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U.S. energy policy is huge in election BESCHLOSS: Ample natural gas
in-en.com  2008-6-30 13:54:56  

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It's becoming crystal clear that the resolution of America's energy crisis is now the centerpiece of the current election campaign; it could conceivably be the decisive issue that decides the future occupant of the White House.

This is increasingly motivated by public opinion, which heavily favors a "drill now" commitment.

In determining whether to drill now in the Arctic National Wildlife Reserve, the Florida and California outer shelves, and expand offshore drilling to the Florida Straits, it must be understood that viable results emanating from such activities will take years to resolve the supply/demand gap that America will increasingly face in the years to come.

The most immediate benefits derived from a comprehensive decision to go all out in exploiting America's oil and natural gas reserves will be the message that it sends to the rest of the world: "The U.S. has decided to go full bore in maximizing its oil and natural gas, starting NOW."

Although a combination of a slowing U.S. economy and voluntary conservation have reduced America's overall usage by a million barrels a day since 2006, this has been more than offset by a 2.5 percent demand increase in such emerging economic powers as Brazil, Russia, China, India and Southeast Asia in 2006 and 2007. Expectations indicate a continuation of that pace this year.

What is becoming an increasing bottleneck is worldwide refining capacity and drilling rigs and ships, which are running five years in backlog.

According to the U.S. Mineral Management Service, two-thirds of the 36 billion barrels of oil believed to lie on federal land, mainly in the Rocky Mountains and Alaska, are accessible to drilling.

Another 89 billion barrels of recoverable oil is believed to be off shore, and four-fifths of that is open to immediate exploitation.

And it's not just oil- in the Gulf of Mexico, four times as much natural gas is probably available to development, compared to those areas protected by the ban.

In the past four years, 10,000 more permits have been issued to oil and gas drillers than have been used. As for offshore areas in the Gulf of Mexico, there are 7,740 active leases and only 1,655 in production. Only 10.5 million of the 44 million offshore leased acres are producing oil or gas.

This "stockpiling" of permits by oil companies should be put on a time-limited "use it or lose it" basis, as part of opening up America's overall capacity utilization.

But those who argue that if restricted areas were opened up pronto, prices would fall precipitously, are deluding themselves, as are those who accept this premise without challenge.

Such rationale is as irrational as those who believe that drilling now and in the future is useless. They believe it's all about alternative energy and their eventual replacement of fossil fuels in transportation, heating and air conditioning, and power generation.

Just as drilling now will primarily have a psychological impact on global oil production, the biofuels and alternative energy crowd is oblivious to the need of hydrocarbons for its derivatives such as plastics, chemicals, petrochemicals and thousands of items that are derived from a fossil fuel base.

What must not be lost on the urgency of the energy crisis is that global supply is starting to decrease, while demand will consistently hit new highs in the years to come. While the demand/supply gap grows and extraction and processing become more costly, higher prices will become the equation that bring buyers and sellers together.

In summation, a massive U.S. policy of immediately utilizing its available fossil fuel reserves will eventually diminish America's dependence on questionable supply sources like OPEC. With Mexico, a top U.S. supplier, expected to become a net importer in five years, U.S. utilization will be hard put to find substitutes; especially with producers like Russia, the United Arab Emirates and Saudi Arabia developing oil usage for newly created home industries.

Morris R. Beschloss writes frequently for The Desert Sun. His blog on mydesert.com is updated as news happens. He can be heard on KPSI Radio 920 AM every Friday 8-9 a.m., KGAM Radio 1450 Saturday 9-10 a.m., seen on KESQ Channel 3, and on Time Warner Cable TV Channel 111.


 
Author:mydesert.com  From:mydesert.com  Edit:steven
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