The Romney campaign put out a circular titled: “The Romney
Plan For A Stronger Middle Class: ENERGY
INDEPENDENCE.” It is basically a compilation of quotes that were made
through the years on the subject of energy. It is not an exhaustive compilation
but one that brings together the quotes that tend to support the current point
of view of Mitt Romney. As to the quotes that were made through the years but
do not support the Romney point of view, well these ones never made it into the
circular.
Luckily, however, the truth was not lost for ever because it
can still be extracted from the circular itself despite the fact that the
quotes were cherry picked to tell a fake story. One of the goals that the
circular tries to accomplish is refute a thought expressed by President Obama
on the subject of energy. In fact, it happened that Romney criticized Obama for
saying the United States
has only 2 percent of the world oil reserves yet consumes 20 percent of it. In
fact, something like this was said in the Nineteen Seventies. To be precise, it
was fashionable to say that the United
States had 5 percent of the world population
yet consumed 25 percent of the world resources. The reason for saying it at the
time was to promote the culture of conservation, which undoubtedly is what
President Obama is trying to do now.
Under the heading: But The President Gives An Incomplete
Picture Of U.S. Oil Resources, the circular quotes Glenn Kessier who wrote
this: “The president is trying to make the case that the world has finite oil
resources, and the United States – the world's biggest oil consumer – needs to
use less oil in the future. But using 'oil reserves' as a key metric gives an
incomplete picture of U.S.
oil resources.” Even without reading the entire article, this quote alone
should alert the attentive reader to the fact that something about it isn't
kosher because it conveys the notion that oil resources in the US is infinite,
which is downright idiotic.
So then, what is behind this? Well, what is behind it is the
definition of the two words: reserve and resource. When it comes to the
underground natural resources, you call a “resource” what the instruments say
is there whether or not you can get to it. For example, the seismic tests may
indicate that 700 million barrels of oil exist under this patch of land. You
call this a resource. But if only 100 million barrels are recoverable with the
existing technology, you call this a “reserve.” Thus, it can be 700 million
barrels of resource but only 100 million barrels of reserve. And when you read
the prospectus of a company that is promoting its stock, the words are clearly
defined so as not to mislead the investors; or someone can be sued for putting
out a false prospectus. In fact, some companies go further than that and call
reserve only the part of the 100 million barrels that has been developed and is
currently producing.
Not only do some companies in North
America do this but a few countries do it as well when they
publish data on the size of the natural resources they have. For example, it is
generally accepted that Egypt
may have as much as 25 billion barrels of conventional oil resources. Between 6
and 8 billion of these are recoverable using the existing technology; and yet the
country lists its oil reserves as only 4.5 billion barrels because only this
much has been developed and is currently producing.
To come back to the size of America 's oil reserves as compared
to that of the world, it is 20 billion barrels versus 1000 billion. And this
puts America 's
reserve at 2 percent that of the world which is what President Obama was
referring to. But what some characters have been doing is compare apples with
oranges. That is, they started to compare America 's resources with the world's
reserves. Not only that, they even exaggerated America's potential by
considering as being a resource not only what has been detected by the seismic
instruments and could someday be recovered with improved technology, but
counting what is sometimes called “inferred” resource.
That is, if you have a patch of land under which there is a
huge formation of the same geological type, and if you discover an X number of
fields separated from each other by a few miles, containing 10 million barrels
or so each, you may infer that there is a Y number of fields under that whole
patch of land even though you have not yet detected them. This is what those
characters have done, thus have come up with the figure of 140 billion barrels
for America
-- 7 times the 20 billion proven reserves.
And the reason why people do something like this is always
political. You can see it by the spin with which the news was made public in
the Romney circular. Under the heading: Proven Oil Reserves Are Not All Of Our
Oil Resources – Not Even Close, the circular quotes Benjamin Cole as saying
what I basically said in the above paragraph, to which he adds this: “That
estimate does not include oil that we know about, yet are unable to access
because of regulatory barriers. For example, the billions of barrels of oil in
ANWR are not included in our proved oil reserves.” But the reality is that
there may be at best 10 billion barrels of oil in ANWR which is situated near
the North Slope of Alaska – an area that is protected because of its unique
environment. Thus, the spin here is part of the war of words between those who
want to develop everything and those who want to protect the environment.
But what happens if we compare apples with apples? Will the
1000 billion barrels of proven world reserves increase to say 7 times that
amount? Well, let's take one example. Canada lists its reserves of Tar Sand oil
as 175 billion barrels but the fact is that 500 billion barrels could be
recovered with an improved technology, and as much as another 2000 billion (2
trillion) barrels of what is called bitumen could be recovered with an improved
technology and a price per barrel of oil that reaches 300 dollars. This is
because you will have to extract as many as 3 barrels to obtain one barrel of
usable oil. The other 2 barrels or the equivalent thereof in natural gas will
be used in the process of extracting and refining the bitumen.
Thus, if we take into account the inferred conventional oils
in the world and add to them the known oil sands, and the known oil shale, the
number could exceed the 10 trillion barrels. Not only that, but there is more
to the story – more of what the dreamers may consider to be bad news. It is
that because America has
developed industrially faster than the rest of the world, most of what can be
inferred in America
has already been inferred.
This is not the case in the rest of the world where vast
tracts of land are yet to be prospected and tested. In fact, while America 's
number in conventional oil has declined from about 40 billion barrels to 20
billion since the turn of the century, the world proven conventional oil has
risen from 1000 billion barrels to 1400 billion. Thus, to be honest in
comparing apples with apples, America
has less than 2 percent of the world oil whether you compare reserve with
reserve or you compare resource with resource.
In conclusion, President Obama
spoke the truth when he painted the energy situation in America , and
his motive was honorable -- he can be trusted. By contrast, Mitt Romney and his
team spun the truth to mislead the public and score a dishonorable political
point – they cannot be trusted.