Thread: Funny how time slips away

MarkRamsey - 2/3/2018 at 01:24 AM

Opinion Review & Outlook
Drilled, Baby, Drilled
A decade ago Barack Obama mocked Sarah Palin. Who was right?

By The Editorial Board
Feb. 1, 2018 7:37 p.m. ET

Readers of pre-millennial vintage may recall the 2008 presidential campaign when Republicans and especially Sarah Palin picked up the chant “drill, baby, drill” as a response to soaring oil prices. The theme was much derided, not least by Barack Obama, who as late as 2012 called it “a slogan, a gimmick, and a bumper sticker” but “not a strategy.” Ten years later, who was right?
The U.S. Energy Information Administration (EIA) reported Thursday that U.S. crude oil production exceeded 10 million barrels a day for the first time since 1970. That’s double the five million barrels produced in 2008, thanks to the boom in, well, drilling, baby.
The EIA summary puts it this way: “U.S. crude oil production has increased significantly over the past 10 years, driven mainly by production from tighter rock formations including shale and other fine-grained rock using horizontal drilling and hydraulic fracturing to improve efficiency.” This is the “fracking” boom our readers know well that has been driven by innovation in the private oil and gas industry.

The magnitude of the boom is remarkable. The gusher has pushed the U.S. close to overtaking Saudi Arabia and Russia as the world’s leading oil producer. In 2006 the U.S. imported 12.9 million barrels a day of crude and petroleum products. By last October that was down to 2.5 million a day. Some gimmick

This translates into greater energy security as the U.S. is less dependent on foreign oil sources. Donald Trump calls it “energy dominance,” which implies that the U.S. wants to husband its supplies like gold at Fort Knox. The reality is we want to produce and sell what the market will bear, including exports to willing buyers around the world.
Thanks to Congress’s deal with Mr. Obama in 2015 when Republicans extended wind and solar subsidies in return for lifting the oil export ban, the U.S. exported some 1.5 million barrels of oil a day in November. Some readers may recall that Heritage Action instructed Congress to vote no, and Breitbart called the bill “a total and complete sell-out of the American people.” Perhaps even they can now see that trading temporary subsidies for a permanent change in export law was shrewd and good for the country.
Also striking is how quickly the oil and gas industry has recovered from the oil price plunge of 2015-2016. Previous price declines led to multiple bankruptcies and bank failures. This time drillers adapted quickly, took the rig count down fast, and cut costs. America’s flexible private capital markets helped the companies ride out the price trough, and now producers, investors and lenders are reaping the benefits of the oil price rebound to $69 a barrel.
And don’t forget the fracking boom in natural gas. EIA says U.S. gas production increased by some 50% from January 2010 to November 2017, reducing carbon emissions and heating prices. Thanks to new export terminals, the U.S. is now selling liquefied natural gas around the world. This has the potential to compete with Russian gas so Western Europe doesn’t have to succumb to Vladimir Putin’s periodic energy blackmail. Unleashing U.S. energy is Donald Trump’s best Russia containment strategy.
It’s worth stressing some of the policy lessons in all this. The first is that the best response to energy shocks is to let the market adjust to the price signals. As oil prices soared in the latter half of the last decade, politicians panicked and rushed to ban certain light bulbs, and subsidize and mandate cellulosic ethanol and other energy fads. The media fed the panic and cheered the politicians on. We were back at “peak oil” and the end of fossil fuels.

Yet American ingenuity was already discovering the solution for high prices in the shale plays of North Dakota, Pennsylvania, Texas and elsewhere. These drillers could move fast because they had the support of private capital and could lease private land. The frackers were also largely regulated by the states, which meant even the Obama Administration couldn’t stop them.
This is a familiar American story of invention and wealth creation that benefits everyone, but it never would have happened if central planners in Washington had to approve it. That’s the most important lesson.

nebish - 2/3/2018 at 04:20 AM

Just providing a visual.

Something else, China is now the world's largest importer of crude oil. I remember during those "peak oil" days the US was lambasted for having x% of the world's population, but uses y% of everyone else's oil - like we should feel bad about that or something. Well now, those people can hate on China instead. Just add it to the many list of reasons to hate on China.

Mark, one thing, I am unable to confirm the article's claim of imports dropping all the way down to 2.5 million barrels per day. The stats I look at on EIA show it is still around 9-10 million barrels per day, which is about 4 million barrels per day lower than the 2005-2007 period. If you have anything to add on that I would appreciate it, best to know the right number and I may just be reading something wrong.

Net take away, the less energy we have to import from other countries, especially countries that don't necessarily like us, and maybe we don't necessarily like them - nice to have to rely upon that less. Still a ways to go though to get closer and closer to true energy independence - a very worthy goal.

Bhawk - 2/3/2018 at 05:46 PM

This obviously means that Sarah Palin was the bestest person ever. Warm fuzzies!

2112 - 2/4/2018 at 04:16 AM

I think your taking the wrong lesson away from this. US oil production went through the roof when Obama was president. Sarah Palin had zip to do with it, and if she would have been president I doubt US oil production would have been significantly higher. The increase was due to better technology, especially fracking. There was never a lack of drilling.

Second, the rise is renewable energy under Obama didn't kill the oil energy. There is plenty of demand for energy, no matter how much conservation we do. Any reduction in the amount of energy we use is positive, and an increase in renewable energy is key to staying ahead of the game, and that's why most developed countries with strong growing economies are investing heavily in solar and other renewable forms of energy, even in places like Germany that aren't exactly sunny. That's why Trump’s recent attack on solar energy makes no sense. Solar is the way of the future and provides lots of good, high paying jobs, both in construction of solar panels and installation. Those 30% tariffs on imported solar panels might help a few solar panel manufacturers, but it just made going solar unaffordable for most Americans and will put all those solar installers into the unemployment lines. It's an example of good intentions to create some American jobs at the cost of killing the industry.

nebish - 2/4/2018 at 04:46 AM

Well, atleast Sarah Palin didn't find her way into this administration.

I think the net metering fight will play a much much bigger role in people deciding to go solar than the higher cost of panels. It comes down to if you want to do it for personal environmental reasons and also for financial reward, ie lower electric bills. If you can't sell the unused electric your panels produce back to the electric company, that is the real deal killer.

I support all forms of domestic energy production. We don't need to open up the argumentative coal discussion again, but the fact is utilities are transitioning from coal to nat gas. What is next after nat gas? It might be a ways down the road, but the next energy source(s) need expanded and developed.

alloak41 - 2/10/2018 at 05:27 AM

Some of my best buds on this thread. Had to check out a Mark Ramsey thread! Jerry, Scott hope you guys are doing well.

nebish - 2/11/2018 at 06:22 AM

Some of my best buds on this thread. Had to check out a Mark Ramsey thread! Jerry, Scott hope you guys are doing well.

Still here!

If you get bored we'll probably be here, but hopefully you have better things to do with your time. LOL.

MarkRamsey - 2/12/2018 at 01:04 AM

Some of my best buds on this thread. Had to check out a Mark Ramsey thread! Jerry, Scott hope you guys are doing well.
If you had to check out a Mark Ramsey thread,I need to introduce you to Mrs. Ramsey. She doesn't find me nearly as interesting. .

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