WASHINGTON, D.C. — Oil is the world’s most critical and
scarce energy resource. Only oil is easily divisible, transportable,
and vital for most transportation. Japan’s shuttered nuclear
plants mean new demand for more millions of barrels of fuel oil to
generate electricity for its cities and factories. Libyan oil production
will now be shut down for months or years. There is almost
no spare capacity in world production.
Here’s a tough fact to face: World prosperity is critically dependent upon
the stability of a single decrepit, corrupt dictatorship in Saudi Arabia. While
the regime there has been quick to put down calls for expanded rights, the
protests for political, civil, and economic rights continue. Chaos in Saudi Arabia, which
produces about 12
percent of the world’s oil, would cause such
shortages of oil in Asia and Europe that the whole world could be thrust
into major economic crisis. Closed factories in China, Japan, and Korea
would crash commodity prices and world trade. Banks would again be
tottering and calling in loans. Russia with its supplies would have
a stranglehold over a dependent Europe. And Americans might be lined
up for hours at gasoline stations, maybe with ration cards.
Saudi Arabia’s status quo hangs by a thread on the lives of an 86-year-old
king and an 85-year-old prince. They are the last surviving direct heirs of old
King Ibn Saud. After them will come jockeying and infighting among thousands
of princes descended from Saud’s many wives and concubines from different
tribes, none with a clear mandate to become the new absolute monarch. The
Economist explains the complicated maze of palace intrigue and notes that there are no
rules for succession except for the ruling family to chose the “best qualified” prince,
which in Arabic can mean “most capable” or “most virtuous.” There’s
no way to know exactly how succession will play out, but even the present government
is more vulnerable than it appears. The sick king’s hurried promise last
week (finally) to allow first time municipal elections and his offer to create
60,000 new public sector “jobs” shows weakness, not a position
Yet for America, there is a way to greatly minimize, if not fully
end, our dependence upon shaky Middle East dictatorships, including
Saudi Arabia. With dependable Canadian production and using our own
shut-in resources, we can vastly reduce our need for imports. This
should be a vital, immediate national interest. America imports some
10 million barrels per day (bpd). Of this Canada
sends us 2 million bpd (the amount is constantly increasing) and Mexico sends about 1
million bpd. Nigeria, Angola, and Venezuela send another 1.5 million
bpd, all of which is pretty reliable. That comes to around 4.5 million
bpd, which means that there’s
5.5 million bpd coming from less-reliable sources, including the Middle
If it were able to produce more freely, American oil production could
ramp up significantly, reducing reliance on Saudi Arabian, Libyan,
and other similar sources. Instead our oil industry is stymied, delayed,
and denigrated by a president and Congress that continues to daydream
about tiny and very expensive amounts of energy from solar power, windmills,
and ethanol. Even with vast subsidies (Obama’s proposed budget
tosses $80 billion toward alternative energy), these sources produce a
tiny fraction of American energy usage: One percent for windmills,
and 1 tenth of 1 percent for solar. Most renewable energy comes from
aging hydroelectric dams. Electric cars are expected to sell a few
tens of thousands this year, compared to over 250 million registered
gas-dependent cars on the road. These figures show some of the absurdity
of most alternative energy hype.
In the Gulf of Mexico, deep-water drilling and exploration has been
shut down for almost a year while permitting shallow wells in known
fields is agonizingly slow. On land, Interior Secretary Ken Salazar
oil drilling permits issued under the Bush administration,
retroactively canceled already approved coal mining permits, and has
thrown many new investments under a cloud of risk as companies fear
more retroactive permit revocations. Environmental extremists file
crippling, unending lawsuits precisely to cause costly, interminable
delays and frighten off investors. As Alaska Gov. Sean Parnell’s recent speech
to the National Press Club makes clear, environmentalist proposals to further limit oil drilling
have been picked up by Obama’s appointees.
Here are six things the federal government could do to increase domestic oil
1) The Alaska pipeline now runs two-thirds empty. It alone could carry 1.5 million
barrels more per day if Washington was to allow
drilling at ANWR and in the shallow,
100-foot-deep waters close in offshore from fixed platforms or manmade islands.
Instead, for example, Shell Oil has been sandbagged with purposeful delays, including a
five year wait for a clean air permit over the Arctic Ocean.
2) The Gulf of Mexico could be producing another half million barrels per day
within five years if permitting were expedited by the Department of the Interior.
The catastrophic spill last April came after thousands
of successful and safe deep water wells have been drilled. It was a freak accident compounded by serious
human errors committed by BP, the (foreign) drilling company with one of the
highest large company accident records in the industry. Various new
procedures have made deep drilling even safer.
3) A crash program to provide abundant LNG (liquid natural gas—compressed
to reduce its volume by
a factor of 600) pumps at major interstate
truck stops would encourage conversions from using diesel oil, which
is imported. A thousand cubic feet of (compressed) gas equals the
energy equivalent of seven gallons of diesel oil costing some four
times as much. Merchandise transport accounts
for 18 percent of oil usage. Already municipal trucks and buses are converting to natural
gas; taxis could too. The price spread between diesel and compressed
gas is very unlikely to change for many years, so there is plenty
of incentive for truckers to buy their new trucks with LNG engines,
but they need to be assured of fueling stations. For peanuts compared
to all the subsidies for ethanol and solar cells, the government
could help pay for these costs.
4) Modern oil production allows drilling horizontally miles and miles out in
all directions from a single platform. Formerly wells could only drill straight
down with a single pipe. Just a few platforms can now drill and produce from
a wide area. They are not the eyesore of years ago. Allowing coastal states some
of the royalties from offshore drilling would do wonders for curtailing opposition.
Reasonable permissions for drilling off our Atlantic
and Pacific coasts could
produce more billions of barrels of oil. New technology is constantly triggering
higher production, for example, with previously unusable oil shale (such as the
Bakken fields in North Dakota) which actually caused an increase in yearly U.S.
production. The prolific oil off the coast of Santa Barbara, California, scene
of a spill 40 years ago, is in waters only 300 feet deep with wells 3,000 feet
deep. Oil companies now routinely drill in 5,000 feet of water down to over 20,000
feet. Within a year California could be producing from fixed platforms which
15 year record of almost no serious spills out of 11,000 wells drilled.
5) Allow building of the proposed Keystone
XL Pipeline from Canada’s
massive tar sands, which would bring in another half million barrels
per day as production ramps up. However, environmental groups are
the project tooth and nail, arguing that it would contribute
to global warming, because the sands need heating to separate out
the oil. As the debate unfolds, China is already offering to buy
the oil instead.
6) Congress needs to correct the Environmental Protection Agency’s
rules to force it to make decisions within 30 days and to use rational
measurements instead of a
few parts per million as grounds for declaring
any product hazardous and illegal. Special fast-track courts for
environmental issues, as suggested by Tea Party leader Rep. Michele
Bachman (R-Minn.), could be established to expedite environmental
The above projects could cut imports roughly in half from their current
10 million barrels per day and end
dependence upon Middle Eastern oil.
They involve very little cost for taxpayers, unlike alternative-energy
schemes, and would produce hundreds of thousands of new jobs and tens
of billions of new tax revenue for Washington. Admittedly, we may have
to wait until Americans are waiting in gasoline lines to consummate
any or all of the above, but these measures are the way to save ourselves
and possibly the world economy from an oil shortage catastrophe. Additionally,
it would undercut the rationale for the seemingly unending wars we’re
now waging while trying to secure Middle East oil.
Jon Basil Utley archives
This article appeared originally at Reason.com on
March 30, 2011.
© 2011 by Jon Basil Utley and reason
.com. All rights reserved.