We’ve been inundated lately with evidence stacked upon evidence that our elected officials in Washington are incompetent in just about every aspect of effective management of our nation and its economy.
Well, I, for one, would like to respectfully disagree.
There is one arena in which our leadership is quite proficient: the art and discipline of telling lies.
Here are just a couple of the most famous whoppers fed to us by various figureheads of state in the last half century…
“We will seek no wider war.” — Lyndon B. Johnson, August 1964
“Read my lips, no new taxes…” — George H.W. Bush, Republican National Convention 1988
“I did not have sexual relations with that woman.” — Bill Clinton, January 26, 1998
“The bulk of the funds for Iraq’s reconstruction will come from Iraqis.” — Donald Rumsfeld, October 2, 2003
“If you like your insurance plan, you will keep it. No one will be able to take that away from you.” — Barrack Obama, April 1, 2010
These bold-faced lies were some of the most salient told to us by our leaders; however, I’d argue they’re not the biggest ones. And they’re certainly not the most important ones.
Many if not most Americans can see through the smokescreens thrown up by our Federal government, because we’re still armed with that human instinct called common sense.
It’s in matters of technical detail, matters in which body language and basic understanding of world dynamics do not help separate fact from fiction… that’s where they really get us.
And perhaps the biggest example of this has been the government’s consistent effort to mislead us on the state of the nation’s fossil fuel supply — specifically, their estimations of the sheer volume of oil and natural gas lying dormant beneath our feet in North America.
The chart below shows the history of the Energy Information Administration’s assessments of major oil reserves within the continental U.S.
“In 2011, oil and gas exploration and production companies operating in the United States added almost 3.8 billion barrels of crude oil and lease condensate proved reserves, an increase of 15 percent, and the greatest volume increase since the U.S. Energy Information Administration (EIA) began publishing proved reserves estimates in 1977.”
— Energy Information Administration, 2012
Now, I know what you’re thinking… Estimates are made to be revised. I get that. Geology is a science that relies on consistent study and the constant gathering of new data; and revisions based on that new information are to be expected.
These revisions come every year, spurred on in large part by private exploration efforts — and they always point in the same direction…
Between 2009 and 2011 alone, the EIA raised their proved U.S. crude oil reserve estimates by more than 35%, from 22 to 30 billion barrels — a stark enough modification that one starts to wonder why bother funding these estimates at all.
More so, it begs the question: Why, with all this uncertainty, are we being sold on the concept of the scarcity of oil?
Yeah I know… this is coming from the guy who wrote a book on Peak Oil. But my thesis was (and always has been) that we were running out of easy-to-get, cheap oil.
To wit, the millions upon millions of barrels of crude being pumped out of American shale formations have been known about for decades. But now the price and technology make it economical to extract this oil.
This is why I called Peak Oil the greatest investment of this century, because we were about to witness the greatest exploration and production boom in history as companies went for the oil that was left behind.
But you would never know it listening to the “experts” in the federal government…
As early as 1974, the EPA was citing these problems in sustainability of the fossil fuel industry.
“Rapidly escalating demand for energy, energy pricing policies, oil import quotas, lack of incentives to invest in domestic energy facilities, and depletion of domestic oil and gas reserves…supply has not kept pace because of economics, facility siting difficulties, resource depletion of oil and gas, and environmental constraints.”
— Environmental Protection Agency “Position Paper,” 1974
Believe it or not, it was this very report (which now dates back close to 40 years) that established the prevailing stance of American environmentalists and progressive politicians pertaining to fossil fuel production.
Between the perceived supply deficiency and environmental considerations, they’ve had no lack of rhetorical ammunition in the decades since.
“Natural gas and oil production is the second-biggest source of U.S. greenhouse gases, the government said, emboldening environmentalists who say tighter measures are needed to curb the emissions from hydraulic fracturing.”
— Bloomberg
When coupled with ongoing political tensions with OPEC countries, it’s pretty easy to see how all of this could be spun in a general anti-oil argument by the powers that be.
The truth, however, is that fossil fuels may be far more of a boon to American industry and the American economy than we’re being led to believe.
You see, the whole concept of ‘proved’ reserves, as the statistic is often cited, is misleading. Proved reserves almost certainly imply a much, much larger unproved volume — something that, if history is any indicator, will be the topic of future EIA revisions in the years to come…
Although this chart still cites the 2009 EIA estimates, it provides a fairly accurate illustration of just how much potential there is for the North American oil industry.
And as technology allows for increased exploitation of these available resources, you will see the top of that pyramid gradually creep downwards, covering more and more of the total potential resource volume.
So we have the oil. Without question, it’s there. Without question, we will be able to harness more and more of it as technological capabilities develop. Without question, the United States will become a net exporter once again and begin to make much-needed revenues from this natural resource.
But what about all the noise we’ve been hearing about how fracking kills the environment, and how we cannot afford to frack for ecological reasons if we expect to continue to inhabit this planet for the foreseeable future?
Well, it seems that there, too, the powers that be are putting their favorite (and perhaps only) talent to good use.
Just two months ago, a study published by the University of Texas and the Environmental Defense Fund stated that CO2 emissions associated with hydraulic fracturing were “97% lower than 2011 national estimates released by the EPA in April.”
For those of you who enjoy fractions, that’s 1/33 what the EPA claimed emissions levels were less than six months earlier.
And thanks to the intensifying reliance on fracking, the environmentalist community’s own ambitions are actually being furthered with this often demonized practice.
“The United States was able to cut its carbon emissions fourfold below the goal of the ill-fated Waxman-Markey legislation, even though the nation’s economy grew 2.8% in 2012… Only the recession year of 2009 saw a larger drop than last year’s carbon emissions drop of 3.8%, which was the largest emissions drop in a year with positive GDP. ”
— The Energy Collective, citing the Energy Information Agency’s 2013 report
It may be a bitter pill for them to swallow — that something they loathe may actually be helping their own cause. But it’s a pill that needs to be crammed down their throats.
Now let’s take a step back for a moment…
I know that these days, it’s sometimes hard to accept good news or a positive view on anything.
But it’s precisely during times like these that you must remember to stay calm and keep the relevant facts at arm’s reach.
The future of American oil and, in large part, the American economy goes far beyond all the doom and gloom you read about every day.
In fact, there’s a lot to look forward to — both in the grand scheme of things and for you personally.
Right now, my colleague and industry-leading expert on the fossil fuel industry, Keith Kohl, is putting the finishing touches on his latest report on the state of things in North American oil and gas.
He’s got facts, figures, and ideas that will do more than just put your heart at ease; they can also put money in your pocket.
The report details a new shale formation right in America’s backyard. It’s bigger than the Bakken, Eagle Ford and Monterey Shales combined.
Production in this new mega-shale just started. And the early results are already a game-changer…
The report’s due out soon, so keep your eyes peeled.
To Your Wealth,
Brian Hicks
Check us out on YouTube!Brian is a founding member and President of Angel Publishing. He writes about general investment strategies for Wealth Daily and Energy & Capital. For more on Brian, take a look at his editor’s page.
