The Coastal Plain of the Artic National Wildlife Refuge (ANWR) which
represents 1.5 mm acres of a total 19.0 mm acres is estimated to contain 16
billion barrels, or approximately 30 years equivalent of our current imports
from Saudi Arabia of 1.4 mm bpd.  Our northern plain states of Wyoming,
Montana, and the Dakotas have vast untapped deposits of tarsand that can be
extracted at some economic cost.  Was $32/bb in 1981, probably closer to
$40/bb today.  The Canadians have huge fields of oil under frozen lakes that
were scheduled to be developed in the 80's before the price dropped out from
under oil, see http://users.redrivernet.com/patois/stats/oilprices.htm

Because the US demand for 19+ mm bpd is extremely inelastic in the short
term, it does not take a very large swing in production to spike prices
either way.  When various fruits are out of season (mass-production), you
can get them, but you pay dearly.  Most simply eat something else until they
are again plentiful and cheap.  Not so with oil products.  We not only
demand our MTV, we demand the ability to fill up Betsy and go where the hell
we want, when we want.  Bicycles are Not Us.

If North American production could increase by just 2 mm bpd, we could take
all of the power out of OPEC.  If we went up by 4 mm bpd, they'd be history
as an effective organization.  Their whole hold is based on our continued
and increasing wanton consumption.  If we even began to cover it, they'd run
for cover and start cutting prices to save their own butts because in most
cases, its all that they have going for them.

Saudi Arabia (and Kuwait) has been extremely understanding of our needs but
they have been going at less than half-capacity for so long that their
infrastructure has suffered.  They are attempting to put their profits back
into the ground in terms of public works and largess to keep the pink
elephants of radical Islam away.  They have acted very responsibly by
allowing other nations a share in reasonably priced oil profits.  They have
over 200 billion barrels in proven reserves and more where that came from.
They could go to 11 mm bpd tomorrow and drop the price to $10.  The lesser
producing nations would have to increase their production to meet their
needs and they would effectively run out of oil in 5-10 years.  Saudi Arabia
would then command the world market.  The Saudis also know that the pursuit
of this stategy could provoke a hostile takeover of a non-corporate kind.

Our Strategic Production Reserve (SPR) is useful only as a symbol of our
willingness to forego imports, if necessitated.  But when you do the math,
it doesn't count for much.  The SPR holds 565 mm barrels.  We import 10.5 mm
barrels per day, so the SPR is about a two months supply.  At current market
prices, its value is $16,500,000,000 and earns zero interest, so its costing
us a little over a billion a year in opportunity costs.  Remember a few
years back when Clinton made a big splash about controlling prices by
releasing 12 mm barrels.  Every single article in the major rags failed to
mention that this was less than two day's imports or one day's consumption.

Those of us who have made the flight from Fairbanks to the North Slope know
that there isn't much out there but white stuff and a theoretical horizon.
When you are in the landing approach at Prudhoe Bay, you think the pilot is
suffering from whiteout.  The famous Aleyaska Pipeline that was to scorch
the earth looks more like a simple waterline project in suburbia.  The only
wolves that suffered once that project was completed were the kind that came
in RVs with a front door, a money changer and a back door.  The limousine
liberal and well-heeled alumni need not worry, they will still be able to
view the marvels of Alaska from their deck chairs.

Bush should start arriving at his campaign rallies on a bicycle and making
the Administration's lack of energy policy a big issue.  This is
particularly appropriate since Gore has been the point man on energy and
conservation.  We are being Gore'd by Gore's conservation agenda.

 

 

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