Oil Remains King; When it Comes to Energy Production It's A Case of Drill or Be Drilled

Reverend Harper: "Have you ever tried to persuade him that he wasn't Teddy Roosevelt?"

Abby Brewster: "Oh, no."

Martha Brewster: "Oh, he's so happy being Teddy Roosevelt."

Abby Brewster: "Do you remember, Martha, once, a long time ago, we thought if he'd be George Washington, it might be a change for him, and we suggested it."

Martha Brewster "And do you know what happened? He just stayed under his bed for days and wouldn't be anybody."

--"Arsenic and Old Lace"

By Barry Rubin

Here’s what you need to know about the current U.S. debate on energy. Stick with me through some numbers and we’ll arrive at a very important conclusion.

According to the U.S. Energy Information Administration (EIA), the official government agency for such statistics, world energy consumption will rise by 53 percent between 2008 and 2035, mostly due to increased non-Western use. Petroleum—and this is according to Obama’s “employees,” will only decline from 34 percent in 2008 to 29 percent of the total world energy use over that period.

In other words, over the next almost quarter-century, only 14 percent of current petroleum usage will be replaced by all other fuels, including algae, nuclear, solar, vegetable, and wind.  And because overall consumption is rising, oil consumption will actually rise from 85.7 million barrels a day in 2008 to 111.2 in 2035.

What does this tell us?

Despite all of the vast amounts of money plowed by government decision into alternative energy sources, the transition away from petroleum will take a century and will go very slowly. During our lifetimes, oil production will be increasing.

--Given rising demand, insecurity of supply, and the using up of currently exploited reserves, prices should remain strong. Even if the current Iran war scare evaporates, there will be plenty of crises in the Middle East to maintain that insecurity.

--The advantage of private enterprise is that companies and businesspeople have an incentive to produce innovations and new technology if they can make a profit on it. This system has worked very well in American history.

--That is why “green energy” companies will almost inevitably end in scandal and bankruptcy. The money can line the pockets of the executives favored by the Obama Administration but cannot magically produce successful businesses or make effective technology magically appear, especially within the short time needed to survive economically. Remember ethanol?

--There have been exceptional cases where government money did drive technology quickly—mainly in military and space applications—but remember that in those cases the government was the only consumer for such products.  Thus, government subsidies and contracts were absolutely necessary, in contrast to consumer-directed projects where average Americans must be persuaded to buy things.

--To bash the auto and other industries by demanding unrealistic goals for mileage and scores of other regulations ensures bankrupt companies, the flight of American business abroad or the rising market share of imports, unemployment, the massive waste of taxpayer money, and products nobody wants to buy. Example: the Volt.

--Say what you like but ten years from now we will all be laughing or gasping in astonishment that man-made global warming hysteria ever existed. See: global overpopulation scare and global cooling scare, among others.

--Any country that can produce more of its energy and refuses to drill and develop these resources is run by nincompoops. It will lose out on the money to be made, remain dependent on unreliable foreign sources, toss away jobs, and shred its wealth. The same applies to a country that rejects the construction of a normal pipeline linking it to itsneighbor to the north.  Remember that even if drilling takes a few years to produce results, it will—unlike the competition--produce results and will do so far faster than wind, solar, algae, corn, etc.

--When the president of the United States says—as Obama just did in Florida--that drilling is a stupid policy proposed by his opponents for producing more oil and that he has high hopes for totally nonexistent algae technology, it is time for the men in the white jackets to come on stage with a straitjacket.

--If the voters buy such nonsense then the asylum might have to be extended to cover the entire country.

Source for statistics: Paul Rivlin, “Oil Market Prospects and Tensions in the Gulf," IQTISADI: MIDDLE EAST ECONOMY," Vol. 2, No. 2 February 2012.