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Drill, drill, drill before it's gone, gone, gone
07/24/08

The current crisis at the gas pumps didn’t happen overnight, and isn’t the responsibility of one specific political party or president.

We are just simply running out of oil at the same time consumption is rapidly growing on a global scale.

This moment of peak oil was forecast 50 years ago.

Unfortunately, it was never seen as a political or economical advantage for our country to be proactive about such a terminal condition until it was staring us right smack in the face.

For that, many will suffer financially in the coming years.

And many will be forced to adjust their lifestyles.

But through the storied resilience and ingenuity of Americans, I believe our country will eventually lead the world into a new era of alternative energy solutions.

In doing so, America will become less dependent on foreign nations for our energy needs, including nations we would have little to do with if not for the black stuff pumping out of the ground.

In 1956, a Texas-bred geologist named M. King Hubbert made a speech to the Southwest Section of the American Petroleum Institute that served as a sobering wake-up call for the industry.

Hubbert, explaining the growth of fossil fuel extraction along a bell curve (production starting and ending at zero, using an estimate of total recoverable reserves, with the downward slope from concave to convext used to predict when the rate of growth would stop at a peak before declining), forecast that domestic production in the lower 48 states would peak between 1965 and 1971.

Ask any local oilman today, and they’ll tell you he pretty much hit it on the head. If I remember correctly, at the peak domestic production was around 9-million barrels a day. Today, it has fallen to around 3-million barrels.

It is known in the business as Hubbert’s Peak.

President Bush recently lifted the executive ban on drilling in ANWR (Artic National Wildlife Reserve), and the outer continental shelf, specifically along the shores of California and Florida.

I’ve never been a big proponent of that, but I’ll go along with Bush’s contention that it will provide little in the short-term to help rising prices at the gas pump, and more to help the overall “psychology” of the world oil market and possibly lead to a lowering of price-per-barrel rates.

I never cared much for caribou, anyway. They are an ugly animal, and necessary only for a few Eskimos in need of a food source.

So let’s drill that puppy, and I’m talking every inch of land that covers about half the size of South Carolina.

And let’s start the drilling in the Pacific along the California coast, and in the Gulf of Mexico near the white sands of Florida.

I don’t get to either state much for vacation. Even if I did, I’m sure I’d view those rigs out in the waters at night much like lights on a Christmas tree at home, with presents for everyone.

Yes, let’s drill wherever we can, but let’s also be firm with the oil companies, and threaten substantive fines for any ecological damage. I’ve been assured that new technologies will virtually negate the potential of such catastrophies. So we can let them put their money where their mouth is.

And drill, drill, drill.

But let’s not kid ourselves. Historically, the price of gas has always gone down following a dramatic shift in supply. This time, it won’t.

While oil was increasingly plentiful on the upslope of the bell curve, it will be increasingly scarce and expensive on the downside.

Once the decline begins for good, estimates are production will drop from at least 3-percent per year, with external factors such as war, terrorism and weather to increase that up to 15-percent of decline.

Vice-president Dick Cheney himself gave a speech in 1999 while still CEO of Halliburton where he said, “By some estimates, there will be an average of two-percent annual growth in global oil demand over the years ahead, along with, conservatively, a three-percent natural decline in production from existing reserves. That means by 2010 we will need an additional 50-million barrels per day.”

So what do we do?

Get serious about investments to alternative energy sources, for one. That includes nuclear, wind, solar, thermal and a host of other prospects.

Many oil companies, including one owned by T. Boone Pickens, is doing that. The biggest ones, though, are much more concerned at present with buybacks of their own stock (by an 8-1 ratio of buybacks to exploration and research).

“Necessity breeds invention,” Benjamin Franklin once said.

For America and the world, necessity is just around the bend.



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