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Oil is well: The shortage is a myth, and not a new one

By Rod D. Martin
web posted June 5, 2006

"America has no shortage of oil... Washington, DC has a shortage of the political will required to let American workers go get it." -- Rep. Richard Pombo

With oil prices reaching record levels, the left is up to its old tricks, blaming the President and calling for lots of expensive big government "solutions". As part of this push, they argue that we're running out of oil. But clearly, this argument is not new -- and it's dead wrong.

In 1874, Pennsylvania's state geologist fretted that America had only a four-year supply of oil left. He was wrong. In 1914, Washington claimed we had only a ten-year supply. It was wrong. In 1940, the government announced that reserves would be depleted within 15 years. Wrong again. In 1977, President Jimmy Carter lamented that within a decade, we wouldn't be able to import enough oil, "from any country, at any acceptable price," to meet our needs. Hardly shocking, the peanut farmer from Plains was wrong too.

Truth be told, the world's estimated oil reserves grew from 60 billion barrels in 1920 to 600 billion by 1950, 2,000 billion by 1990, and 3,000 billion by the year 2000. And in the next few years, they'll keep rising.

Why? Because when demand increases and prices rise, companies explore for more. When oil is cheap, they don't. Why should they?

According to Daniel Yergin of Cambridge Energy Research Associates, from 2004 through 2010, production capacity will likely grow from 85 million to 101 million barrels per day, a 20% increase. This forecast is based only on projects already under development. So the gloom-and-doomers are about to be shown up again.

It's not just exploration either. The left consistently underestimates the power of human ingenuity -- given sufficient price incentives -- to devise new technologies which expand supply.

But in fact, researches say that today -- right now -- we could extract 150 billion additional barrels of domestic oil just by utilizing specialized software and low-cost supercomputers, 175 billion barrels locked in Canada's oil sands, nearly 300 billion barrels -- that we know of -- below the world's oceans, 377 billion barrels trapped in existing oil reservoirs, and a mind-boggling 2.6 trillion barrels embedded in oil shale across western Colorado and parts of Utah and Wyoming.

Altogether, that's more than the entire world's "proven reserves" estimates put together; and that's before we do any new exploration.

Given our high crude oil prices, it's now profitable to do all of this and more. And once done, prices will fall again, just as they did in the 1980s.

But that may not be all. What if oil isn't a scarce fossil fuel derived from dead dinosaurs, but a plentiful resource from inorganic material embedded in the Earth's crust: basically a liquid rock? Joseph Stalin's scientists thought so, and by employing this "abiotic" theory of oil formation, the old Soviet Union found numerous oil fields where Western scientists said little or no oil could exist. Their theory has received greater attention in the West in recent years, most notably from the late Cornell astrophysicist Thomas Gold, and if true, would mean that the world is literally floating on a sea of oil deep in the Earth's core. There might even be oil in space!

The "Limits to Growth" crowd rejects this out of hand, of course; but it doesn't really matter. Either way, the environmental extremists are mistaken: There is no oil shortage.

There's plenty of oil, even for the 2.5 billion consumers in rapidly industrializing India and China. Those countries' unprecedented consumption has driven up prices for now, but this will only unleash the supply needed to bring them right back down.

So what about today? How do we lessen the magnitude of price hikes? Remember those environmentalists who've wailed about supposed oil scarcity? They've reduced available supply -- and therefore hiked prices -- more than anyone else.

They've blocked offshore drilling. They've blocked drilling in Alaska's ANWR. They've even come up with the most ludicrous political slogan of all time, "you can't drill your way to lower prices." They oppose drilling, period. And through their draconian rules and regulations, they've stopped even one single new refinery from being built in America in more than a generation.

The result? Needlessly higher prices for everyone, especially the poor northeastern widows and African villagers for whom they endlessly claim "compassion". Isn't it time America stood up to these extremists?

From his first days in office, President Bush has done just that. It's time we stood up for him. George W. Bush believes in markets, entrepreneurship and human potential. Democrats believe in fear and "redistribution". And anyone old enough to remember Jimmy Carter should know which course actually works.

Rod D. Martin is Founder and Chairman of TheVanguard.Org, America's premier online conservative group. A noted author and speaker, former policy director to Arkansas Gov. Mike Huckabee and Special Counsel to PayPal.com Founder Peter Thiel, he is a member of the Arlington Group and of the Council for National Policy's Board of Governors. He also serves as Executive Vice President of the National Federation of Republican Assemblies (NFRA), "the Republican Wing of the Republican Party".

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