The oil industry calls them “elephants” – world-changing discoveries capable of supplying petroleum to consumers for decades. California's Chevron Corp., along with its partners, thinks it has found one in the deep waters of the Gulf of Mexico. If geologists are right, it's the largest U.S. discovery since Alaska's Prudhoe Bay 40 years ago.
Given the federal government's shameful failure to craft a responsible energy policy, the discovery is something of a triumph for U.S. consumers. For openers, it heaps more market reality upon the “peak oil” Chicken Littles who say the world is running out of petroleum, thus requiring fat taxpayer subsidies for alternative fuels to avert international chaos.
To be sure, giant oil fields, like real elephants, are getting harder and more expensive to find. The Gulf of Mexico discovery proves the point. It begins a staggering five miles below the Earth's surface, under 7,000 feet of water. Chevron says it will spend billions to develop the field. Only new technology and today's ultra-high prices of $70 a barrel make production possible.
Then again, high prices make many things possible, as any credible economist will point out. Oil sands in Canada and oil shale in the American West are expensive to exploit, yet these North American resources dwarf those of the entire Middle East. So the world won't run out of oil any time soon.
But that doesn't mean the United States can ignore the very real dangers posed by soaring demand for oil products. Fully three-quarters of the world's petroleum reserves are off-limits to Western oil firms. Most fields are owned by corrupt, oppressive states such as Iran, Saudi Arabia and Russia. Put another way, despots hold the economic lifeline of Western democracies. There are few greater threats to U.S. national security.
Incredibly, such risks have been ignored by recent do-nothing Congresses. Last year's energy legislation settled for shoveling $12.3 billion in welfare to corporate farmers and the energy industry. Meaningful measures were cynically absent: Republican lawmakers, pandering to an auto industry hooked on SUV sales, refused to raise mileage standards or otherwise tame the nation's voracious demand for fuels.
On the supply side, Democrats captive to the environmental lobby refused to open up the Arctic National Wildlife Refuge to oil exploration. They argued that ANWR is estimated to hold “only” 11 billion barrels of crude, the equivalent of “only” a couple of years of U.S. consumption. Improving energy efficiency could conserve that much oil, said this reckless, pro-Saudi environmental lobby.
And so, Washington bunglers gave Americans neither safe supplies nor greater efficiency. This logic of increasing supply vs. reducing demand is deeply flawed. The nation needs both – more North American oil and aggressive energy conservation.
Chevron thinks its gulf field could hold 15 billion barrels, boosting the nation's reserves by a whopping 50 percent. Thank goodness that, while Washington fiddled, somebody was drilling for oil.
