Guest post by Alec Rawls
“President no longer worried about CO2!” That’s what the headlines should have read last week after Obama presented an elaborate argument that alternative energy is the only viable response to high energy prices without ever once mentioning CO2, global warming or climate change. Instead, he presented the need to lessen our reliance on oil purely as an economic imperative.
Back when he thought that global warming was a winning concern Obama used to acknowledge that his anti-CO2 policies were going to cause high energy prices (forcing them to “necessarily skyrocket“). Now he is trying to use the high energy prices that he intentionally caused as a reason to get away from fossil energy. But if we are no longer worried about climate, how about just undoing the anti-fossil-fuel policies that drove prices up in the first place?
Obama’s silence on climate is a testament to how thoroughly the alarmists have lost the climate debate in the eyes of the voting public. Obama can’t even mention climate change (never mind global warming), even in a speech about his own climate-driven policies.
To make his economic argument, Obama puts forward two glaring lies. Let’s take these whoppers one at a time.
The lie that we are already aggressively developing our fossil resources
From the President’s March 15th energy policy speech at Prince George’s Community College in Largo, Maryland:
Under my administration, America is producing more oil today than at any time in the last eight years. (Applause.) Any time. That’s a fact. That’s a fact. We’ve quadrupled the number of operating oil rigs to a record high. I want everybody to listen to that — we have more oil rigs operating now than ever. That’s a fact. We’ve approved dozens of new pipelines to move oil across the country. We announced our support for a new one in Oklahoma that will help get more oil down to refineries on the Gulf Coast.
Over the last three years, my administration has opened millions of acres of land in 23 different states for oil and gas exploration. (Applause.) Offshore, I’ve directed my administration to open up more than 75 percent of our potential oil resources. That includes an area in the Gulf of Mexico we opened up a few months ago that could produce more than 400 million barrels of oil.
So do not tell me that we’re not drilling. (Applause.) We’re drilling all over this country.
That’s chutzpah, bragging about opening up drilling in the Gulf after using the Deep Horizon spill as an excuse for wiping out the Gulf drilling industry with an illegal moratorium.
Everyone knows about the big anti-oil moves from Obama and the Democrats, like rejecting the Keystone pipeline and continuing to block drilling in ANWR, but if you want a picture of how systematic and extreme their anti-fossil-energy policies have been, take a look at the list compiled by House Natural Resources Committee Chairman Doc Hastings. As soon as they got in the Obamatons started revoking all the permits that were in the pipeline: for exploration, for mining, for drilling, for building power plants. Everything was shut down to almost nothing, and that is the way it has stayed.
Speaker John Bohner put a few of the highlights onto a timeline along with gas prices. Cause and effect:
What about that record amount of oil production? From Tina Korbe:
Energy experts say the president’s rhetoric isn’t exactly forthright. It’s unfair for the president to take credit for record high oil production. Not only does it take oil three to five years to come online, which means the previous administration was responsible for approving the exploration and drilling permits that led to increased production, but oil production on federal lands actually declined from 2010 to 2011. Oil production on private lands is responsible for the increase.
She quotes CNS for the specifics:
As CNSNews.com has reported, oil production on federal lands declined in fiscal year 2011 from fiscal year 2010 by 11 percent, and natural gas production on federal lands dropped by 6 percent during the same timeframe.
In contrast, oil production on private and state lands accounted for the entire increase, reported the IER, as production was up 14 percent from 2010 to 2011. Natural gas also was up 12 percent from 2010 to 2011.
The energy boom from advances in fracking technology are so massive that Obama has not been able to suppress them entirely, but he sure is trying, and we know why. Energy Secretary Stephen Chu was up-front about this as recently as two weeks ago when he testified before the House Appropriations committee:
“Is the overall goal to get our price [of gasoline] down,” Nunnelee began. “No,” interrupted Chu, “the overall goal is to decrease our dependency on oil, to build and strengthen our economy.”
Chu’s goal is less oil consumption, which of course requires higher prices, “to strengthen our economy.” (Note that Chu is a physicist, not an economist.) Chu has been saying for years that:
Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.
That’s $7 to $9 per gallon. Under duress he recanted last week and said that he no longer wants higher prices, but that just stripped away his last remaining virtue, which was his honesty.
Lie number 2: that America is energy poor, so there is not much we can gain by drilling anyway
Someone who knows absolute nothing about anything might find this Obama riff compelling:
There’s a problem with a strategy that only relies on drilling and that is, America uses more than 20 percent of the world’s oil. If we drilled every square inch of this country — so we went to your house and we went to the National Mall and we put up those rigs everywhere — we’d still have only 2 percent of the world’s known oil reserves. Let’s say we miss something — maybe it’s 3 percent instead of 2. We’re using 20; we have 2.
Now, you don’t need to be getting an excellent education at Prince George’s Community College to know that we’ve got a math problem here. (Laughter and applause.) I help out Sasha occasionally with her math homework and I know that if you’ve got 2 and you’ve got 20, there’s a gap. (Laughter.) There’s a gap, right? …
We will not fully be in control of our energy future if our strategy is only to drill for the 2 percent but we still have to buy the 20 percent.
Obama’s 2% figure refers to “proven reserves,” and the smallness of this particular number is actually a measure, not of our resources, but of how little they have been developed. Investors Business Daily explains:
The U.S. has 22.3 billion barrels of proved reserves, a little less than 2% of the entire world’s proved reserves, according to the Energy Information Administration. But as the EIA explains, proved reserves “are a small subset of recoverable resources,” because they only count oil that companies are currently drilling for in existing fields.
We have very little “proved reserves” because we have developed only a small fraction of our resources into active fields. The relevant number to look at is the amount of oil we could produce if it were allowed, and here we are proverbial thousand pound gorilla. Again, from IDB:
We actually have the world’s largest fossil energy resources, and the “recoverable” part is rapidly expanding as the technology for extracting it advances. Estimates for technically recoverable shale gas reserves increased 134% in 2010, and we’ve hardly begun on shale oil. Then there are methane hydrates, which according to the Department of Energy contain “more energy potential … than all other fossil energy resources combined.”
In short, the United States, and the entire world, have only been tapping the planet’s most easily accessible fossil energy supplies, and even those are far from running out, while vastly larger resources wait in store. Obama’s claims about the impossibility of relying on fossil energy are a fairy tale for childish green adults who want to see themselves as saving the planet. They dream of going “forward” to windmills and absorbing solar radiation like a snake on a rock, yet none of them have enough confidence in the saving-the-planet part to even mention it anymore.
The war on CO2 is over! Tell the EPA!
Obama’s lies about fossil resources are just supporting lies. His big lie is his pretense that his anti-CO2 policies are not about CO2. So take him at face value. He has apparently surrendered his claim that CO2 is dangerous. From his energy-policy speech, it seems that global warming is no longer a motivating concern.
THAT is a big story. Quick, tell the EPA. With this change in the administration’s position there should be no more regulation of CO2 and Obama should rescind his promise to bankrupt the coal industry:
So if somebody wants to build a coal-powered plant, they can. It’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted.
That war against coal is proceeding apace, every bit as much as Obama’s drive for higher gas prices. And all for nothing, since even Obama is no longer worried about CO2.
At some point—long before we run out of fossil energy—a cheaper source of energy will be developed and fossil fuels will go by the wayside. The only reason to interdict that natural progression and try to go backwards to wind and solar is a belief that fossil fuels imperil the planet. For that to be true, human effects on climate would have to dominate natural effects, a hypothesis that has already been falsified by 15 years of no warming. The only people who believe it at this point are the paid shills of our lavishly funded climate-alarm industry and their anti-capitalist allies. It has actually become unmentionable, which really does warrant some mention.
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James Sexton says:
March 19, 2012 at 8:14 pm
Lol, not really…. “Advances in thermally conductive in-situ conversion may cause shale-derived oil to be competitive with crude oil at prices below $30 per barrel. …..” Continuing, ….“With the exception of the Alberta-Taciuk Processor, no significant development work in surface retorting has occurred for more than 20 years. During this period, major technical advances have occurred in process monitoring and control, process simulation and modeling, chemicals separation and purification, and systems and methods for reducing adverse environmental impacts.” More…… “We assume operating and maintenance costs for first-of-a-kind plants to be between $17 and $23 (2005 dollars) per barrel (OTA, Volume I, 1980; Albulescu and Mazzella, 1987).10 Given these capital and operating cost estimates, we project that the price of low-sulfur, light crude oil, such as West Texas Intermediate, will need to be at least $70 to $95 per barrel for a first-of-a-kind oil shale operation to be profitable.” What’s the price per barrel today? Oh, yeh $108 ….. but, that was just a first gen estimate…… “For initial production costs between $70 and $95 per barrel, experienced-based
learning could drop those costs to between $35 and $48 per barrel within 12 years of the start of commercial oil shale operations.” ……… but all of that was for off-site retorting.
http://www.rand.org/pubs/monographs/2005/RAND_MG414.pdf
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Sorry but I prefer to look at the objective evidence instead of assumptions, mays, coulds, and other expressions of hope. And I am quite aware in the ‘advancements’ made in unconventional recovery because I have invested in them and talked to the people who made or implemented them. None of what I have seen convinces me that there is much of a profit to be made in extracting shale gas and liquids from the average shale formation.
Note that I have not dismissed the sweet spots in the good areas. For a small producer who limits his operations to the areas that make sense there is a lot of money to be made and if I see such opportunities I would have no problem taking a risk investing in them.
But what worries me the most is that the hype being pushed by the charlatans who tout the promise of shale production is diverting attention and investment from other sources. From where I stand the level of debt in the shale sector reminds me a lot of the subprime crisis in 2006. If there is a slight setback in the real economy for a period of six months or so I can see more than 80% of the shale sector going into bankruptcy within the following year with most of the drillers leading the way.
I am just hoping the last 30 years of purchasing other people’s oil has been a concerted long term effort to use that up first. Kind of like going to someones house and drinking their beer until it is all gone then going home and still having a refrigerator full of your own beer.
Thank you. Please do all you can to get the word out. The MSM like NY Times, Guardian and The Economist are all denying the obvious: The Obama administration has been an unmitigated disaster for the economy – they have attack fossil fuel businesses, subsidized uneconomic green scams and thrown money at their friends the banksters. Cheap energy is good for America. Expensive Green scams are not. And printing money like there is no tomorrow will simply make everything more expensive as America’s fiat currency devalues.
The President: “What he does, not what he says.”
Study: EPA air emissions rules could cause substantial slowdown in drilling
http://api.org/news-and-media/news/newsitems/2012/mar-2012/study-epa-air-emissions-rules-could-cause-slowdown-in-drilling-reduced-govt-revenue.aspx
Carlton Carroll | 202.682.8114 | carrollc@api.org
WASHINGTON, March 15, 2012 – The New Source Performance Standards for oil and natural gas production proposed by the Environmental Protection Agency (EPA) would significantly slowdown drilling, resulting in less oil and natural gas production, lower royalties to the federal government, and lower tax payments to state governments, according to a new study funded by the American Petroleum Institute.
“EPA needs to fix these rules in a way that they’ll reduce emissions but not impede oil and natural gas development, which creates jobs and government revenue and improves our energy security,” said Howard Feldman, API director of scientific and regulatory affairs.
The study – by Advanced Resources International – shows that the regulations as proposed would reduce drilling for natural gas using hydraulic fracturing by up to 52 percent, reduce natural gas production by up to 11 percent, and reduce oil production by up to 37 percent. As a result, the federal government would not collect up to $8.5 billion dollars in royalties and state governments would not collect up to $2.3 billion in severance taxes due to reduced drilling and production.
Feldman asked the EPA to avoid the one-size-fits-all approach for emissions completions; to allow more time to implement the requirements; and to streamline the compliance and recordkeeping requirements.
“Natural gas prices are half what they were three years ago because of the shale boom, and this is benefiting consumers and businesses,” Feldman said. “At a time when the government is desperate for revenue, and America’s fuel prices are high, applying overly burdensome regulations would be bad public policy and could place an even bigger burden on Americans in the form of higher energy costs.
API represents more than 500 oil and natural gas companies, leaders of a technology-driven industry that supplies most of America’s energy, supports 9.2 million U.S. jobs and 7.7 percent of the U.S. economy, delivers more than $86 million a day in revenue to our government, and, since 2000, has invested more than $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.
Careful !!! Going against the Church of Obama {and the KKK} WILL produce retribution. House arrests, politically based assassinations, inquisitions, control of one’s job based on beliefs, suppression of Freedom of Speech, are on the horizon. When scientific analysis is deemed to be Scientific Truth, the slippery slope has been initiated.
Watch for a CRISIS that will cause the unlimited issuing of Execution Orders [all ready happened??] This will be a created crisis, say, Oil/Nuclear Iran, economic embargo, war??
Alec Rawls says:
March 19, 2012 at 8:29 pm
Vangel claims that for tar sands and oil shale “the positive return on the energy invested is very small,” and that “this is why the actual production of oil has not changed much since 2005.”
I do not dispute this. It is most of the rest of what you have written that I have a problem with.
Actually, some of the methods of extraction very promising. Shell’s experiments with in-situ conversion of oil shale into refined and semi-refined products found a quite high rate of energy efficiency:
ICP requires energy input for heating, freeze wall construction, processing, and maintenance but still generates three to four times as much net energy as it consumes. This energy ratio is very comparable to steam injection in heavy oil projects. [Page 4-22 here.]
At this rate of conversion, the present estimates of 800 billions bbls of shale oil would yield 600b bbls of oil. Is this what Vangel means by a “very small” return?
Yes it is. The people at Shell told me that they have dropped the project because it makes no economic sense. Note that I have been following this plan since the early 1980s and have yet to see anything viable even though 30 years have passed.
So why has “the actual production of oil has not changed much since 2005″? That’s obvious. The Democrats haven’t allowed development to proceed. George W opened up oil shale leases and permits but before they could come through the pipeline Obama shut them back down. He even shut down research.
This is not true. We are talking about GLOBAL oil production and a period during which Bush was also in office. The price increases attracted hundreds of billions in new investment in all kinds of conventional and unconventional projects. But all that investment has yet to get global production to go up because at the low energy returns the cost of marginal production is very close to the world price and there isn’t enough capital for many of the projects to be completed on time and on budget.
None of which bears one way or the other on the fact that Obama seems to have abandoned the supposed danger of CO2 as a rationale for his energy policies.
The politics does not change the physics. No matter who is in office shale gas will still be unprofitable. I suggest that you stop looking at the hype and that you look at the actual data. The 10-Ks would be a good place to start because it is hard to make the cash flow statements hide the truth. Listening in on the conference calls may also be instructive if you pay attention. When you do listen try to figure out why such promising activities require so much injection of new capital years after the companies began operations and after they had the benefit of learning from earlier mistakes.
ElmerF says:
March 19, 2012 at 8:29 pm
As a parting shot, Vangel Vesovski says: “The claims of recoverable reserves are not actually supported by the production data.” Wrong, Wrong, Wrong. Want an example, just look at the relatively quick change in natural gas supplies in the last decade or less.
Nonsense. You need to look at the cash flows and profits. Or pay attention to the comments made by the CEOs. They don’t want to drill for gas but have to because if they did not the companies would have to write down the ‘value’ of the leases that they carry on their balance sheet. If they did that they would be bankrupt because there isn’t any capital to handle the change. Take a look at the 10-Ks and ask yourself why companies that have been producing shale gas for half a decade or more are unable to self finance their activities.
And this is why the actual production of oil has not changed much since 2005 even though hundreds of billions in new investment has helped develop new fields.
——
The Alberta government disagrees with you:…
I am talking about GLOBAL production of oil. If hundreds of billions of new investment has not been able to get the total production level to rise materially since 2005 you have to doubt the narrative being spun above.
Why is it that readers on this site have a healthy distrust of models and official pronouncements when it comes to climate but are eager to buy models and official pronouncements when it comes to estimates about energy? Why not take a look at the real world data and examine the SEC filings and the production data?
While I am at it let me also point out that even the total production data is not very clean. Most people seem to think of one barrel of oil as the same as another but that is clearly not the case. To have production stay equal in real terms the decline of each barrel of light sweet would have to be made up by more than one barrel of unconventional oil or heavy sour. The reason should be obvious. We consume the end products, not the barrels of crude. As such we have to ensure that our supply of final products is properly accounted for. When we replace a barrel of light oil with heavy oil we get a lot less gasoline and kerosine and a lot more asphalt and bunker oil. To properly account by value we need more than one barrel of heavy oil for each barrel of light oil.
@Tiger Woods Leg
>>As for Hansen, I will be amazed if he holds his job after the election, the issue for Obama is if he moves Hansen now the left will go insane before the election.<<
Hansen will hold his job for as long as he continues to be USEFUL to whatever political regime is in office after the election. It could just as easily be a Republican regime as a Democrat regime. Control of energy production and distribution, carbon credit trading and carbon taxes potentially serve the needs of quite a few people regardless of their politics.
You are far behind the times in terms of the on-going shift in world energy production. We are seeing a paradigm shift. There is a huge amount of energy production about to break out from politically stable portions of the world, not just the USA.
Consider the geo-political implications if Israel becomes a Saudi class Oil exporter of light sweet crude at $35-$45 a barrel, and a major Natural Gas exporter, in about 7-years.
I am sorry but I thought that we were discussing the real world. There is no major shift of energy production. Hundreds of billions in new investment were not able to cause global crude production to increase materially over the 2005 levels. Spare capacity levels have fallen to historically low levels (days of use). While there SHOULD be plenty of undeveloped conventional gas in the Middle East, Mexico, Indonesia, Venezuela, and a few other locations its development will take time and will not be quick enough to offset the decline of production in conventional oil fields. While tar sands production should be viable (I hope it is given the amount that I have invested in it) shale production is still very uneconomic in most shale formations.
Israel should have some oil and gas but nowhere near what the US, Russia, or Saudi Arabia had. And the last time I looked it was not exactly stable politically.
Spector says:
March 20, 2012 at 1:01 am
The point is that all the extra processing takes energy. That is why we/they have never exploited these resources before…….
Torgeir Hansson says:
March 20, 2012 at 2:26 am
For the Senate, the Republicans had the majority from 1981-86, 1995-2000, 2003-06. Let’s look at the period between 1995 to 2006. During that time oil production fell every year. EVERY year.
===========================================================
Guys, I don’t think you know how things work, or what has already been done. And, you’re not listening. Your talking points have already been addressed. The reason why we haven’t exploited the oil that’s there is because of the same enviro-nutjobs that are blathering so much about CO2. Spector, the sand oil Canada is trying to sell us….. don’t you think they understand EREOI ? Torgeir, in spite of what you believe about how the U.S. political system works, it isn’t that easy to say so and so was president and could have drilled if we wanted to. It doesn’t work that way. Oil companies have been trying to get to ANWR for years. Further as technology increase so to does the ability to extract more oil in an energy positive manner.
For decades the lunatic greens have thwarted U.S. energy production at every turn. I’ve offered these already, but, perhaps you’ve missed it.
Go here for the economic viability of extracting shale oil. http://www.rand.org/pubs/monographs/2005/RAND_MG414.pdf I don’t think you understand that our available oil and gas has already been identified as sufficient. Go here http://www.europeanenergyreview.eu/site/pagina.php?id=3316
The reason why we haven’t exploited the oil that’s there is because of the same enviro-nutjobs that are blathering so much about CO2. Spector, the sand oil Canada is trying to sell us….. don’t you think they understand EREOI ? Torgeir, in spite of what you believe about how the U.S. political system works, it isn’t that easy to say so and so was president and could have drilled if we wanted to. It doesn’t work that way. Oil companies have been trying to get to ANWR for years. Further as technology increase so to does the ability to extract more oil in an energy positive manner. For decades the lunatic greens have thwarted U.S. energy production at every turn. I’ve offered these already, but, perhaps you’ve missed it. Go here for the economic viability of extracting shale oil.
We have looked at the literature. Most of the arguments for shale viability are based on models and assumptions, not the actual production data and accounting. As I said, we heard the shale gas hype for about a decade and have yet to see the producers being able to self finance. If that is not a red flag for you I don’t know how you can pretend to be looking at the issue rationally.
Yes, politicians can get in the way. But if they do not you still will not be able to produce shale gas economically and all but the best shale oil targets will lead to losses. That is the reality as it is, not as you may wish it to be.
Please note that Dr. Chu did NOT recant his previous views. What he said was (to paraphrase) we CURRENTLY are in a difficult economic environment and it would not be helpful to increase gas prices NOW. (He probably also got a lecture about election year politics from the WH.)
A reasonable followup question would have been: “So when the economy recovers, do you think gas prices should then be raised European levels?” I think that would have elicited a little dance.
Crispin still in Johannesburg says: @ur momisugly March 20, 2012 at 12:28 am
….One more thing, the chart of reserves is laughable as a picture of available energy. Africa is barely explored and it seems every time someone trips over a mango tree root, oil pops up. Keep your eye on the Congo basin.
____________________________________
AH! Maybe that is another reason for the land grab going on in Africa right now. I just thought it was food, but now that I think about it, valuable resources under the land are another very good reason especially when there are absolutely no environmental laws to worry about.
The African Land Grab
African Land Grab – “Acres for a bottle of Scotch”
Claims of African ‘land grab’ spark controversy
World Bank policies “enabling” African land grab
US universities in Africa ‘land grab’:Institutions including Harvard and Vanderbilt reportedly use hedge funds to buy land in deals that may force farmers out
African land grab threatens food security: study
vangelv says:
March 20, 2012 at 7:17 am (Edit)
Granted there is no US crude excess at the moment, but it wouldn’t take long to change that. We used to supply the world with oil – remember?
That was a long time ago and will never come back. We have to be realistic about what we see, not depend on models and pronouncements not supported by actual data. By now you should realise that the shale gas story was little more than hype. Producers needed $7-$9 per Mcf gas but were stuck drilling even when prices fell to less than $4 per Mcf. While that was great for consumers of gas it destroyed capital and blew up the balance sheets. We are now expected to forget the shale gas fiasco and believe that shale liquids will somehow be very different. But the truth is found in the 10-K cash flow statements and footnotes, not in narratives from people who missed the shale gas story because they didn’t understand what was going on.
—————————————————————————————————————————
You seem to be an investment type who has taken great care to understand the investment climate in carbohydrates of various types. Your analysis runs counter to the picture painted recently published document hy CitiGroup of Feb 15th this year called “Resurging North American Oil Production and the Death of the Peak Oil Hypothesis” and you make various points based on your intimate relationship with annual reports and CEO statements.
So far so good.
Then you make a statement that it is cheaper for the drilling/extraction companies to operate uneconomic assets at a huge loss rather than lose those same assets. That has me puzzled, particularly in light of the fact that these facilities have caused the price of gas to fall precipitously.
That’s hard to understand at a number of levels but then I am not investing so perhaps I need to sharpen my thinking. There must be some explanation as to why a company would deliberately throw shareholder funds down the hole of a useless asset in an effort to hold onto that same useless asset.
I got nothin’
You seem to be an investment type who has taken great care to understand the investment climate in carbohydrates of various types. Your analysis runs counter to the picture painted recently published document hy CitiGroup of Feb 15th this year called “Resurging North American Oil Production and the Death of the Peak Oil Hypothesis” and you make various points based on your intimate relationship with annual reports and CEO statements. So far so good. Then you make a statement that it is cheaper for the drilling/extraction companies to operate uneconomic assets at a huge loss rather than lose those same assets.
That is not exactly what I said. I pointed out that if the companies wrote down their ‘reserves’ to reflect reality they would go bankrupt. Any investor understands that such a position leaves management a very clear choice. It can choose to admit reality and stop getting paid or keep playing the game for as long as possible. If you were a CEO who could make $30 million over the next 15 years before you retire why not keep playing the game and wind up with $60 million in compensation over the next two years even if that means bankruptcy and more money lost?
That has me puzzled, particularly in light of the fact that these facilities have caused the price of gas to fall precipitously.
That is my point. If you look at the production data and calculate the average likely ultimate recovery that is based on the decline curves you find that it is about half the reported EUR. That means that if you are the CEO you figure out that instead of a $4.50 per Mcf break-even value you need $9 per Mcf just to keep the wheels spinning. Now you could do the honourable thing and write down the reserves. But that leaves your balance sheet in ruins and wipes out all shareholder equity. Everyone gets fired and you stop getting paid.
Why do that when the SEC gives you several ways to salvage as much as you can? For example, the US has no NI 43-101 equivalent. Shale gas producers can claim reserves based on estimates that may not be anywhere close to reality. It allows companies to guess and come up with EURs out of thin air. And best of all when reporting the boe figure it allows the use of the six to one energy content ratio instead of the 25+ to one price ratio. When you put it all together these rules permit shale gas producers to have value to conventional oil and gas companies that have a reserve depletion problem. By paying up for worthless gas reserves these companies can hide the fact that production is reducing their per share reserves. This allows the market to value their shares at a higher multiple than it would otherwise and allows the management to use their overvalued shares to purchase companies with conventional reserves at artificially low prices. The problem is that this game does nothing to add to the actual reserves that we need to keep the game going in the real economy. And in case that I have not been clear, that is my primary concern here.
That’s hard to understand at a number of levels but then I am not investing so perhaps I need to sharpen my thinking. There must be some explanation as to why a company would deliberately throw shareholder funds down the hole of a useless asset in an effort to hold onto that same useless asset. I got nothin’
Careful. All you need to do is to look at the motivation. There is no ‘a company’ when making decisions. It is just the management of that company. And management likes to get paid. (Look to the CDS or CDO markets for a great example of why operations that were doomed to fail kept going for quite some time.) And as I wrote above, the SEC rules give people who understand the game a great leeway to play it for their benefit. If you have a lot of cash flow and are profitable spending $5 billion on worthless shale gas reserves that will increase your market cap by $15 billion and allow you to buy real reserves at a lower price seems like a pretty good strategy for you and your shareholders.
Keep in mind that even after the bubble bursts the conventional producers who bought worthless reserves will benefit because the damage done by the write-down of those reserves will pale in comparison to the benefit that comes with the exploding prices and higher cash flows and profits.
Shale gas is not limited to the USA.
The Fracking revolution has arrived in the UK.
And the same Warmist clique is against it there like in the USA.
http://blogs.telegraph.co.uk/news/jamesdelingpole/100106839/watermelons-v-the-shale-gas-miracle/
Watermelons v the Shale Gas Miracle
By James Delingpole Politics Last updated: September 23rd, 2011
198 Comments Comment on this article
Caroline Lucas by Fenbeagle
God knows we could all do with some good news right now. And as it happens, from Oop North near Blackpool this week, we had good news in spades.
Sure, it was known Britain was sitting on some pretty sizeable shale gas deposits. What hadn’t been announced before though, was just how sizeable.
An area in northwest England may contain 200 trillion cubic feet of shale gas, putting it in the same league as some of the vast shale-gas plays that have transformed the U.S. energy industry.
The figure for the area near Blackpool, released Wednesday by Cuadrilla Resources, a small oil-and-gas company with operations in England’s Bowland Shale, highlights the U.K.’s emerging position as a new frontier for unconventional gas exploration.
I said “good news” but that seriously understates the case. It may be the best thing to happen to the British economy since the discovery of North Sea oil and gas; possibly since the Industrial Revolution. Those who’ve been following the story closely such as Nick Grealy at the
No Hot Air blog understand this perfectly well:
[*]No doubt about it, the numbers are not so much game changing as jaw-dropping. These figures surprised everyone, but they didn’t surprise readers here as much. The experience world wide of shale shows that initial “expert opinion” expectations of potential and actual production have been consistently pessimistic at best and generally down right wrong.
And even more amazingly, this may be just the tip of the iceberg. I hear reports that the shale gas deposits in the North East of England may be larger still; and that those under the North Sea may dwarf even these. We are talking, in other words, of cheap energy sufficiently abundant to supply our needs for at least the next century, possibly much longer. This means in turn that our industry will become more competitive, the cost of heating and lighting our homes will fall dramatically, and that our economy suddenly now has an opportunity to grow even as those in much of the Western world are collapsing.
So why aren’t we out on the streets, celebrating, drinking and rutting like it was VE Day all over again?
In a word: Watermelons.
You may have seen the episode of the Daily Politics where I accused Green MP Caroline Lucas of being a “watermelon” and she admitted she was proud to be one – “green on the outside, red on the inside.” Well we should be grateful for her honesty, I suppose. But is this really what we need right now as our economy stands on the brink of the Greater Depression: outspoken, publicity-hungry politicians who consider it their bounden and sacred duty to put whatever obstacles they can in the way of economic growth – all in the name of combating that increasingly discredited chimaera, “climate change”?
Lucas clearly thinks so, as she shows in her latest article for Komment Macht Frei (Grüne Abteilung). Drilling, she insists, must be postponed indefinitely, because someone somewhere might derive some economic benefit from it – and that would be just plain wrong.
With pound signs in his eyes, Cuadrilla’s chief executive says he was “excited” by the find. I am not. And neither are the many hundreds of environmental campaigners and local people who are fighting the government’s apparent determination to allow the exploitation of every last bit of fossil fuel from below our feet.
I think she might be pushing a bit with that “many hundreds”. “Dozens”, possibly, though it’s interesting to note that even at the Guardian the majority of commenters below her article appear to be either cautiously in favour of further exploration or downright cynical about Lucas’s doom-cult ideology.
My favourite is the one that says:
Gaia, in all her wisdom, has seen fit to give us the gas finds at Blackpool.
Much as I respect the views of Ms Lucas, I must accept Gaia’s sacred plan.
Lucas is not, of course, the only Watermelon standing in the way of economic recovery. The biggest and most dangerous by far is the impossible Chris Huhne:
The UK’s “dash for gas” will be halted by the government because if unchecked it would break legally binding targets for carbon dioxide emissions, Chris Huhne, energy and climate change secretary, said on Monday evening.
Well he may think that now. But I do wonder whether his Coalition colleagues will feel quite so enamoured of this principled stance to progress, economic growth, cheap energy, and inflation-reduction as the depression deepens, the weather gets colder, the landscape is ruined by more and more wind farms, and energy bills continue their exponential rise.
One thing’s for certain. No longer is there any excuse for anyone to write sympathetic pieces about George Osborne arguing that there is no magic bullet available in his armoury to save the British economy. Against all the odds, that magic bullet has just been handed to him on a plate. All he has to do is call a halt to Britain’s economically suicidal drive for “renewable energy”, cancel immediately Britain’s disastrous wind farm building programme, and give the green light to shale gas drilling. It won’t even cost the taxpayer any money. The cheap energy is there. The jobs are there. If he doesn’t grab this miraculous opportunity with both hands, history will never forgive him.
Oh incidentally it has come to my shocked attention that I am speaking at the Soho Literary Festival tomorrow on this very subject: Watermelons. Even though I haven’t prepared anything I’m sure I’ll be very good and would welcome your support, if any of you happen to be in central London and at a loose end around 5.45pm on Saturday evening. Maybe see you there?
Torgeir Hansson says:
“European governments tax oil to regulate behavior, just like we tax cigarettes to regulate behavior. Same thing.”
————————————–
Smokey says: @ur momisugly March 20, 2012 at 1:17 am
Yes, same thing, Mr Hansson: for MONEY. But regulating behavior has nothing to do with it; that’s just the cover story. Political greed is the motive.
Governments don’t give a damn about people, except insofar as people are taxpayers. Oil is taxed for MONEY, and cigarettes are taxed for MONEY….
—————————————–
Very true that was what the Federal Reserve act of 1913 and the 16th Amendment to the U.S. Constitution—the federal income tax amendment— also ratified in 1913 was all about. MONEY, coming up with a “Legal” method to steal wealth from American citizens. Also the income tax was a method of making the American people accept bank script. What makes the universal acceptance stick is that government accepts its own money to expunge liabilities to it. In plain English, fiat money has value because it is the only money you can use to pay taxes.
Politics always boils down to power and wealth. Very Very few politicians are honest and those that are end up driven from office, ridiculed or as a last resort shot or poisoned.
Power and wealth also drives the owners of the printing presses who control what a journalist may or may not print. We at WUWT have seen ample evidence of that.
vangelv,
You really need to check out the chart at the link:
http://www.chron.com/business/energy/article/N-American-oil-output-could-top-40-year-old-peak-2193837.php
The title in the text says it all:
The Oil Boom is Here
North America appears headed for an oil renaissance, with crude production expected to hit an all-time high by 2016, given the current pace of drilling in the U.S. and Canada, according to a study released by an energy research firm this week.
U.S. oil production in areas including West Texas’ Permian Basin, South Texas’ Eagle Ford shale, and North Dakota’s Bakken shale will record a rise of a little over 2 million barrels per day from 2010 to 2016, according to data compiled by Bentek Energy, a Colorado firm that tracks energy infrastructure and production projects.
Canadian crude production is expected to grow by 971,000 barrels per day during the same period, with much of the oil headed for the U.S.
Combined, the U.S. and Canadian oil output will top 11.5 million barrels per day, which is even more than their combined peak in 1972.
Goldman Sachs has estimated the U.S. could move from being the No. 3 oil producer behind Saudi Arabia and Russia to the No. 1 spot by 2017.
It’s a reversal of the steady downward production trend that started after 1971, when U.S. oil production peaked around 9.5 million barrels per day.
And the pace of production now has caught quite a few people by surprise, says Joseph Pratt, a historian at the University of Houston who has written extensively about the oil and gas industry.
“We have this momentum out there to set about doing what we said we wanted to do back in the 1970s: reduce the flow of imports from volatile regions,” Pratt said. “It was like the Holy Grail back then. And suddenly it seems possible.”
The surge is fueled by the same drilling and production techniques that opened up natural gas production in recent years – the combination of horizontal drilling and hydraulic fracturing – as well as the success of deep-water Gulf of Mexico projects and the ramp-up of Canadian oil sands projects.
The natural gas glut has kept its price low, prompting producers to focus more effort on oil and natural gas liquids, which fetch better prices.
Earlier this year, the number of land and offshore oil rigs working in the U.S. exceeded the number of natural gas rigs for the first time in 18 years, according to data compiled by IHS-CERA.
And Texas oil and gas industry employment returned to its pre-recession highs in June, according to the Texas Petroleum Index, topping the last boom that peaked in October 2008, thanks largely to oil drilling.
The oil boom has plenty of economic upside potential. IHS-CERA predicts oil production could directly and indirectly generate another 1.3 million U.S. jobs over the next decade and raise an additional $97 billion in federal taxes and royalty payments.
But plenty of people are concerned about the other costs that might come with more oil production.
The proposed Keystone XL pipeline, a major project to bring Canadian oil sands to U.S. Gulf Coast refineries, has become a rallying point for environmentalists, with hundreds arrested during a sit-in in front of the White House several weeks ago.
And the Environmental Protection Agency is moving forward with new rules aimed at tighter controls on emissions from oil and gas drilling, production and transportation.
The industry contends the proposed rules put a costly burden on a job-creating industry at a time when the country needs jobs.
But Daniel Weiss, a senior fellow at the Center for American Progress, a liberal-leaning think tank, said the industry is far from being hobbled financially. He noted that the five oil majors – Exxon Mobil, Shell, BP, Chevron and ConocoPhillips – have reported $67 billion in 2011 profits and are sitting on $60 billion in cash. Yet they have cut more jobs than they’ve created in recent years and spent billions buying back their own stock, Weiss said.
Pratt predicted that tensions among the resurgent oil industry, community groups and environmental groups – heightened by last year’s Deepwater Horizon accident and oil spill – will continue.
The conflict was manifest in public hearings Monday in Port Arthur, where federal officials took comments on the Keystone XL pipeline project, Pratt said.
“The first 25 speakers were union workers and locals saying they needed the jobs the pipeline would bring. Then the bus from Houston pulled up, and the environmental groups spoke about how it’s the filthiest oil in the world,” Pratt said.
“All of them had passion about their point of view, but there are questions of fairness and justice and economics that we just don’t know how to talk about.”
tom.fowler@chron.com
twitter.com/houstonfowler
vangelv, You really need to check out the chart at the link: http://www.chron.com/business/energy/article/N-American-oil-output-could-top-40-year-old-peak-2193837.php The title in the text says it all: The Oil Boom is Here North America APPEARS headed for an oil renaissance, with crude production expected to hit an all-time high by 2016, given the current pace of drilling in the U.S. and Canada, according to a study released by an energy research firm this week.
Sorry but the same was said of shale gas. But when production of shale gas went up the producers had to pile up debt. They wound up destroying capital and the last time I checked, capital destruction was not a way to prosperity for investors, consumers, or the nation.
Now you could argue that shale oil will be much better than shale gas but I just don’t buy it. As I said above, if you have wells in the sweet spots of the best formations you could make a lot of money. But the discussion isn’t about unique locations but about the total output from all shale formations. If we look at the production data we find that the costs are still too high to ensure a profit for the average producer.
You also need to keep in mind that if we used horizontal wells in conventional fields before they peaked we would be looking at production rates that were above 10,000 bpd and depletion rates that were quite manageable, not IRs of 1,200 bpd that fell to 80 bpd within a year along a hyperbolic curve.
U.S. oil production in areas including West Texas’ Permian Basin, South Texas’ Eagle Ford shale, and North Dakota’s Bakken shale will record a rise of a little over 2 million barrels per day from 2010 to 2016, according to data compiled by Bentek Energy, a Colorado firm that tracks energy infrastructure and production projects.
That may be true but I don’t see how that happens with the huge depletion rate. Note that the average Bakken well is producing less than 100 bpd even though most of the old wells are now shut-in and most of the newer wells have been drilled in the past 3 years in the most promising areas. That makes me still a skeptic and I will remain one until I see positive cash flows that allow the shale players to self finance.
Canadian crude production is expected to grow by 971,000 barrels per day during the same period, with much of the oil headed for the U.S. Combined, the U.S. and Canadian oil output will top 11.5 million barrels per day, which is even more than their combined peak in 1972.
Most of the actual Canadian production will come from the tar sands. I am not disputing the viability of those projects although if you have been paying attention to all of the unscheduled shut-downs you will find that things are not going as smoothly as they were expected.
Goldman Sachs has estimated the U.S. could move from being the No. 3 oil producer behind Saudi Arabia and Russia to the No. 1 spot by 2017.
It will never happen when your average well costs $5-$7 million to drill and is producing less than 100 bpd within a year or two. We live in the real world and down here we can’t ignore depletion or the lack of capital.
And the last time I looked GS was telling people how great MBSs were even as it was making bets against them. It would not surprise me to see GS as the big winner after the shale gas and oil bubble bursts because it made bets against the money losing producers that it was promoting to speculators.
It’s a reversal of the steady downward production trend that started after 1971, when U.S. oil production peaked around 9.5 million barrels per day.
As I wrote above, chewing through capital is not a way to prosperity for investors. If the full cost of production is greater than the sale price the companies will continue to show funding gaps and will keep adding debt.
And the pace of production now has caught quite a few people by surprise, says Joseph Pratt, a historian at the University of Houston who has written extensively about the oil and gas industry. “We have this momentum out there to set about doing what we said we wanted to do back in the 1970s: reduce the flow of imports from volatile regions,” Pratt said. “It was like the Holy Grail back then. And suddenly it seems possible.” The surge is fueled by the same drilling and production techniques that opened up natural gas production in recent years – the combination of horizontal drilling and hydraulic fracturing – as well as the success of deep-water Gulf of Mexico projects and the ramp-up of Canadian oil sands projects.
LOL. Haven’t you noticed that the only reason that the US is less dependent on foreign oil is because of a collapse in demand in the real economy? Or that conventional production in Alaska and California is collapsing?
The natural gas glut has kept its price low, prompting producers to focus more effort on oil and natural gas liquids, which fetch better prices.
Why is this good news for shale gas producers that need $8 per Mcf to break even?
Earlier this year, the number of land and offshore oil rigs working in the U.S. exceeded the number of natural gas rigs for the first time in 18 years, according to data compiled by IHS-CERA. And Texas oil and gas industry employment returned to its pre-recession highs in June, according to the Texas Petroleum Index, topping the last boom that peaked in October 2008, thanks largely to oil drilling.
The only reason that the natural gas rigs have fallen is because the skeptics who questioned the shale gas hype were right and those that were doing the hyping were wrong. Why should we turn away from the skeptics who were right and listen to the same group of con men who were wrong before?
The oil boom has plenty of economic upside potential. IHS-CERA predicts oil production could directly and indirectly generate another 1.3 million U.S. jobs over the next decade and raise an additional $97 billion in federal taxes and royalty payments.
About five years ago CERA, IEA and EIA were arguing for a depletion rate of around 4% while the skeptics were pointing to data that implied that the true depletion rate was at least 2-3% higher. After the IEA looked more carefully it found that CERA was wrong and the skeptics were right. CERA was hyping shale gas but that turned out to be a big bust for investors looking to finance activities that would generate reasonable economic profits.
But plenty of people are concerned about the other costs that might come with more oil production. The proposed Keystone XL pipeline, a major project to bring Canadian oil sands to U.S. Gulf Coast refineries, has become a rallying point for environmentalists, with hundreds arrested during a sit-in in front of the White House several weeks ago. And the Environmental Protection Agency is moving forward with new rules aimed at tighter controls on emissions from oil and gas drilling, production and transportation. The industry contends the proposed rules put a costly burden on a job-creating industry at a time when the country needs jobs. But Daniel Weiss, a senior fellow at the Center for American Progress, a liberal-leaning think tank, said the industry is far from being hobbled financially. He noted that the five oil majors – Exxon Mobil, Shell, BP, Chevron and ConocoPhillips – have reported $67 billion in 2011 profits and are sitting on $60 billion in cash. Yet they have cut more jobs than they’ve created in recent years and spent billions buying back their own stock, Weiss said.
Note that those companies made their money from conventional production, not shale or tar sands?
Pratt predicted that tensions among the resurgent oil industry, community groups and environmental groups – heightened by last year’s Deepwater Horizon accident and oil spill – will continue. The conflict was manifest in public hearings Monday in Port Arthur, where federal officials took comments on the Keystone XL pipeline project, Pratt said. “The first 25 speakers were union workers and locals saying they needed the jobs the pipeline would bring. Then the bus from Houston pulled up, and the environmental groups spoke about how it’s the filthiest oil in the world,” Pratt said. “All of them had passion about their point of view, but there are questions of fairness and justice and economics that we just don’t know how to talk about.” tom.fowler@chron.com twitter.com/houstonfowler
The environmental groups are a pain in the butt but even if they went away the production of shale gas or liquids would not be profitable. Of course, if they did go away the Mackenzie River deposits could be brought to market and help to lower prices a little. (If that ever happens I would look to see if Franco Nevada still holds the royalties.)
Bottom line is that the quoting of hype pieces is not a valid argument. As I wrote before, if you want to see what is going on take a look at the 10-K filings with the SEC and examine the cash flows and debt levels.
Algae! That’s the ticket!
The USA is awash in inexpensive “fossil” fuels that can be burned cleanly and profitably. Glad that was pointed out in the article.
MP Biomass is one company with a system for coal that does make it clean and is in production and being used.
If that still doesn’t convince people to use it then I’ll know they are serious about “change” when they put up half a billion for LFTR development. That is the same amount they lost on Solyndra.
Vangelv,
Israel as a gas producer is a 2013 inevitability.
Israel as a oil producer is 4-6 years down the road.
Israel as an expeorter of Natural Gas is going to depend on how fast Israeli infrastructure switches from oil to domestic natural gas for both balance of trade and security reasons. Israeli electrical production will be foreign oil free by 2016 at the outside.
Many people really don’t want to look at the foreign policy implications of a Jewish oil state that is INDEPENDENT OF US FOREIGN AIDE and sells both natural gas & light sweet crude to Europe in lieu of Russia and the Arab oil states respectively.
See:
http://www.jpost.com/Features/FrontLines/Article.aspx?id=211676
How Israel could revolutionize the global energy sector
By DORE GOLD
03/11/2011
New data suggests Israel may not only have much larger gas resources than believed, but also the 3rd largest deposit of oil shale in the world.
Libyan oil accounts for less than 2 percent of world oil production, yet the revolt against Muammar Gaddafi has managed to shoot up the price of oil to more than $100 per barrel in the last month.
No one knows how long the internal instability in the Middle East will last, but according to the US Department of Energy, its share of the world’s total oil supply is expected to actually increase in the years ahead.
Simply, the world is using up the reserves of non- Middle East oil more quickly. Moreover, of the trillion barrels of proven reserves still left, according to the CIA roughly 800 billion barrels are to be found in the Middle East and North Africa, especially in Saudi Arabia, Iran and Iraq.
The implications for Israel of the West’s growing dependence on Middle Eastern oil are troubling, for obvious reasons. Yet there are two new developments in our energy sector that could well offset these trends and eventually alter our standing in the world, especially with respect to Europe.
First, the gas discoveries in the Eastern Mediterranean, which began to produce commercial quantities of natural gas in 2004, are generally well-known. The Tamar field, which should begin production in 2013, is expected to supply all of Israel’s domestic requirements for at least 20 years. The Economist suggested in November 2010 that the recently discovered Leviathan field, which has twice the gas of Tamar, could be completely devoted to exports.
All the undersea gas fields together have about 25 trillion cubic feet of gas, but the potential for further discoveries is considerably greater, given that the US Geological Survey estimates that there are 122 trillion cubic feet of gas in the whole Levant Basin, most of which is within Israel’s jurisdiction.
After the Leviathan discovery these numbers could go up further. Perhaps for that reason, Greece has been talking to Israel about creating a transportation hub for distributing gas throughout Europe from the Eastern Mediterranean that will come from undersea pipelines.
What is less well-known, but even more dramatic, is the work being done on this country’s oil shale. The British-based World Energy Council reported in November 2010 that Israel had oil shale from which it is possible to extract the equivalent of 4 billion barrels of oil. Yet these numbers are currently undergoing a major revision internationally.
A new assessment was released late last year by Dr. Yuval Bartov, chief geologist for Israel Energy Initiatives, at the yearly symposium of the prestigious Colorado School of Mines. He presented data that our oil shale reserves are actually the equivalent of 250 billion barrels (that compares with 260 billion barrels in the proven reserves of Saudi Arabia).
Independent oil industry analysts have been carefully looking at the shale, and have not refuted these findings. As a consequence of these new estimates, we may emerge as the third largest deposit of oil shale, after the US and China.
OIL SHALE mining used to be a dirty business that used up tremendous amounts of water and energy.
Yet new technologies, being developed for Israeli shale, seek to separate the oil from the shale rock 300 meters underground; these techniques actually produce water, rather than use it up.
The technology will be tested in a pilot project followed by a demonstration stage. It will be critical to demonstrate that the underground separation of oil from shale is environmentally sound before going to full-scale production. The present goal is to produce commercial quantities of shale oil by the end of the decade.
This particular project has global significance.
For if Israel develops a unique method for separating oil from shale deep underground, that has none of the negative ecological side-effects of earlier oil shale efforts, that technology can be made available to the whole world, changing the entire global oil market. The effect of the spread of this technology would be to shift the center of gravity of world oil away from Iran, Saudi Arabia and the Persian Gulf to more stable states that have no history of backing terrorism or radical Islamic causes. (In the Arab world, Jordan and Morocco have the most significant oil shale deposits.) WHEN WILL the West begin to treat Israel as a powerful energy giant and not as a weak client state that must be pressured? In the case of the Saudis, when the US realized the true extent of their oil reserves, after America’s reserves in Texas and Oklahoma were depleted by World War II, it sought to upgrade its military and diplomatic ties with the Saudi kingdom even before its production capacity was fully exploited. The US-Saudi connection grew as massive infrastructure investments for moving Saudi oil to Western markets were made, like the Trans-Arabian Pipeline (TAPLINE).
More capital was needed for the Saudi oil project. US companies, like Standard Oil of New Jersey (today, Exxon) and Standard Oil of New York (Mobil), joined Texaco and Standard Oil of California, the original holder of the Saudi oil concession, and created the ARAMCO consortium in the late 1940s. ARAMCO executives came to be regular guests at the State Department, where they could present the Saudi perspective.
In time, Saudi Arabia’s status grew as its future position in world oil came to be appreciated.
In the case of Israel, updated international reports verifying the true dimensions of both its undersea gas and oil shale should be forthcoming in the next year.
Many more international companies are likely to take an interest in its energy sector at that time. Moreover, the full exploitation of these energy resources will require massive infrastructure investment for pipelines, liquified natural gas plants and new oil exporting outlets in the Mediterranean and Red Sea.
Israel is uniquely situated by its geographical position and is able to direct its energy exports to either Europe or China and India. It may not have the capital to build this export capacity, but the involvement of foreign investors in these projects will give European and American banks new interests in developments.
Western policies will not change overnight. Nonetheless, Israel needs to tell the full story of its newly emerging role in the world energy sector if it wants to begin to alter the way it has been handled internationally.
The writer is president of the Jerusalem Center for Public Affairs and served as ambassador to the UN.
———-
This link explains their technology in detail:
http://en.m.wikipedia.org/wiki/Shale_oil_extraction explains it detail.
Vangelv, Israel as a gas producer is a 2013 inevitability. Israel as a oil producer is 4-6 years down the road. Israel as an expeorter of Natural Gas is going to depend on how fast Israeli infrastructure switches from oil to domestic natural gas for both balance of trade and security reasons. Israeli electrical production will be foreign oil free by 2016 at the outside…
The conventional gas reserves are still very tiny. While they will help the country will still need to depend on imports a decade or two down the road.
The rest of the story depends on shale production being economic and all of the evidence so far seems to point the other way. You can’t solve the energy problem by adding more and more debt and producing energy by investing the same amount or more into the production process.
Once again, citing hype pieces is not a valid argument. You really should look at the actual production data and check reality by looking at the financing and cash flow reporting.
I forgot to add this on the subject of taxes:
And this
No flies on those guys, they were not about to be shafted like the rank and file workers. The above is why Obama’s “Tax the rich” rhetoric is so very laughable. The very rich stuck their money in tax shelters a LONG LONG time ago and they are going to make sure it remains untaxable. That is why they pay bribes.
Torgeir Hansson says:We have already covered the fact that new domestic oil production is not going to alleviate “ruinous energy prices,” especially when they are at about half of what Europeans pay.
Question, what is the cost of gas in Europe and USA after you subtract taxes?
Maybe not everyone will be surprised to know, gas is cheaper in Europe, but it’s the taxes that are killer!
Torgeir Hansson says:
March 20, 2012 at 1:33 am
“Dear Smokey:
Governments need money to function. You may not like it, but governments are the agents of the people. Both driving and smoking cost money to society, as there are cheaper alternatives.”
___________________________
What a pony and cart? I live on a dirt road in the back end of nowhere the nearest civilization is 15 miles ~ a 30 mile round trip so that is about a two day journey for a pony and cart unless the animal is very fit. (This was part of a discussion on another board)
I have done 20 -30 mile carriage drives and it leaves me and my animals half dead the next day so it is a subject I am familiar with BTW. It also take ALL day. So how the heck am I to drive to work if it takes me all day HMMMmmmm?
Oh that is correct “Sustainable Communities” will stack humanity up on top of each other like logs and leave 1/2 of the country as a “Nature Preserve” So that must be what you are talking about when you say ” cheaper alternatives”
This no doubt is your Dream of America’s future.
Normal human use is allowed in the little green areas only: http://www.mtmultipleuse.org/wilderness/wildlands_map.htm
The bill to turn that map into reality was defeated at the 11th hour but the eco-nuts have not given up they never do and that is why we are in the mess we are today.
Alex the skeptic says:
March 20, 2012 at 3:35 am
I just wish I can fake US citizenship and come and vote come November.
________________________________
Not a problem.
You head for a state with lenient voter ID laws. http://www.ncsl.org/legislatures-elections/elections/voter-id-state-requirements.aspx
Then all you need is an easily obtainable US drivers license not US citizenship. All you have to do is ask the first illegal immigrant you find where you can get one /snark
The two things that can kill off the AGW scare are running out of money and running out of political will, with this will coming from their constituencies concern , the only countries where the latter does not matter, such as China , have not bought into the ‘scare ‘ in the first place .Which is why the fight is far more often done on the PR front than the science one when it come to AGW proponents.
Its just reality that most people nether know the science nor frankly care about it , most people don’t put the effort into looking into the background . As fine a web site as this is , its still a echo chamber to those who self selected put the effort in.
And that goes for both sides, but ‘the people ‘do care about their basic, such as has fuel cost, getting hit, they do notice the shrill alarmism, and best of all they do grow tired of constant messages of doom.