Literally speaking, they are correct of course. For the low info voter, we should probably revise the terminology. We need to produce and refine 100%+ of the volume of energy making materials that we consume.
This is not to say we should not continue to import and export per free market capitalism ideals. This is the only way we can affect the world market. And speculators, whether we like it or not, drive the price of crude. The alternative is for our government to enact laws that control the sale, distribution and cost of energy producing materials. WE DON'T WANT THAT anymore than we already have it.
When America can bring our full resources to bear to saturate the world market, and we are a net export nation, the added supply will force OPEC to compete for business. They will either have to continually reduce their output to fix the supply and let American companies have more of the market share. Or they will have to ramp up production to keep their net cash flow consistent with the lower prices. Their additional output along with ours will create a self feeding cycle of supply, which should drive down speculator costs.
We should be careful here, however. If the cost of a barrel of oil drops to dramatically too soon, the motivation for private industry to produce more will fall as profit margin potential goes lower.
Ideally, we would relax all regulation on exploration, extraction, refinement and new refinery production and distribution for 10 years. Let our people push out capabilities hard. Nuclear, Oil, Coal, natural gas.... This would drive down the cost of energy for America and the entire world. Lower energy prices frees up private capital. And so the snowball begins....
But alas, with the current administration and political discourse in this nation, this is but a fantasy.
If we were drilling and producing offshore in 20 states like we do in TX and LA, anyone that wanted a job in this country could get one.
Munger doesn’t know how much oil there is out there. It is simply astronomical. The shale oil being mined now by fracking is from the source rock of all the oil that’s ever been drilled. All the oil that’s ever been drilled since the mid 1800’s is only 10% of the oil underground. That oil percolated up from source rock and was trapped under salt domes and similiar formations. Fracking allows us to get at another 30% of the oil from the source rock itself. That’s three times the amount of oil that ever been drilled since the beginning of the oil age.
But there’s several orders of magnitude more oil out there.
There is an unlimited supply of oil locked in the oil shale of the green river basin in Utah colaorado and wyoming.
In 10-20 years the cost of electricity will collapse —making that oil shale cheap enough to extract byo of insitu mining—if there is any demand for oil after the collapse of the cost of electricity.