State of the Union: Apparently, Hugh Hefner is Responsible for Abstinence
My column for this week is up at Forbes, and inevitably, deals with the State of the Union address last night.
But the portion that really floored me was Obama’s taking credit for the increase in US oil and gas production over the last several years. It is certainly true that, against all predictions of peak oil, new technologies have helped drive a surge in US hydrocarbon production. Combined with a recession-driven drop in demand, America’s oil imports as a percentage of its total use has dropped to 45.6%, the lowest level in over 15 years.
This surge in energy production is a fabulous reminder of how markets work. For years I have written that the peak oil folks were missing something fundamental by performing an overly static analysis. They looked at current “proven” reserves of oil and gas and projected forward how many years it would take for these to run out. But oil and gas reserve numbers only make sense in the context of a particular set of technologies and pricing levels. As hydrocarbons run short, rising prices tend to spur both innovation and new, more expensive exploration activity. Oil and gas companies are once again proving Julian Simon’s addage that the only true scarcity is human brain power, and they should be given a lot of credit for the recent production boom.
The one person who deserves no credit for this boom is Barack Obama....
marco73:
Well if the Big O can take credit for everything that happens on his watch, then he should just take credit for the huge run up in gasoline prices. Here if Florida, we are now paying roughly 80 cents more per gallon today that January 2011, and we are headed for a summer of $4 per gallon. Yes, gasoline did touch $4 for a few days back in 2008, then settled down to below $3 as the recession really took hold. It has been creeping up ever since.
January 25, 2012, 9:21 amMost of our run up has been because of close to $100 per barrel of oil. Also some of our run up is because of refinery capacity being cut.
Jeff:
Nicely done as usual, Warren. Keep fighting the good fight.
January 25, 2012, 10:02 amTed Rado:
When I hear our idiot politicians take credit for everything good that happens, and blame someone else for everything bad, I am overwhelmed by waves of nausea. What a bunch of gutless, pass-the-buck losers.
As to the energy thing, Obama being the champion of the oil patch is like the fox guarding the hen house. The guy wouldn't know veracity if he fell into a bucket of it.
January 25, 2012, 10:54 amcaseyboy:
Hey, Obama helped Brazil drill for oil off its coast by loaning them (Petrobras) $2 Billion. I don't think the fact that his major backer George Soros invested over $600 million in Petrobras had anything to do with our loan cause Obama is a "drill baby drill" kind of guy so long as it is somewhere else. Oh yeah, most of that oil will go to China.
And don't worry, the Canadians will store that oil somewhere for us until we decide whether or not to go forward with Keystone. Maybe they'll just leave it in the ground and send their drillers home. They wouldn't sell it to China I'm sure.
To put a final bullet in our energy plan, the EPA will soon try to stop shale oil production in the Great Plains. Obama will get that foreign oil percent way up there before he is done.
January 25, 2012, 1:59 pmSmock Puppet, 10 Dan Snark Master:
>>> The one person who deserves no credit for this boom is Barack Obama….
How is it that no one ever seems to comment about The Great Big 0's great big ass...?
It's hard to miss with it right up there on his shoulders.
January 25, 2012, 2:45 pmMichael:
Warren
You state that peak oil folks make the mistake of looking "at current “proven” reserves of oil and gas and projected forward how many years it would take for these to run out. I respectfully suggest that you have never examined the idea of peak oil because peak oil folks never ever talk about reserves. They simply warn that when conventional oil "production rate" fails to keep up with global demand the price will rise and hurt the economy. So what actually happened is production rate of conventional oil slowed and then came to a halt. It has not grown since 2006. That is a half decade so far. And since 1998 the global price of oil has risen from $13.50 to $111 in 2011 (yearly averages). $111 dollar oil during the worst recession in decades.
Then you state that America's oil imports as a percentage of use has dropped to 45% ??? A jump to the EIA website finds that in 2011 the consumption of crude oil was 14,331 thousand barrels per day and the imports of crude oil were 8,630 million barrels per day. That is 60.2% ??
You do good work - but don't get your energy data from political websites are investment newsletters. They are horrible about mangling reality to make political points or to get people to invest in their "plays.
US oil production is not surging. The increase from 2010 to 2011, with a large increase in drilling was only 207,000 barrels per day. Pretty pathetic.
There are two dominating realities in oil today. Global oil production growth has stopped and prices continue to rise. That is the reality of living in "peak times". If you want to refute the peak oil folks you have to explain those two facts (or deny them).
January 25, 2012, 3:56 pmMesa Econoguy:
Mark Perry has picked up your Forbes piece, Warren (via our friend morganovich)
http://mjperry.blogspot.com/2012/01/obama-deserves-no-credit-for-oil-and.html
January 25, 2012, 7:50 pmMichael:
The repeated assertion that we are experiencing an oil boom in the U.S. Here is the link to the EIA website showing oil production (crude plus NG liquids)since 1951. If you consider that small blip upward in 2010 is a boom you are really desperate for good news.
http://www.eia.gov/energy_in_brief/images/charts/Consumption_production_import_trends-large.jpg
January 25, 2012, 9:44 pmErisGuy:
I remember watching on C-SPAN in the early 1980s, a convention of political consultants. One's speech concerned one of his former clients, a senator? (might have been a representative) from Colorado with a Republican challenger who the senator thought might win and take his sinecure.
The Republican's campaign consisted of pointing out that the senator told the people of Colorado what they wanted to hear, then returned to Washington to be a "Washington-insider," (that is consultant-speak for hard-core Leftist). The consultant laughed and said: "What could we do? It was true."
The consult hit upon the perfect response: an ad showing a smoke-filled room with five? white guys (but never showing their faces--the camera focused on the cigars and expensive clothes) debating who to pick to further their vile business interests.
The senator, needless to say, was re-elected until retirement. That was over 20 years ago. Nothing has changed. Elections aren't about issues or policy, they're about hate. It worked for Democrats then, it'll work for Obama now.
The people do not wish to vote on self-interest, but one fear; on representation, but on hate; on wise policy, but on platitudes. And the people of the USA hate {omitted, but look at their entertainments}, and will vote (in the majority) for anyone who vocalizes that hate. Obama, aping "Reverand" Wright, spews that hate as subtly and effectively as any 20th-century politician.
January 26, 2012, 5:20 amJames H:
Blocking drilling in the Gulf (even in defiance of a court order to act on permit applications), shutting down refineries, nixing an oil pipeline, possibly attacking shale oil production in the great plains - it's amazing that in spite of Obama the production has been able to increase.
January 26, 2012, 12:03 pm