White House Explains Transport-Energy Future

blair1q writes "Today on the White House Blog, the President (ok, his staff) released an infographic showing various facts about transportation energy, and how current gas prices need not be so worrisome. Highlights include rapidly increasing domestic production and rapidly decreasing prices for electric-car batteries, requesting Congress to shift tax breaks from oil producers to wind/solar/geothermal energy producers, and increasing domestic oil production (yes, there's a conflict there)."

Comments

Re:Lower Taxes & Cut Regulations. Poison the E

[lowflying]

So how do I parse these "liberal guys" from CATO, published in Forbes, saying that oil and gas firms get special tax breaks?

"Another significant tax break allows companies to accelerate the deductions of the costs of labor and various other inputs associated with drilling oil or gas wells. Now, there's nothing wrong with deducting the cost of doing business from one's tax bill. In other industries these expenses would be capitalized and deducted over time as income is earned. But in the oil and gas sector, the tax code allows oil and gas firms to deduct 70% of these expenses in the very first year of a well's operation and the remainder over the next five years."

Or this guy over at The Volokh Conspiracy claiming that:

"The best example is the percentage depletion allowance which, as applied in some cases, enables oil companies greater depreciation than the value of the initial investment."

Because, I wouldn't want to look dumb and uneducated, thereby hurting my claim.

Smart to Import Oil

[retroworks]

Accepting as fact that oil reserves are finite, we should be importing more, not less. The reserves will be more valuable later. When the Arab oil runs dry, they can buy oil from us at a much higher price based on the scarcity. If there were only two canteens available for a hike across the desert, would your policy be to consume your own canteen of water first?

Re:Domestic production?

[Rei]

It's also not including the fact that the known global reserves keeps growing, not declining, despite our huge rate of consumption. In 1920, the world estimate was 60 billion barrels of reserves. In 1950, 600 billion barrels. From 1970 to 1990, estimates increased from 1,500 to 2,000 billion barrels. In 1994, the USGS estimated world reserves at 2,400 billion barrels. In 2000, the same estimate was raised to 3,000 barrels. Note that these estimates are not limited to "proved reserves" and only cover conventional crude. In short, we've been finding conventional crude faster than we've been taking it out of the ground, and faster than we've been expecting to find it -- at least in the long term.

There's a lot of distortion about oil reserves from the doomer crowd. For example, doomers love to point to graphs like this:

Link

Dear god! Run out and panic, right? Well, no. This graph is about as distorting as a graph can get. It's all based on backloading data. For each field, its current proven size is marked at the point in time when the field was discovered. What that should tell you is that regardless of however the actual rate of oil discoveries, you'd expect that shape on the graph! Oil fields aren't suddenly proven at their maximum capacity they're discovered. An oil field isn't proven until you start to produce from it, and there are even supergiants out there that we haven't started producing from yet. And the proven size continues to grow as you expand and explore the field. So for example, Ghawar, when it was first discovered in 1948, it was estimated to have "billions" of barrels. This grew to "60 billion barrels" in the 1970s. It's now produced 65 billion, and is estimated at 100 billion. Graphs like this backload that whole 100 billion to the 1940s.

It's trivially easy to disprove graphs like this. Let's just list some of the more noteworthy discoveries of the past decade or so. Jack 2 (3-15B), Noxal (~10B), Azadegan (~42B), Ferdows/Mound/Zagheh (~38B), Sugar Loaf (~25-40B), Tupi(5-8B), Jupiter(5-8B), West Kamchatka (10.3B), Tahe (29B), Jidong Nanpu (7.5B; potentially 146 in all of Bohai Bay), Kashagan (9-13B), and on and on. See those on the graph? But I guarantee you that a graph like that made a few decades from now will have them all conveniently showing up for this point in time.

There's this notion that "the biggest fields are found first, then everything else goes on the decline". Really? The US drilled its first well in 1859. It took us another 109 years to find Prudhoe Bay. And today we've got the absurdly massive Bakken field looming which back in the 1970s was assumed to be small and impossible to extract (Elm Coulee has proven otherwise). The same can be pointed to all over the world. Just simply pointing to Ghawar is not a counterexample. Look at coal; a single subsea coal deposit found off Norway in 2005 more than triples the world's known coal reserves. Or natural gas -- Israel has spent pretty much its whole existence in a vain search for sizeable deposits of oil or natural gas, only to hit the motherlode last year. How is this sort of thing possible? Simple. New exploration tech beats the pants off old exploration tech; new production tech makes far more things that used to be unviable, viable; there's always more "down" (especially with advancing technology); and most of the world haven't even been surveyed at all or has been only poorly surveyed -- sometimes even in known oil-rich areas (a good example of this is Iraq, which due to decades of war and sanctions is poorly explored and has just been living off its earlier finds).

Hubbert Peaks are the epitamy of fitting a particular curve to whatever arbitrary dataset you want (sometimes by hand) and the insisting that it matches. The US is a popular one, but the best-fit curve for the US is closer to a poisson than a normal (the US oil production