Washington, DC – Leading up to today’s (April 28, 2010) House Energy and Environment subcommittee hearing entitled “Clean Energy Polices That Reduce Our Dependence on Oil,” the panel’s staff issued a memorandum outlining the subject matter to be covered at the hearing. The non-partisan Institute for Energy Research (IER) issued the following “fact check” on this briefing memo.
E&C Claim: The U.S. contains only 2 percent of the world’s oil reserves.
FACT: The U.S. contains far more than 2 percent of the world’s oil reserves. Today, the U.S. has 2 percent of the world’s proven oil reserves. However, the U.S. has far more than only 2 percent of the world’s oil. This factually inaccurate talking point is often used by opponents of domestic energy production. While the proved conventional oil reserves of the U.S. in 2009 were 19.1 billion barrels, this number is misleading on several fronts. In short, “proved reserves” are indeed proven, we know they are there, and that they are economically recoverable.
For the better part of three decades, misguided U.S. government policies have kept hydrocarbons on 97 percent of offshore water and 94 percent of taxpayer-owned lands unleased. What is exactly beneath these taxpayer-owned waters and lands remains anyone’s guess. But to use the “2 percent” talking point to further an anti-oil agenda is simply disingenuous. For example, ANWR’s 10.4 billion barrels of estimated economically recoverable oil would raise U.S. reserves by over 50 percent. And according to the non-partisan Congressional Research Service (CRS), “undiscovered technically recoverable oil in the United States is 145.5 billion barrels” (CRS report number R40872, page 2). The U.S. Energy Department also estimates that the U.S. has 1.38 trillion barrels of potentially recoverable shale oil (CRS report number R40872, page 10).
E&C Claim: The U.S. has increasingly relied on imports, which supplied 57 percent of U.S. oil demand in 2008.
FACT: It is true, that since 1994 the U.S. has imported more crude oil than it has produced. But this dependence is in large part due to policy decisions made over the course of nearly four decades – by both Republican and Democratic administrations and Congresses. While the U.S. is oil dependent, it should be noted that our two largest suppliers of crude oil, after the U.S., are also our closest North American neighbors: Canada and Mexico. In fact, in 2008 these strategic trading partners supplied the U.S. with 716 million and 434 million barrels of North American oil, respectively.
E&C Claim: Global oil demand is projected to grow 23 percent to 24 percent by 2030. To meet these projections, two-thirds of the world’s oil production in 2030 will have to come from fields that have not yet been developed or found – roughly the equivalent of locating and developing six new Saudi Arabia.
FACT: With much of the developing world entering the energy business, global energy consumption will undoubtedly increase. However, these numbers need to be examined in the appropriate context. In 1940, according to the Energy Department, the U.S. had proven oil reserves of 19 billion barrels. In 2008, our proven reserves stood at 19.1 billion barrels. So, did the U.S. only use 100 million barrels of domestic oil in nearly seventy years? Of course not. Through the never-ending advancement in technologies, we discovered more oil, and continue to do so today. Since 1971, global oil reserves have grown by more than a factor of 2.5, while global oil demand has grown by a factor of 1.7. Factor in oil shale, and the overall dynamics shift considerably. In fact, according to the Energy Department’s Office of Naval Petroleum and Oil Shale, approximately 1.38 trillion barrels of shale oil are potentially recoverable in the U.S. (CRS report number R40872, page 10). Which, by the way, is 5.2 times the amount of Saudi Arabia’s proven reserves.
E&C Claim: On March 27, 2007, an unfounded rumor of an attack on a U.S. warship by Iran sent oil prices climbing $5 (to 68.91/barrel) in about 7 minutes.
FACT: According to the Wall Street Journal, on March 26, 2007, crude oil traded on the NYMEX at $68.22 per barrel. However, on March 27, oil increased to $68.70 a barrel and then fell to $68.50 on March 28. There is no doubt intraday trading can be volatile, including short-term price shocks due to erroneous reports. But as the data shows, these short-term intraday shocks are quickly corrected by market forces. On the other hand, government policy can have an immediate impact on the price of crude oil. We witnessed this on July 14, 2008 and September 23, 2008, when President Bush lifted the executive ban on offshore exploration, and the Democratic-controlled Congress allowed its ban to expire. Prices dropped on the mere anticipation that additional oil reserves could come on-line at some point in the future.
E&C Claim: Greenhouse gas emissions from new motor vehicles endanger human health and welfare.
FACT: This is a claim often made by EPA officials and proponents of increasing the cost of transportation fuels. That said, according to the EPA’s own analysis, the new fuel economy mandate will cause global mean temperature to “be reduced by 0.006 to 0.015 °C by 2100” and “sea-level rise is projected to be reduced by approximately 0.06-0.14cm by 2100” (EPA’s final rule, page 355). To put that reduction in sea level rise in context, 0.14 cm is less than the width of 4 coarse human hairs. If carbon dioxide emissions from vehicles were as harmful as EPA claims, it stands to reason that their regulations would result in a detectable impact rather than something undetectable in the real world like 0.015 °C over the next 90 years.
FOR IMMEDIATE RELEASE:
April 28, 2010
CONTACT:
Patrick Creighton: 202.621.2947
Laura Henderson: 202.621.2951
