"The U.S. will remain the world’s biggest oil producer this year after overtaking Saudi Arabia and Russia as extraction of energy from shale rock spurs the nation’s economic recovery, Bank of America Corp. said."
If you only read the headline you might believe the U.S. was somehow on a par with Saudi Arabia, when in fact we are not even in the same oil universe. Kudos to author Smith for stating the crucial fact that America imports 7.5 million barrels of oil day; American oil independence is a dangerous delusion. What we are currently witnessing is a replay of the post Arab oil embargo (1974) era when new technology and intensive drilling on and off shore brought huge amounts of non-OPEC oil to the world market. But make no mistake; this story will not end with a glut as it did in the 1980’s, when a disgusted Saudi Arabia opened the taps to punish overproducing OPEC members. The resultant cheap oil of the late 80’s early 90’s is credited with creating much of the economic expansion of the 90’s and 00’s. As author Smith rightly points out, shale oil is simple keeping oil prices from getting even worse than they already are. With gasoline at four dollars a gallon, consumers could be forgiven for being confused about Americas new oil bonanza. The hard truth is that the world uses unfathomably huge amounts of oil, and this use is accelerating every day as whole continents industrialize. In fact, there is no possible way that oil production can begin to satisfy future demand; you just can’t squeeze that much oil out of a piece of shale. The Middle East is and will remain far and away the most significant reserve of oil in the world, because traditional oil formations of sandstone and limestone (Middle East) hold vastly greater reserves than quickly depleted shale formations such as those in North Dakota and Texas. Horizontal shale wells, ultra-deep water rigs, and tar sands are all complicated and expensive. None of this would be necessary if there were any low hanging fruit left. Simply put, when it comes to oil, the world is running fast to stand still.
Posted by: hopeandespair