By William Tucker
Keeping abreast of the new energy reality — how soon before the U.S. becomes an energy exporter?
Last week Alaska Senator Lisa Murkowski unveiled the Republicans’ new plan for energy development. She called for a partial opening of the Alaska National Wildlife Refuge, the development of offshore oil tracts plus more production from federal lands. Within hours the Natural Resources Defense Council had dismissed the whole thing as “a plan from the past.” And in fact it was little more than a reiteration of the four-year-old cry, “Drill, baby, drill.”
Anyone who thinks this signals another four years of energy stalemate, however, is sadly mistaken. The very next day, energy expert Daniel Yergin was telling a hearing of the House Energy and Commerce Subcommittee that, if anything, Washington is completely out of the loop as to what’s happening in energy. “Our thinking has to catch up with reality,” said Yergin, head of the prestigious Cambridge Energy Research Associates. “Everything has been turned upside down.”
Indeed. Only six month ago Mitt Romney was being mocked on front pages across the nation for suggesting North America could achieve energy independence within the next decade. Romney was careful to include Canada and Mexico, but the editorial writers ignored him anyway. Now six months later you could cross out Canada and Mexico. Within a few months, Congress will be undertaking a contentious debate over whether we should become an energy exporter.
Everybody knows about the natural gas boom, of course, brought about by the new fracking technology. Prices have been driven so low that gas wells are now closing down, waiting for the glut to subside. Fracking has so much momentum that even the attempt by Matt Damon to do for fracking what The China Syndrome did for nuclear power slunk out of the theaters in about a week. Sorry, Hollywood, even star power won’t be able to stop this one.
But natural gas is only the beginning. Where indirect drilling and the new fracturing techniques will have an impact is on reviving American oil. Consider this. The Bakken Shale’s “tight oil” formation, opened for development in 2006, has lifted America’s oil output 38 percent over the last five years. That’s the equivalent of the entire output of Nigeria, OPEC’s 7th largest producer. North Dakota is booming as if it were the 1980s. Unemployment is 3.2 percent, lowest in the nation, and Wal-Mart is paying $17 an hour. Things have gotten so good that the New York Times has felt compelled to dispatch reporters to tell us how women are being harassed in oil towns and many roughnecks lack medical insurance. (But the roughnecks do have enough money to offer the women $3,000 a night to tend bar at private parties.)
Now here’s the big news. As far as tight oil is concerned, the Bakken is just square one. The Eagle Ford formation in Texas, which is just getting started, is estimated to have the same amount of reserves (3-4 billion barrels). But another 15.4 billion barrels — 64 percent of all U.S. reserves — lie in the Monterey formation of northern California. (Why does California always get the best of everything?) If Golden State politicians allow this oil to be developed, it will be far more significant than the ANWR or the Keystone Pipeline.
All these American resources are open for development precisely because they are not owned by the federal government. That is the saving grace. Except for the 60 percent land west of the Rockies that is owned by the government, America has the best system in the world for developing resources. Private investment and private ownership get things done while governments everywhere are consistently bogged down in bureaucracy, “baksheesh,” red tape, environmental opposition, and every other kind of impediment.
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