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  • Quit Repeating Nonsensical Oil Statistics!

    Drilling for oil

    “I give out this statistic all the time, and forgive me for repeating it again: America holds about 2 percent of the world’s proven oil reserves.” – President Barack Obama, March 30, 2011

    It would be easier to forgive the President’s repetition if it the way he used it made any sense at all. Here is his explanation of why it matters:

    What that means is, is that even if we drilled every drop of oil out of every single one of the reserves that we possess—offshore and onshore—it still wouldn’t be enough to meet our long-term needs. We consume about 25 percent of the world’s oil. We only have 2 percent of the reserves. Even if we doubled U.S. oil production, we’re still really short.

    The key here is that the President’s favorite statistic refers to oil reserves, not oil production.

    We don’t consume 25 percent (actually the number is closer to 22 percent) of the world’s oil reserves, we consume about 22 percent of the world’s oil production. In general, we consume about 22 percent of the world’s production of everything.

    Consumption is determined by income, not by available resources, and the U.S. also produces about 22 percent of the world’s output of all goods and services

    Now, we don’t produce 22 percent of world output of oil, at least not within out territorial borders.  Rather, our production is somewhere between 6 percent and 10 percent of world production (the numbers vary depending on whether you include things like natural gas liquids). Is that sustainable? Sure. Can we increase our production, even for decades? Sure.

    A hypothetical example can illustrate why comparing the percentage of current production to reserves provides no useful information.

    Imagine that we cut our use of petroleum to one barrel per year, and the rest of the world eliminated its consumption entirely. We would still only have 2 percent of the world’s reserves, but we would consume 100 percent of the world’s production. You can see how these statistics sound alarming but are misleading.

    Of course, we and the rest of the world consume a lot more than one barrel per year. In fact, production needs to be increased. Obama’s own Energy Information Administration (EIA) says we can increase production for decades to come.

    If you think we are past “peak oil” and cannot increase our energy production because we’ve gotten all the easy-to-get oil, look at the EIA’s projections. In the most recent Annual Energy Outlook baseline projection, the EIA forecasts a 7.7 percent increase in annual petroleum production between 2011 and 2035. That is, in 2035 they project the U.S. will produce 7.7 percent more than we will this year.

    So will we have run dry by that time? Not according to the Obama EIA. It projects that improvements in technology and the economics of extraction, production, and sales actually will lead to a 23.7 percent increase in U.S. reserves—even after extracting billions of barrels of oil in the interim.

    The sky is not falling, and straightforward economics still holds true: If we produce more oil, the price of oil will be lower than if we don’t.

    Posted in Energy [slideshow_deploy]

    10 Responses to Quit Repeating Nonsensical Oil Statistics!

    1. DaveR, MN says:

      And if you include the oil shale deposits, we have more oil reserves than they claim. A LOT more. Why not invest and utilize our *own* energy reserves instead of funneling $2 billion in taxpayer/borrowed money to Brazil so we can import more of their oil? For all the good advice Pres. Obama got during his campaign, he is getting *far* more bad advice now.

      • Mike says:

        Since at present the technology does not exist to "mine' the oil shale resources in Colorado, Wyoming and Utah in a economically viable manner they can't be included as reserves. The latest guesses/estimates which I have seen suggest we MAY have economically viable technology within 15/20 years to begin extracting oil from the oil shale rock.

    2. David Kreutzer, Ph.D. David Kreutzer says:

      Forgot to note another twisted set of facts the the president is unlikely to repeat: The U.S. has 7 percent of the world's wind resources but uses 22 percent of the world's wind power. While wind power may have other problems, the fact that our ratio of wind use is greater than our ratio of wind reserves isn't one of them.

    3. Doug Korthof Seal Be says:

      This is the most tendentious, self-serving critique I've every seen on any talking-head website.

      Did you know that the US sends $700 million each DAY to OPEC countries alone, receiving only oil that gets burned and leaves pollution, death and disease. We don't have the exports to pay for this!

      You need to understand the difference between "reserves" and "resources". Reserves are proven in the sense that they are economical to extract under current condtions; resources may be huge, but if too expensive to mine, have no value — for example, the millions of ounces of Gold dissolved in the Ocean represent huge potential value, but only if some economical way can be found to extract it.

      Our percentage of proven RESERVES in the world has been falling since the 1960's. Most of those reserves are found in countries that hate us.

      While shale oil, tar sands, coal-to-oil, GTL and even CO2-to-oil (yes, we could use excess energy to convert CO2 from the ambient air to oil) have huge promise, the cost is much higher than we can pay, both cash costs and future remediation costs.

      Clearly, the huge solar energy falling on the Earth (160,000 tW by one estimate) is the major energy source: the source of all "stored sunlight" in coal, natural gas, oil, peat bogs, etc., etc. — even tidal and wind energy.

      The unused rooftops of America, 10,000 sunny square miles, would supply more than all the energy we need, even if all our cars were plug-in and all our trains ran only on electric.

      So Obama made a TINY move towards ending our insane reliance on "cheap" oil. Naturally, the nattering nabobs of nagativism, those with special agendas, grind their axes in their lonely caves. Who listens to this sort of stuff??

      If you think oil is cheap, think about the $5 we pay per gallon in WAR COSTS.

      Every car and truck can be converted to run on cleaner natural gas, as Obama might have indicated; engines run cleaner on natural gas, last longer, and you get HOV stickers.

      Our 10-year-old Toyota RAV4-EVs have saved the oil from over 200,000 miles of oil-free driving, all their energy coming from our small rooftop solar system. Even better, we pump excess energy into the grid during the daytime, to meet peak demand, while our slow-charging at night also helps the grid equalize loads.

      Why mine coal, why make expensive oil, when we have abundant natural resources right on our roofs, with cheap batteries that recycle after 100K or 200K miles, are non-toxic and very reliable?

    4. Pingback: Quit Repeating Nonsensical Oil Statistics! | Big Propaganda

    5. Martin says:

      We do not SEND $700 million to OPEC (where??) each day. We buy $700 million worth of oil, that we use to power our cars, our planes, our factories, to manufacture plastics, to pave our roads, to make pharmaceuticals, and on and on and on. To manufacture solar panels….

      If it's there, we should exploit it – if we leave it where it is, what benefit will it create for the planet? None. We should of course develop new energy sources, when they are economic, but to simply stop using oil for its own sake is an absurd piece of hair shirt liberal metaphorical martyrdom, with no discernible benefit. It's gesture politics and posturing, both specialties of the left.

    6. dave...san dimas, ca says:

      wow,…what drivel. If only you weren't taking me down with you with this myopic view of energy and social responsibility. As long as you can sleep at night….

    7. Pingback: Pain at the pump | Hoystory

    8. Juan Ramirez says:

      I watched "A crude awakening: The oil crash" in Netflix; it is obvious that we will run out of cheap and expensive oil sooner or later and as the era of cheap oil ends, an era of problems will begin which I hope it has a smooth bell shape and ends too.

    9. Pingback: FACT CHECK: 10 Dubious Statements from Obama's State of the Union

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