Wouldn't it be great if the U.S. had as much oil as Saudi Arabia? Wouldn't it be great if we knew where it was? Would you be surprised if you knew that the answers to both questions was, "We do!"

Earlier this year the Democratic Congress voted against allowing any development of the oil shale that has been identified in the tri-state region of northwestern Colorado, northeastern Utah, and southwestern Wyoming.

According to a Rand Corporation report, the amount of oil in that region is estimated to be two trillion barrels of oil - or more than twice the entire Middle East oil reserves.

Here’s the catch. Oil shale can’t be drilled like a regular oil well and taking it out of the ground was initially uneconomical when oil was $25 a barrel. A 2006 Rand study for the U.S. Department of Energy estimates that about one trillion barrels is recoverable using current technology at a rough cost of $50 to $70 a barrel. (Rand claims it might even become economical to produce at a price as low as $20 a barrel, in 2006 prices, using new technology that Shell Oil Company has developed.

As Rand's James T. Bartis told Congress last year, "The potential public wealth embedded in our oil shale lands is staggering. Many, if not most, of the potential lease tracts in Colorado will contain over 2 million barrels of oil per surface acre. That means that a single 5,760-acre lease tract holds nearly 6 billion barrels. Assuming a modest recovery of the total oil within a lease tract, the potential public value of a single lease is clearly in the tens of billions of dollars. The potential public value of the total oil in place in oil shale deposits in the Green River Formation is in the trillions of dollars.”

Even a much more modest level of development would have substantial benefits according to Rand’s 2005 report, “Assuming a national production level of 3 million barrels per day, direct economic benefits in the $20 billion per range are possible, with roughly half going to federal, state, and local governments. Also, production at this level would likely cause oil prices to fall by 3 to 5 percent, saving American oil users roughly $15 to $20 billion annually.”

The Rand report indicated sizable job growth from oil shale development too. “A multi-million barrel per day industry would also yield a few hundred thousand jobs in the oil shale producing areas and in regions that contain industries that provide inputs to the production process."

That doesn’t matter. The anti-energy liberals in Congress voted to ban oil shale energy production earlier this year. This is identical with the congressional ban that has prevented the billions of barrels of oil that are recoverable in the Arctic National Wildlife Refuge area in northeast Alaska on a mainly frozen desolate Arctic plain from being developed too.

After all, congressional opponents of ANWR drilling claim it would take “10 years” to be able to develop this oil production. The Republican controlled congress in 1995 sent an ANWR drilling bill to President Bill Clinton. If Clinton had not vetoed this real energy producing bill we would have already had this new Alaskan oil being produced with millions of barrels years ago. Since we won World War II and the Manhattan Project in less than four years, the likelihood of even a very large project taking a “decade,” to complete is ridiculous under sensible laws.

Even if Alaskan and shale oil did not exist, there is a lot more energy available too. The United States is the Saudi Arabia of coal with the largest coal reserves in the world. Our reserves are so large that Clinton was able to lock up a large chunk of these reserves in Utah to keep this valuable low sulfur coal off the international market while he was president.

Many have forgotten that during World War II much of the petroleum produced in Germany was derived from coal. This conversion technology is well-established and was later improved by South Africans in the 1970s when that pariah state was excluded from international trade. Coal conversion into petroleum is economical in the $40 per barrel price range if it becomes permissible by federal energy and environmental regulations.

The U.S. has offshore deposits that hold billions of barrels of oil that the U.S. Congress now forbids anyone to explore, let alone drill in. Today, only five of the 23 oceanside states have offshore drilling!

Belatedly, this month President George W. Bush finally terminated the presidential ban on offshore oil and gas drilling that had been in place since 1990. Unfortunately, that ended only one of the two federal government bans on drilling offshore. The congressional ban remains. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reed are refusing to allow even an amendment to be voted upon in either house.

The northern plains of the U.S. is the one new area in the lower 48 states where Congress has not totally shut down energy exploration in favor of subsidizing politically correct, mostly noneconomical energy. The energy problem in the U.S. is aggravated by the unwillingness or inability of the federal government to let energy producers have access to these areas. Canada has enjoyed massive success in allowing energy development of its tar sands areas.

It was only a decade ago in the late 1990s when it was uneconomical producing energy from this area when crude oil prices were barely $10 a barrel. When prices are low, the incentives to produce are lacking. Today, with prices having soared, this lack of energy production in the United States is a disgrace that stains every political incumbent in Washington with the scarlet letter of $4-a-gallon gasoline.

Of course, even if we ignored all of the oil, gas and coal in the U.S., there are massive amounts of additional energy that could be produced by nuclear power. Nuclear power has been used for more than half a century safely by the U.S. Navy to power everything from submarines to aircraft carriers. France generates 80 percent of its electricity from nuclear. In addition, nuclear does not create any of the dreaded carbon dioxide that is one of the reasons for the myriad of governmental restrictions on all energy generation and the resulting soaring prices inside the U.S. today. Historians are now the ones to note that we haven’t built any new nuclear power plants since the 1980s.

Even if we started producing more of our abundant petroleum reserves, historians would note that this country has not produced a new oil refinery in more than 30 years. We’ll have to export the oil, gas or additional energy in whatever form, because under current governmental restrictions that the Environmental Protection Agency has issued in mid-July, new limitations will be placed on everything and anyone emitting carbon dioxide. Al Gore says it, he believes it, the courts have ruled that carbon dioxide is a pollutant, and soon everyone gets to pay for more it.

In a world where there was some common sense inside the DC beltway, it wouldn’t have to be this way. Let’s remove the leaden energy bureaucracy, the crippling congressional restrictions, expand drilling and property rights, and let energy producers and entrepreneurs produce.

The energy solution might be shale oil, coal conversion, offshore and Alaskan drilling, nuclear, politically correct wind/solar/bio-fuels or some complex combination of all of the above. Or, perhaps the solution will lie elsewhere.

Let’s remove government subsidies. Let’s let a free people work out our energy solutions in a free market. This is too important to have the authoritarian government continue their three-decades-long policy of screwing this up.

Sources:

“Gauging the Prospects of a U.S. Oil Shale Industry,” Rand Corp., Research Brief, 2005.

“Policy Issues for Oil Shale Development,” James T. Bartis, testimony to U.S. House of Representatives Natural Resources Committee, Subcommittee on Energy and Mineral Resources, April 17, 2007.

Karl Peterjohn is the executive director of the Kansas Taxpayers Network and is a former California Department of Finance budget analyst and newspaper reporter. Footnotes on energy are available as part of this submission.

The Week in Review