For years, the American public has been inundated with anecdotes and factoids about the perils associated with continued purchases of foreign oil. While many of the statistics are eye-popping and downright alarming, most of the general populace seems conditioned to believe there is simply no alternative to buying foreign oil and if there is an alternative it comes in the form of wind, solar and other green energy initiatives. At least that is what many politicians would have us believe.
In the essence of keeping political criticisms and endorsements out of this piece, something that is often difficult to do when talking about oil, I will just mention a report issued by the National Association of Regulatory Utility Commissioners earlier this week. The report states there is more oil and natural gas on U.S. federal lands than previously thought. How much oil and gas is there on federal lands that is currently not being tapped into? As far as oil goes, the report says the total is 229 billion barrels or 50 years of the supply the U.S. needs. For natural gas, there is 2 trillion cubic feet, or 75 years worth of supply, that we are not getting our hands on.
The economic argument for exploiting U.S. oil and gas resources is compelling. The Utility Commissioners report says the U.S. is at risk of losing $2.4 trillion over the next 20 years if we continue to ignore our own oil and gas resources. Making an addition of that size to any economy would be substantial, but since we live in the real world, it is reasonable to assume that Washington's chattering class would not allow all of the U.S. resources to ever see the light of day. Fair enough. Undoubtedly, some of the areas where this untapped oil and gas lies are prime outdoor recreational areas, accessed by folks who are forced to pay higher prices at the pump due to U.S. imports of foreign oil.
Let us assume that half of that $2.4 trillion total can be kept here within the cozy confines of the U.S. borders so we add ''just'' another $1.2 trillion to the economy over the next two decades. What does $1.2 trillion buy Uncle Sam these days? Well, let us assume California goes belly-up the way Greece has. California, a far more important contributor to the U.S. economy than Greece is to the European Union, had a budget deficit of $46 billion at the end of 2009. An extra $1.2 trillion in Uncle Sam's coffers means California could be bailed out more than 50 times.
Put another way, $1.2 trillion would easily cover the cost of President Obama's healthcare reform package or more than cover the cost of the war in Iraq, which by some estimates could reach $700 billion. According to the New York Times, universal preschool would cost $35 billion and the National Cancer Institute has an annual budget of around $6 billion. In other words, no matter what your personal politics are, there are plenty of ways spend another $1.2 trillion and there is no getting around the fact that $1.2 trillion is no drop in the bucket.
Of course, jobs cannot be ignored. Proponents of green energy use the jobs argument all the time and yet they are usually the leaders of the anti-oil movement. The reality is the folks that work in oilfields and offshore rigs make very nice wages and it would be easier to create more of those well-paying jobs faster than it would be to focus similar efforts on producing more electric cars. To become an engineer at Tesla Motors, a leading maker of hybrid cars, one certainly needs a four-year degree and probably an advanced degree. By comparison, a ''roughneck'' (the guys you see on the Discovery Channel that handle the drill while getting covered in mud) that works on a rig in the Gulf of Mexico, can conservatively make $65,000 a year with just a high school diploma.
As for a total number of jobs that could be created by more drilling in the U.S. that's hard to quantify, but ANWR proponents said 250,000 to 735,000 would have been created by drilling a small slice of Alaska territory, so we can surmise that millions of jobs could be gained by further investment in traditional U.S. energy resources. And all those jobs mean more tax revenues for the Treasury Department to collect and for Congress to put toward more worthwhile initiatives (hopefully).
The bottom line is that it is all fine and dandy to think about solar power and hybrid cars, but it is simply foolhardy to think that just because fewer cars are using gas that means the need for oil is diminished. After all, oil is used to make the tires for the cars, the asphalt to pave the roads the cars drive on and last I heard, there are no plans for hybrid airplanes or trains. Perhaps Congress will wake up to this fact and prevent the U.S. from hemorrhaging a massive amount of wealth in the coming years. If not, the alternatives are quite dour.