House of Eratosthenes

Combined, oil and gas companies hold leases to nearly 68 million acres of federal land that they’re not using both in Alaska and in the Gulf. This is over 80% of available federal land and the federal government provides these leases at a discount. Congress needs to pass legislation that would force oil companies to fully utilize these existing areas which contain some of the most abundant supply of oil in this country. It only makes sense that they explore and develop the millions of acres they already have access to before Congress permits drilling in new areas.

Energy experts contend opening new areas like the Arctic National Wildlife Refuge would not lower prices at the pump for years and then only by a few cents. Additionally, it would fail to move the country toward energy independence. With only 3 percent of the world’s oil supply and 25 percent of the world’s demand, it is clear America can not drill its way to lower prices. Our country instead needs real solutions to the energy crisis.

I’ve seen the 68 million acres addressed in a lot of different places, but the best analysis that came to my attention was the one you can find here. To bottom-line it, looking for oil works pretty much the way you’d expect it to. You could buy land, hoping you’ll find some oil there but that would be ridiculously expensive. So the companies lease the tracts on a massive scale, presumably at a lower rate, for the purpose of exploration. If they find some oil, they have to take out a different lease in order to actually produce.

So there is just a smidgen of truth in each sentence. Nothing more, nothing less. The leases are provided “at a discount,” in the sense that it makes good business sense for both sides to sign exploration leases at one rate, and production leases at another.

The thing about 25 percent of the world’s demand and 3 percent of the world’s supply, is another interesting little canard. I’m not exactly sure how I’m supposed to interpret that sentence, and that’s probably by the design of whoever wrote it. Evidently we’re providing 3 percent of the world’s supply of oil but we’re creating a quarter of the demand, so we have to import whatever we’re using that we can’t pull out of the ground here. I do not know if “3 percent of the world’s supply” means we’re already pulling that 3 percent out of the ground as things stand now, or we’d be supplying that much if we were using the 68 million acres the way democrats say we should be using them. Since the 68 million acres is just a big ol’ snow job, and a fairly obvious one at that, I don’t suppose it very much matters. As Phil says, “I assume the allusion to accounting for 25% of the world’s demand and 3% of the world’s population is hinting at some sort of moral assessment of whether or not that should be so.” Hard to say; they aren’t really going anywhere with this thought, except to say we “can not drill [our] way to lower prices.”

Allowing all else the benefit of the doubt, the logic still seems fuzzy to me. We are providing 3% of the world’s oil. Congress lays the smackdown and says, you dirty rotten creepy jerks (DRCJ) in the oil industry better use those 68 million acres or we’re gonna take ’em away! The DRCJ’s get together and say omigosh, Congress is really getting tough on us. Darn those noble democrats and that strong-willed woman with the gavel, Nancy Pelosi! Oh well, we know when we’ve lost a battle. So they start pulling more oil out of the ground — now we’re providing 4% or 5% or 6% of the world’s oil. Yay, democrat Congress!

Well…now we have more oil. We import a little bit less…or we don’t import less…whatever. Clearly, oil would become somewhat more of a domestic product, and less of an imported one. Prices would then come down, because they would have to. The trade balance would benefit. And/or, the oil reserves. Supply and demand.

Bears Really Hate Pipelines Huh? I think Phil is right; there was supposed to be some “bash America” talking point stuck in the boilerplate, something someone wanted stuck in. Oh, that stupid piggyish America, guzzling more than her fair share of yet another precious resource. Well, it must not have been coordinated too well because they didn’t take that thought anywhere. I doubt I can find a plurality of democrats anywhere, who can provide to me one single coherent explanation of how this is supposed to work — how drilling more fails to lead to lower prices because we’re consuming 25 and supplying 3.

In the end…it’s just yet another example of a simple matter being made needlessly complex. We’re restricting ourselves from drilling for our own oil reserves, importing like mad, paying through the nose. We’re being sold a big ol’ bill-o-goods about caribou and fuzzy baby polar bears shivering to death because of our selfish oil exploration, a tiny minority of us are buying those bullshit stories, and so the status quo endures even though it does nothing to help us and everything to hurt us.

Drill here, drill now.

Hey! How’d that polar bear get there? I don’t see any ice! No ice, no polar bears, I thought!

And don’t oil pipelines disturb wildlife? He’s supposed to be nervously steering clear of it. It scares them, dontchaknow.
- philmon | 07/09/2008 @ 11:49
If we only have 3% of the world’s supply and yet account for 25% of its demand, then how is it that we produce 40% of the oil we use? Sounds like we’re importing 88% of our oil. Do we have some sort of “oil amplifier”?

If so, I think the solution is obviously to either turn this one up, or build a better oil amplifier. You know, one that goes up to “11”. 🙂
- philmon | 07/09/2008 @ 12:10
Hmmm…that’s a good point. I made the numbers work this way:

The world produces 200 widgets of oil every eon. (Billions of barrels a day, trillions per year, whatever.) In that same stretch of time, whatever it is, the U.S. produces 6 widgets. We demand 15, because 6 is 40% of fifteen. Since our demand is a quarter of the world’s demand — and I uncritically believe every statistic I’m being offered in this exercise — there is only one number that will correctly identify the world’s demand of oil, and that would be 60, which is 15*4.

Conclusion: If everyone’s on the up-and-up, the world is producing 3+1/3 times as much oil as it needs.

I wonder who’s stockpiling it.
- mkfreeberg | 07/09/2008 @ 12:16
Huh. This looks like it’s probably pretty even-handed after a quick perusal. Some interesting stuff in here.

Gibson Consulting on Oil
- philmon | 07/09/2008 @ 12:19
Holy bejeezus, oil imports in 11/05 accounted for a third of our total trade deficit.

Learn something new everyday.
- mkfreeberg | 07/09/2008 @ 12:31

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The 68 Million AcresWednesday, July 9th, 2008

The 68 Million Acres
Wednesday, July 9th, 2008