of people who happen to be pretty much exactly like me) are the most important things on Earth. I am not willing to embrace the outright rape of the environment simply so I can have cheaper goods and services.

    Laughable. Perhaps you should learn from a left-wing hero:
    http://www.youtube.com/watch?v=eScDfYzMEEw

  63. anjin-san says:

    > Laughable

    Wow. You just summed yourself up with one word. Cool.

  64. Scott says:

    Eric, neither of those articles, including the one with the headline “CHINA STARTS OIL DRILLING OFF FLORIDA” says any drilling has taken place, let alone with wild abandon.

  65. anjin-san says:

    That’s pretty cool bitsy. A link to an article that cites “Wide Stance” Craig. Did not know you were a fan.

  66. Ben Wolf says:
  67. Eric Florack says:

    Perhaps you should be dealing with updates that don’t come from Sorors?

  68. anjin-san says:

    Perhaps you should be dealing with updates that don’t come from Sorors?

    Ah, Glenn Becks speaks.

  69. An Interested Party says:

    Perhaps you should be dealing with updates that don’t come from Sorors?

    George Soros is better than a James Bond villain for certain people…*psst* Soros isn’t behind Factcheck.org…glad to be of assistance…

  70. kathy says:

    Well since I believe the oil rig blow up was a conspiracy I cant believe anything his purple lips say, plus they didn’t let a good crisis go to waste. If you google obamas lies you will find 158 doc. lies. He wants only(and if it costs him a term to rape and pillage our country and shred it to bits way beyond repair and give our oil to his commie buddies. Remember cuba is saying if we don’t drill they will be happy to get it.

  71. An Interested Party says:

    I cant believe anything his purple lips say…

    Surely you can do better than that? Maybe a reference to his skin color or his kinky hair , perhaps…

  72. Scott says:

    Damn it, she’s figured the whole thing out. Scramble the new black panthers and get this woman to a fema camp, stat.

  73. anjin-san says:

    Bit, while you are at it why don’t you fill us in on how the Weathermen are behind recent gains by the Islamic party in Turkey? It’s all connected…

  74. Hey Norm says:

    Yes goddammit…give big oil billions in tax breaks and free access to natural resources…and eliminate all regulatory control over them.
    Why? Because back in the seventies when people talked about weaning us off oil the visionless (folks like Dodd) laughed at them. Now we are facing $5 gas. So let’s double down on oil…surely if we bend over for big oil now they’ll never come back expecting us to bend over again.

  75. Drew says:

    There seems to be some, uh, issues with respect to data in this thread. The executive summary of the 2011 Annual Energy Outlook published by the US RIA is out, and available here: http://www.eia.doe.gov/oiaf/aeo/aeoref_tab.html and when combined with the 2010 report here: http://www.eia.gov/oiaf/archive/aeo10/index.html is a good primer. I’ve been reding it for years because we have and have considered a variety of investments in products made to the energy industry.

    A few things relevant to the commentary:

    1. Despite being described as the dregs, oil shale gas production is projected to grow from about 17% to 45% of all dry gas, which in turn is expected to grow from all sources by 25% over the next 25 years. The shale gas increases are happening now, and involve Bakken.

    2. Despite claims that moratoriams and lease issues are irrelevant, they are integral to all the projections for oil production.

    3. Renewable sources of energy grow, but remain a tiny portion of the overall energy mix. Wind leads the way, and solar and electric cars are nowhere.

    4. Per steves desires, natural gas prices decline and naturally become a greater fraction of the mix. They could be larger, but LNG and CNG suffer the same problems wrt vehicle use as electrics: limited range and the need to buildout an supply infrastructure.

    5. Despite PEAK worries, all liquids utilization and production, including oil, increases, in part due to tecnological advances that have allowed more full utilization of existing proven reserves/beds

    6. Despite concerns that some energy sources are “too expensive” the price scenarios that the EIA uses are currently in the “high” range of all scenarios, and of course the EIA therefore projects greater mining.

    Although not a topic of the thread, for the global warmers, it should be noted that almost the entire reduction in CO2 per US GDP output (like 98%) has been due to the increasing mix of services vs manufacturing. Although not rigid, most of those here who decry the loss of manufacturing are also on the global warming bandwagon. be careful what you wish for. Alas, the BRICS have taken on the role putting out the CO2.

    Lastly, Dodd’s original point is that Obama’s verbal slieght of hand is not what one would expect from a serious person, much less the President. Obama’s comment was absurd. But fear not, while energy prices threaten the economy and national security, te Middle East is in turmoil, and unemployent remains at carzy high levels, our leader is on the vital case of schoolyard bullying. So at least we got that going for us……..

  76. john personna says:

    Responding to Drew’s points.

    1. That’s bad news, if cost of production is higher. It means a continued migration to higher cost fuels.

    2. My city has a moratorium, and a lousy million barrels of oil. I wouldn’t be surprised if that was the pattern. We wouldn’t have a moratorium if someone stood to make billions.

    3. I agree! Renewables won’t work by themselves, and increased efficienty is actually often cheaper than “adding” renewables (or nukes). BTW, I get a “power content” tab from SCE. 11% of my household power actually comes from geothermal (17% nuke).

    4. Accepted.

    5. Peakers have been Chicken Littles, no doubt. They have called a dramatic global peak a few times, only to see production continue. That said, we did have that energy crunch, just before the Great Recession. It isn’t clear what will happen in recovery. Can and will producers react fast enough to drive down to $50/bbl? Will they be so slow as to get $200/bbl? It’s unclear, and everybody seems to spitballing a continuation of the current price … which isn’t really science … it’s just the best answer in a vacuum.

    6. I have no confidence in EIA (or anyone else’s) modeling.

  77. Drew says:

    jp –

    I was hoping you might read that. Its late to the thread, and the whackjobs have moved on, but I suspected you might take a look at the EIA or at least take a sensible view.

    Comments:

    1. I’m not sure that’s true. Technological improvements are occuring. And after all, Bakken et al are benefitting from what’s being learned up in Canada. That shouldn’t be surprising. Perhaps the bigger point is this: there’s a tremendous amount of fossil fuel potential at oil price points near where we are today. (BTW – yes, we have an investment that services oil shale and sands. Smokin’, baby. Smokin’.)

    2. I understand. But a million barrels here, a million barrels there……. It reminds me of budgeting discussions we have with our management teams. “But the insurance savings is only…….” Yeah, but a million bucks here, and a million bucks there……..”

    3. I agree, too. And only a fool wouldn’t want to explore all alternatives or reasonable efficiencies. My point of departure with the left is that they are fools to believe alternatives or efficiency alone can solve our problems of a) energy dependence, b) global warming (if it exixts, which I don’t believe). As such, the actions they advocate that retard a full speed ahead approach to fossil fuels right now is economic suicide and, as we sometimes chide within the firm “shootiing your – well, I can’t say it – off.”

    4. Heh. Buy you a scotch??

    5 and 6. I’ve never, ever constructed a model yet that was correct. They simply serve to make one think, and provide scenario ranges to contemplate. That said, I think the point is that “high oil price” scenarios (and to be clear, their reference scenario has been blown through as we speak) show that people who are in this arena everyday and for a living know that this will create economically viable opportunities for traditional and new energy sources. Again, the point of departure with me and the left is that their true colors come out: 1) punish the evil oil companies, 2) revert to quasi-caveman days wrt energy consumption, 3) alternatives will – like a shining white knight – save the day. Childish views…….and dangerous.

    Which brings us back to Obama, and why Dodd’s original post was actually right on the mark. I don’t think Obama is half as smart as his sycophants think he is. But I don’t think he’s stupid, either. So that leaves us with an unfortunate problem – he’s talking pure crap, and what is the motivation? Let your mind wander………but it ain’t good.

  78. john personna says:

    I think he’s talking relatively harmless crap. He’s more in-line with reality than Sarah Palin’s “drill baby, drill” chorus. They really don’t get that it’s a few million barrels here, a few million there, left under our drilling bans. They think that there is a cornucopia, a return cheap gas, out there to be had, and it’s only the environmentalists who won’t let them have it.

    The evil in Dodd’s piece is that he really defends that false dream.

    Any student of economics will tell you, price rations scarce goods. Oil is (increasingly) scarce.

  79. Drew says:

    “The evil in Dodd’s piece is that he really defends that false dream.”

    Not really, he simply exposes Obama’s cheap, politically motivated false accusations aimed at the weak minded. Witness so much of the thread..

    “Any student of economics will tell you, price rations scarce goods. Oil is (increasingly) scarce.”

    Yes, in fact price rations ALL goods. The issue is HOW scarce? And so, how price sensitive? (Ahem – ANY student of economics will tell you that.)

    You don’t deal with that by limiting development, or advocating politcally expedient 1% solutions, especially when economic and security issues are at stake. That’s called stupid ideology and bald faced political expediency; and certainly not Presidential leadership.

  80. john personna says:

    Isn’t strange that I’m the one trusting price, as my signal, about scarcity in the world?

    Saying “the world” is key. There are global oil supply chains. Price is set internationally. The real absurdity of the “drill baby, drill” crowd is that they only look inward, and imagine that we must have enough domestic capacity to affect world price.

    Why? Because they are promised it by shallow politicians, and they are too lazy to think it through.

  81. Scott says:

    Ah yes, the whackjobs have moved on. Fortunately for us Drew comes to the rescue with an awesome display of straw man slaying. Stand back and watch as he turns a molehill worth of quibbles into a mountain of Obama bashing. Tremble in fear at his non-childish explanation of why a Michael Moore presidency and a legislature controlled by teen age Greenpeace volunteers would be bad for America. Learn as he reveals the dark scenarios to be observed when you let your mind wander into Limbaugh’s nether regions. Well done sir.