Every election year, the politicians take malicious delight in panicking Americans with lurid predictions of an imminent energy crisis: We're running out of oil. We're running out of natural gas. The oil sheikhs will be dictating how we run the country!
The solution, of course, is always to elect the politicians making the charges. It's all nonsense.
A March 20 Wall Street Journal commentary by Citi's top commodities researcher, Ed Morse, contends that "in energy, North America is becoming the new Middle East." That might have been an overstatement, but not by much. The U.S. and Canada's proven reserves of oil and natural gas are increasing at rates that would have been considered fantasy only a few years ago.
The conservative calculations of the Energy Information Administration said oil reserves increased 8.6 percent from December 2008 to December 2009 and natural gas reserves rose 11.3 percent — and those were economically down years when exploration would presumably slow down. Natural gas reserves reached their highest level since 1971.
Proven reserves are those that the EIA deems reasonably recoverable given existing technology and economic conditions. Of course, the technology is constantly improving, and high demand makes the recovery profitable. And then there are new discoveries, like the Bakken Field underlying almost all of North Dakota and parts of South Dakota and Montana. It is estimated to hold 481 billion barrels of oil.
Indeed, because of our refining capacity, the United States became a net petroleum exporter last year for the first time since 1949.
In The Wall Street Journal, Morse writes, "The United States has become the fastest-growing oil and gas producer in the world, and it is likely to remain so for the rest of this decade and into the 2020s."
Canada is enjoying a similar boom in production and exploration.
In the U.S., it would help if the federal government wouldn't get distracted by uneconomic and wasteful incentives for ethanol, electric cars, windmills that chop up great numbers of birds for tiny contributions to the electricity grid, and schemes for extracting fuel from random plants.
The government's efforts should be directed to research, investment and regulation to ensure that this energy, which our economy must have, is extracted cleanly and safely.
The "new Middle East" sounds pretty good energy-wise, but we'd just as soon skip the political turmoil. With the coming election, we have a surplus of our own.
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