The Press. An energy story appeared in the New York Times on March 13th. Titled “U.S. Inches Toward Goal of Energy Independence” and drawing more on anecdote than on data, it quoted a wildcatter in West Texas as saying “To not be concerned with where our oil is going to come from is probably the biggest home run for the country in a hundred years.” An epochal overstatement (as I will document below), but of course the wildcatter had a vested interest in talking up the industry.
On April 10, the New York Times ran a spate of stories that, if not quite so vivid, were at least as optimistic as the wildcatter. “Fuel to Burn. What Now?” argued that “the promise of abundant and cheaper fuel…could have profound effects on what people drive, domestic manufacturing and America’s foreign policy. Cheaper fuel produced domestically could reduce the cost of shipping and manufacturing, trim heating and cooling bills, improve the auto market”, reestablish American industry and transform our foreign trade deficit. It argued that all these benefits would far outweigh any environmental concerns. It quoted the CEO of Exxon as saying that “The transformation unfolding in North America represents a potentially decisive shift in the history of energy,” and cited a claim that “as many as 3.6 million new jobs might be created by 2020 thanks to the energy boom.” (It did not point out that that is far too few jobs to solve the unemployment problem or even to absorb the intervening growth anticipated in the numbers of job seekers. It quoted a figure of 9 million barrels per day (mb/d) for current U.S. oil production – (the correct figure is 5.5 mb/d) – and predicted that U.S. production could reach 15.6 million barrels a day by 2020. It wound up calling the U.S. “an energy-rich superpower.”
Another New York Times article in that issue described the expectations of an oil/gas bonanza in Africa and, indeed, most of the world. It consisted mostly of statements about companies’ investment plans, and offered no figures to document the supposed bonanza.
Taken together, the articles spelled out hopes that defy both history and logic. That is a bubble.
The politicians have joined the press in the general enthusiasm. They want to please the voters and perhaps to persuade themselves that energy independence is around the corner, that there are no limits to growth, and that all we need do is to get the growth machine going again. The Republicans have been offering “drill, baby, drill” as the solution to high gasoline prices, and accusing the President of insufficient enthusiasm for their remedy.
The President, in turn, has been announcing the opening of new areas to oil and gas exploration. And, in his 2012 State of the Union address, he announced that we have “nearly a hundred years” supply of natural gas.
That figure may have been extrapolated from a paper last year sponsored by a consortium of companies with investments in oil and gas exploitation. It projected 2170 trillion cubic feet (tcf) of “proved”, “probable”, “possible” and “speculative” potential natural gas resources in the United States,2 Consumption in 2011 was 23.52 tcf. At that rate, the estimated resource would last 93 years. (That itself is a flawed measure, because it assumes that production and consumption levels will stay constant – which they won’t – but it offers a graphic way to visualize huge numbers.)
Any effort to estimate unproven oil and gas resources is simply a compilation of educated guesses about dozens of fields, each with a range of error that can be tenfold or more. The median (or the 50% confidence level) estimates are used to compile the national and global data. The U.S. Geological Survey (USGS) is the most widely cited source of such estimates, and the U.S. Energy Information Administration (EIA) is the principal source of projections of U.S. annual supply and demand. Their view of the future is much more conservative than the press stories.
The USGS’ 1995 National Assessment of U.S. Oil and Gas Resources is still its latest consolidated estimate of U.S. oil and gas reserves, projected reserve growth, and recoverable resources.3 USGS has, however, been updating the recoverable resource estimates, field by field, since then. Together, they provide a picture of the present assessment, though that picture is incomplete and internally inconsistent