The ‘Crude’ Realities of Oil Supply

In a recent email announcing the introduction of The Domestic Drilling Act (H.R.6593) and The Consumer Energy Supply Act (H.R. 6578), Congressman Nick Lampson (D-TX) stated, “As we find ourselves competing with rapidly growing nations such as China and India for energy, it is clear that we must increase supplies to reign in skyrocketing prices.”

I must disagree with Congressman Lampson. It is not only NOT clear, it is IMAGINARY.

According to the Energy Information Administration, the US produced 5,064,000 barrels of oil per day in 2007 and world production was 82,532,000 barrels/day in 2005. This means the world controls the supply of the world’s oil. It also means increasing drilling locally will not “reign in the skyrocketing prices” of gasoline.

Here’s a quote on the matter and some simple math to show why Lampson’s proposal won’t work.

In an article about T. Boone Pickens’ wind and natural gas plan and Pickens’ support of more drilling, there is this statement at the end of the article:

“When we drill more, OPEC drills less,” Gal Luft, executive director of the Institute for the Analysis of Global Security.

To consider what Mr. Luft says, lets take Lampson’s numbers for what the US might recover by expanding US drilling, about 96.4 billion barrels including ANWR, and see how that might affect world supplies and fuel costs.

These US reserves represent a little over 1,150 days worth of oil for the world, if they could be extracted at the EIA 2005 daily rate for the world. But this is very unlikely since the US would have to increase the number of producing wells by over 16 (82/5) times based on our 2007 EIA rate of production.

In other words, the number of US rigs would have to grow from July 25, 2008’s level of 1,957 to over 31,000 to equal the worlds 2005 output. Not very likely.

Even if we could double the number of rigs, this would only increase the US contribution to the world’s oil supplies by 6 percent (5/82). So, the impact on world supplies of this proposed expanded drilling will, assuming the rest of the world cooperates by maintaining there production, be hardly noticeable.

However, one thing will happen if Lampson’s bills become law. Corporate oil revenues will shift from the rest of the world to US oil producers. Only the US oil companies will gain from this increased drilling – NOT consumers.

As for his “twist” of using royalties to fund alternative sources of energy. That won’t make it into the final law.

Mr. Lampson’s proposals will not make a difference to any consumer as long as the rest of the world controls ninety-four (94) percent of the world’s oil supplies.

Wake up America and smell the ‘crude’ realities of world oil supplies. We may be the policeman of the world, but we’re just the junk yard dog of oil production.