Thursday, July 17, 2008

We can drill our way out of oil shortages

Announcement of American projects to explore for oil in the continental shelf, Alaska, Colorado oil shale, just about anywhere, will drop the price of crude, and do so in a matter of days. Even if the project won't come on line years. The outrageous crude oil prices are caused by fear, fear that oil will be unobtainable without a contract. Users have to get crude oil, or go out of business. So they pay six kinds of prices for it. Everyone can see demand going up and up, and production struggling to stay level, let alone grow.
Once the world sees the Americans committing to a large scale oil project, it will come to believe that more oil is out there, and oil will be available. America has a rep for pulling technological rabbits out of hats that is unmatched. America is the land that invented telegraph, telephone, oil wells, electric light bulbs, aircraft, nuclear energy, moon landings, polio vaccines, integrated circuits, microprocessors and more. An Exxon-Mobil announcement of an oil project that will come on line in 2009 and produce a couple of million barrels a day would have instant credibility. In part because the Americans are experts in this kind of thing and in part because American companies must be honest, 'cause the SEC will crucify them for flim flamming investors if they are dishonest.
Just one good oil strike will go far to convince the world's nervous oil consumers that more oil will be available in the future.
And, despite T. Boone Pickens TV ads, we can drill out way out of the shortage. US consumption is 20 million barrels per day. The undrilled resources are estimated in the billions of barrels. Twenty billion barrels is three years of supply. Two hundred billion barrels is thirty years of supply.

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