A World Affloat on an Ocean of Oil

Considering how much untapped oil is known to exist, not just in the United States, but worldwide, one would think that its current price was some kind of anomaly and it is. It is more the result of speculation than anything else.

The most fundamental fact about oil worldwide is that there is lots of it. Though frequently overlooked, the ability to refine crude oil plays an essential role in the supply and demand equation. More refining capacity is needed worldwide. Finally, there’s the fact that, in general, oil is very expensive to get at and often found in the most inhospitable places on Earth.

For sheer insanity, however, consider a nation that has an estimated 31 billion barrels of oil offshore of its coasts and 117 billion barrels of oil under land owned or managed by the government, plus 139 billion barrels beneath privately held land.

In just one area, a desolate place designated a wildlife refuge, there’s an estimated 7.7 billion barrels untapped. The nation with this abundance of oil is, of course, the United States of America. Most of the areas where oil is known to exist have been ruled off-limits to any exploration or extraction by the government.

In the areas where it is accessible, drilling for it is hugely encumbered and often denied by the National Environmental Policy Act, the Clean Water Act, the Endangered Species Act, and the National Historic Preservation Act.

If, however, you connect the dots, you will have noticed by now that America’s energy problems, namely the price of a gallon of gasoline or heating oil, is making everyone miserable thanks in great part to environmental legislation designed to make it impossible to access oil on both public and privately held lands. Then, just to make matters worse, the government requires that every gallon of gasoline include the additive, ethanol, which reduces its mileage and increases its cost.

Further, we’re told that Sen. Barack Obama, if elected, intends to seize “windfall profits.” This is sufficient reason for American oil companies to decide to drill anywhere else. The last time a windfall profits tax was implemented was at the end of President Carter’s term. It had such a negative impact on U.S. oil companies that drilling for oil domestically dropped dramatically. It has stayed that way since the 1980s. Their actual profits are now less than pharmaceutical, high tech, and other elements of the economy. Imagine how thrilled they were to hear Rep. Maxine Waters’ threat to nationalize them.

No profits. No exploration. No drilling. And no domestic oil with which to correct our dependence on foreign oil and thus provide a measure of security to a nation that runs on oil.

If you wanted to bring the United States to ruin, you could not have designed and implemented a more perfect scheme. Along with too many members of Congress, environmentalists are America’s Fifth Column.

As my friend, Seldon B. Graham, a veteran petroleum engineer and oil industry attorney, and a graduate of West Point says of oil, says “If it is worth dying for in the Near East, it is worth drilling for in the United States.”

As to the claim that the Earth is running out of oil, that can be easily dismissed simply by reading information available in respected publications such as Business Week. Its June 9 edition reported the Saudis “already plan to increase production by 300,000 barrels a day in June for a total of 9.45 barrels to meet customer demand. Unlike the U.S., “The Saudis have embarked on an ambitious expansion program that should see more than 2 million barrels of new production capacity come onstream by the middle of next year.”

Those of us who follow energy trends read the Energy Tribune because it has some of the best information available on what is really occurring. In its May edition, Matt Pickard wrote about the expansion worldwide of offshore drilling, noting that today’s prices are being driven by increased demand from rapidly developing nations such as China and India. This demand is going to increase over the next two or three decades.

Unless the United States begins to free up its own oil and natural gas reserves, Americans are going to be paying more at the pump and in their homes for a very long time to come.

The good news is that the offshore oil and gas industry, despite the huge risks and costs involved and despite an aging, understaffed workforce, is making strides to meet demand. Whether it’s in the Gulf of Mexico or the North Sea, the icy waters of the Barents Sea or offshore of Brazil and Africa, massive new reserves of oil are being found.

“Large discoveries offshore Brazil, the continued progress in every region’s major projects, and the ongoing push for Arctic exploration and production point to the industry’s potential for growth over the next 20 to 30 years,” wrote Pickard. Brazil is poised to become a major producer. In its Tupi field, “Petrobas announced an aggressive development plan, with an early production system possible within two or three years,” reports Pickard. The nearby Jupiter field has gas reserves to rival Tupi.

None of this is a secret! Both privately owned U.S. and foreign national oil companies are going to find more oil and gas.

Neither candidate for President is telling the truth these days because both believe global warming is real and both keep blathering on about “alternative” energy. The big problem for the rest of us is that you can’t pour wind or solar energy into a gas tank.

The U.S. mandate for ethanol as a gasoline additive has already significantly put the world’s food supply in jeopardy, but most Americans are blissfully unaware that it requires 1.5 gallons of ethanol to produce the same energy as a gallon of gasoline. It actually emits more carbon dioxide than gasoline. It is an environmental hoax.

The world is afloat an ocean of oil. Meanwhile, the United States continues to rule 85% of its offshore oil off-limits to exploration and extraction. This is occurring while the Chinese prepare to pump oil just offshore of Cuba, a merely 90 miles from Florida. It is occurring while the Russians are looking to plant their flag on potential reserves of subterranean oil in the Arctic.

The next time you hear a politician say we need to be “energy independent”, ask him or her why Americans cannot have access to the oil reserves known to exist in California, in Alaska, and in many of our other States or off the coastlines of Florida and elsewhere.

Ask them why the fate of the condors and little known species is more important than the family budget of Americans forced to make choices between more food and more gasoline.

Ask them why they continue to claim that global warming is a threat when the entire Earth is now in a decade-old cooling cycle.

Ask them why they insist on blaming investor-owned oil companies whose own reserves are barely four percent of the all the oil that exists worldwide? Ask them how they expect these oil companies to compete in the global marketplace when they threaten to seize their profits.

Energy is the master resource. It determines which nations thrive and which lag behind. For now, America is being ill-served by a Congress that refuses to permit access our own energy resources.

Ask yourself how we have arrived at a point in time when both candidates for President believe in a non-existent global warming and whose proposals offer no practical solution to our current and future energy needs.

Politically Contrived Gasoline Shortage
The Independent Institute ^ | Spring 2008 | CRAIG S. MARXSEN

Posted on 06/07/2008 12:08:06 PM PDT by DaveTesla

Politically Contrived
Gasoline Shortage

CRAIG S. MARXSEN
The 1972 book The Limits to Growth (Meadows et al. 1972) sensationalized
the theory that natural-resource depletion and rising pollution would soon
bring catastrophe. The authors theorized that, among other problems, running
out of basic resources such as petroleum would cause a collapse of industrial and
agricultural production as well as a resulting loss of a large part of the world’s human
population. An “energy crisis” immediately following the book’s publication enhanced
its credibility and brought it a great deal of public attention, although the
energy crisis later proved to have been only a temporary anomaly caused largely by
price controls. Recent, substantial increases in gasoline prices may revitalize the catastrophists’
conviction that imminent fossil-resource exhaustion demands prompt substitution
of renewable fuel sources, such as ethanol. Convinced that because fossil
fuels apparently are nearly exhausted as a practical energy source and we can abandon
them almost costlessly, opponents of fossil fuels advocate drastic reduction of their use
to prevent a ruinous crisis of carbon dioxide pollution. Yet the alleged crisis requires
a near-zero discount rate to raise the prorated present value of damage, per gallon of
gasoline combusted, far above the relatively modest figure obtained by use of a market
interest rate for discounting purposes.
A more serious potential economic crisis caused by rising motor-fuel prices, in
contrast, does not spring from pollution or resource exhaustion, but from the catastrophists’
mistaken belief in what has become their almost self-fulfilling prophecy
(see Marxsen 2003). Through the political system, they have promoted regulatory

actions that are discouraging the investment that would otherwise have prevented
today’s worsening refining bottleneck. Obstruction of investments in gasoline refineries,
achieved by regulatory interventions, is probably a more significant threat to the
affordability of gasoline than any approaching exhaustion of gasoline’s fossil sources.
Reestablishment of refiners’ reasonable property rights and adoption of strict liability
as the major instrument for controlling carbon dioxide and refinery pollution might
end what otherwise may become an ever-worsening, regulatory-induced “energy
crisis.”
The Price Mechanism
Robert Solow responded promptly to The Limits to Growth. He explained that the
price mechanism would induce substitution of alternative sources as oil became
scarcer (1973, 44–47). Production methods that rely on relatively more abundant
natural resources eventually will substitute for dwindling supplies of oil that had
previously been cheap and easy to exploit (Solow 1974, 3–5). Now, more than thirty
years later, specific forms of such substitution have become more visible to those
looking ahead toward practical alternatives.
Although crude oil still appears to be relatively abundant and supplies most of
the world’s material from which gasoline is refined, other fossil sources of gasoline
seem to offer commercially viable alternatives. These sources include methane (or
natural gas), coal, bitumen obtained from tar sands or oil shale, and crude petroleum’s
“bottom of the barrel” components, such as asphalt. Let us ignore nonfossil feedstocks,
such as corn and turkey guts, because they escape political opposition from
opponents of fossil fuels and, in any event, have potential to make only a small
contribution to present rates of gasoline consumption. Because available stocks of
petroleum, methane, coal, tar sands, and oil shale are sufficient for centuries to come,
however, the possibility of sustaining supplies of ordinary gasoline for motor fuel at
reasonable prices appears virtually assured, regardless of nonfossil sources, if the political
system will permit. Conversely, a complete transition to nonfossil sources at this
time would doubtlessly result in much higher gasoline prices.
Fossil-Energy Sufficiency
A great deal of fossil-fuel material remains buried in accessible places. In the U.S.
Department of Energy’s International Energy Outlook 2006, world energy use is
projected to rise from 421 quadrillion Btus, or “quads,” in 2003 to 722 quads in
2030 (2006b, 1). Paul Holtberg, director of the Demand and Integration Division of
the U. S. Department of Energy, and Robert Hirsch, a senior energy program advisor
at Science Applications International Corporation, estimate that 13,400 quads of
conventional crude oil and 14,000 quads of conventional natural gas remain exploitable.
At least another 15,000 quads are available from unconventional sources of
crude oil, such as tar sands and oil shale. In the lower forty-eight states of the United
States, geopressured brine and gas hydrates may offer as much as 335,000 quads,
according to Holtberg and Hirsch (2003). Bob Williams (2003a), former executive
editor of the Oil and Gas Journal, reports a global methane hydrate endowment more
than 190 times the amount in the United States. Worldwide coal resources exceed
135,000 quads, according to Holtberg and Hirsch. At the 2003 rate of global energy
use, and not counting the geopressured brine and methane hydrate endowment
outside the lower forty-eight states, such fossil-fuel reserves would apparently last
more than 1,200 years, and they would last more than 700 years at the projected 2030
rate of consumption. Moreover, Holtberg and Hirsch’s estimates seem to be conservative
ones. David L. Greene, Janet L. Hopson, and Jia Li estimate in a report
prepared for the U.S. Department of Energy by Oak Ridge National Laboratory that
the world’s remaining supply of exploitable oil (including that from shale and tar
sands) is about 106,572.2 quads, with about 32,885.6 quads recoverable under
technologies and prices expected to prevail before 2050 (2003, 9). Thus, fossil hydrocarbons
for making gasoline and other liquid fuels will almost certainly be adequate
for centuries to come. The real obstacle is the world’s political systems.
Obstructing Refining
Government interventions have constrained the petroleum-refining industry for decades.
A 2004 U.S. Department of Energy National Petroleum Council report documents
a variety of impediments to expansion of refining capacity. Not a single new-site
refinery has been built in the United States since the mid-1970s (Shackouls 2004,
I-19). From 1981 to 2002, the average return on equity for petroleum companies was
11.3 percent, and the S&P 500 average was 12.2 percent (I-14). The return on capital
employed in refining and marketing was only 5.3 percent, compared with a return on
capital of 7.7 percent for the industry as a whole (I-14). The low returns reportedly
derive from significant regulatory-driven investments that yield no return, combined
with the highly competitive nature of the business (I-16). Building a new refinery
involves a huge investment and is therefore subject to tremendous losses from any
delays. Environmental regulation—including New Source Review enforcement and
National Ambient Air Quality Standards—and uncertainties generated by waivers,
exceptions, and amendments to regulations create strong disincentives for investment
in new refineries (I-6). Ben Lieberman (2006), a senior policy analyst at the Heritage
Foundation, contends that as much as 25 percent of total capital outlays in the
refining sector are devoted to environmental regulatory compliance. Ever-changing
specifications for reformulated gasoline and low-sulfur diesel frustrate refiners’ efforts
to achieve maximum volumetric efficiency during peak demand periods and further
reduce the return on an investment in a new refinery (Shackouls 2004, I-18). The
government’s obstructions of the use of carbon fuels somewhat resembles its more
visible prevention of the expansion of nuclear power in spite of engineering advances
that have almost totally eliminated the more significant nuclear-safety issues that once
seemed relevant.
The potential for regulatory harassment may make refiners with less-thanextraordinary
prospective profits unwilling to remain in business in coming years. In
a 2002 report, Jerry Hill, principal environmental engineer at Bechtel’s Houston
office, illustrates what had then become a strategy emphasized by the Environmental
Protection Agency (EPA). The EPA’s Office of Enforcement and Compliance Assurance
had increased its focus on petroleum refineries, and inspection teams made a
number of detailed audits, each spending many days searching for violations of federal
and state pollution regulations. These armies of fault-finding inspectors compiled and
submitted to the U.S. Justice Department and filed in district federal courts long lists
of alleged violations of pollution laws. At the top of Hill’s list of violations was failure
to obtain construction permits, failure to install the best available control technology,
and flaring gas that contained sulfur. Other violations included insufficient labeling of
containers and inadequate record keeping. Hill describes the prompt and costly defeat
of a refiner who decided to go to trial. Thirty-six refineries in nineteen states settled
these actions for the most part with negotiated consent decrees that involved millions
of dollars for remedial expenditures and additional millions for payment of fines. The
consent decrees typically remained in force for years. Hill notes that such actions
against refiners “have made them subject to additional standards and regulatory supervision
without the typical rule-making process.” He describes settlements as “giving
the EPA joint dominion with several owners in the daily operation of a number
of refineries” (2002, 76). Affected refineries account for about one-third of U.S.
capacity. Fines ranging up to $10 million went to the U.S. government, with a
sizeable portion going to the regulatory agency involved. Hill’s report is not a polemic
to sway public opinion, but only a descriptive article in the trade journal Hydrocarbon
Processing. To an industry outsider, however, the account raises suspicion of an abuse
of regulatory authority for the purpose of obtaining, by extortion, nearly unqualified
pledges of compliance with bureaucrats’ dictates that are unbounded by statutory
limitations.
Al Gore’s near victory in the 2000 presidential election suggests that opponents
of fossil fuels continue to gain political traction. When subsequently asked what he
would have done differently had he won the election, Gore told George Stephanopoulos,
“I would have urged the Congress and done my best to lead the country
to take on this climate crisis, become independent of carbon-based fossil fuels as
quickly as we can, to shift toward conservation, efficiency and renewable energy”
(Stephanopoulos 2006). With this expressed ambition, Gore presumably represents a
powerful segment of the voting public that political candidates of both major parties
seem increasingly willing to placate. This tendency suggests an increasingly effective
influence of the voters lying between the median and the extreme, individuals for
whom, as John Brätland observes, “environmental enjoyment may be impossible as
long as the petroleum industry continues to exist” (2004, 530).

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Read The Rest Here.. http://www.independent.org/publications/tir/article.asp?issueID=53&articleID=678
(PDF)

One has to wonder..
Does Gore and his crowd sit around in the evening and toast their glasses of Chablis while laughing hysterically at us?

Truth is we have more energy, particularly hydrocarbon fuels than we know what to do with.

Arresting man's development and controlling the population (serfs) is what this really about.

From The Article:
http://www.thestar.com/sciencetech/article/415215
(A must read as gas to liquid processes can use these reserves with a short time to market)

http://www.freerepublic.com/focus/f-news/2027596/posts

And oil is not the only resource we have. We have coal, IN ABUNDANCE, to make America self-sufficient in energy for centuries to come. What happened to coal-to-liquid-fuel technology? We know it is there, we only lack the will to put it into practice. There is a process, called reformulation, that can change natural gas (mostly methane) into longer-chain alkanes, hexane, heptane, octane, nonane, dodecane, hexadecane and that gold standard for automobile engines, iso-octane.

And we have LOTS of natural gas. Major by-product of working oil wells, as a matter of fact. Not only that, there are underground deposits that consist of practically nothing BUT natural gas under extremely high pressure, in fact, the problem here is to keep it from coming out TOO fast. Natural gas in the process of becoming entrapped in sedimentary layers is simply lying on the ocean floor, where the temperature hovers around 38º F (about 4ºC.), contained in a water-methane matrix called Methane Hydrate, a totally stable substance that will remain that so long as the temperature does not rise above about 41º F. This substance resembles ice, and is rather amorphous. Simply scoop this substance up off the ocean floor, where it lies pretty immobile, deposit it in a containment vessel, and allow it to warm. The methane and water dissociate, releasing the methane (which has some 164 times the volume of the Methane Hydrate from which it came), and let the gaseous methane come to a surface ship, where it is cooled and compresed back into liquified natural gas, LNG, which then may be transported to ports all over the world. It is estimated that the quantity of all the Methane Hydrate in the ocean floor is a couple of HUNDRED times as much energy as is contained in all the known coal, crude oil and natural gas reservoirs everywhere on earth. More importantly, this Methane Hydrate is continuously forming, as organic materials that have sunk to great depths decompose into constituent molecules, methane being one of the simplest and most stable. These molecules of methane, under the constant steady pressure and unchanging temperature of 38º F. in the ocean depths, are physically forced into the Methane Hydrate conformation.

Note that this is not a chemical reaction. It is merely the most stable conformation that water and methane form at that temperature.

Natural gas wells are formed when deposits of this Methane Hydrate are buried in silt, which solidifies into sedimentary rock over time. As the Methane Hydrate is removed from the cooling effect of the water in which it was once beneath, by the gradual warming of the earth’s crust by residual heat radiating out from the molten center, the Methane Hydrate gasifies under tremendous pressure, resulting in the natural gas wells found at various depths beneath the ocean.

Is it beastly stuff to handle? Well, mmm, yeah. Nothing that is tougher, say, than anchoring a drilling platform at sea, and tapping into the ocean floor three miles below to a depth of seven miles or so, to capture trapped petroleum and natural gas there. In fact, in the process of hitting these deep wells, the operator often has to go through a layer of varying depth of this Methane Hydrate, just to hit the substrate below.

The Japanese are really interested in researching this substance, you might look up what kind of progress they have made already in recovering Methane Hydrate. They are very nearly at the commercial industrial level already.

The world is going to depend on carbon-based fuels for a long, long time. After all, the product of combustion of carbon is carbon dioxide, a very vital link in the life process of every living thing on Planet Earth.

Carbon dioxide is plant food. It is not, by definition, any more of a “pollutant” than water or oxygen.

No matter what the ruling of any politically motivated legislature or court may claim.

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