The Absurd Report

Before my recent retirement after a career of almost 40 years, I had the unique opportunity to work in the technology areas for a major oil company, an international financial operation, and one of the world’s largest international banks. As a result, although not an expert in either exploration or production of crude oil and its impact on financial and consumer markets, I did have access to information that most American consumers did not. This was not secret data, nor was it proprietary information. It was simply a case of facts the media was not interested in reporting, and our politicians felt were not germane to their own agendas. Let me start with a few simple facts.

At the time of the 1972 OPEC oil embargo, the domestic production of crude oil in America peaked at about 10 million barrels per day. This domestic production accounted for almost 2/3’s of our total needs, resulting in about 1/3 of our needed crude to be imported. The chilling effect of the embargo on our economy, and ability to provide for the national defense, resulted in our political leadership pledging that the government would work to allow America to achieve energy independence in 10 years. What have we achieved so far?

By 1980, domestic crude production had fallen to 8,572 million barrels per day, while our oil usage climbed to 16,058 million barrels per day. Imports had risen to 7,486 million barrels per day, or 46% of our needs. In 2005, our total crude oil requirements were 20,802 million barrels per day, while domestic production had fallen to 7,486 million barrels per day. The 15,624 million barrels per day necessary to keep America and her economy moving were met by imports, which now account for 75% of our needs. So much for the pledge to make America independent of unreliable foreign sources. What went wrong?

Of natural crude, we have large reserves off the coasts of California and Florida. However, no drilling in these areas has been permitted by law since the late 1960’s. China, however, by using agreements with Cuba to drill in this area, will begin doing so shortly.

America also has additional reserves in the Gulf areas, from Florida to Texas. However, no drilling is permitted in most of these areas. Mexico, however, has no such restrictions.

In Alaska, both onshore and offshore, we have large areas of proven reserves, which are not allowed to be developed by law. Canada has no laws prohibiting such development.

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The Bottom Line: So who is to blame for the “new” energy crisis we face? Look no further than Washington DC.

Tags: Inconvenient Truths About Oil

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