Robrief 2.17.2008: HUGE OIL IN USA!

Robrief no. 1: Massive Oil Deposits in U.S. Already?
Few months ago, as in last year, I’d learned about a huge decades-long research and development process by Royal Dutch Shell in northern Colorado to actually convert rocky oil shale into a much desperately needed usable energy source: oil. According to CNN’s Money special report, the Green River Formation may contain possibly the largest unconventional oil deposit in the world:

Spanning some 17,000 square miles across parts of Colorado, Utah and Wyoming, this underground lakebed holds at least 800 billion barrels of recoverable oil. That’s triple the reserves of Saudi Arabia.

Harold Vinegar, an oil scientist for the Royal Dutch Shell, claimed to make a real breakthrough by finding new ways to convert rocky oil shale into liquidized oil that can be used to power the vehicles, support the businesses, and heat American homes and without any further damage to the environment of where the oil shale comes from. Environmentalists aren’t so sure but they aren’t opposed to the extraction and conversion of oil shale into oil in the area, because of much needed economic boosts in the states and the Native American reservations (in other word: jobs). Critics stated that it’s all fool’s gold but Vinegar and Royal Dutch Shell doesn’t think so and they would prove it soon, IF the U.S. Department of Energy is willing to give RDS’s newest techniques a chance to work and impress the hell out of the investors and government wonks.

Then another surprising news come up: the Bakken Formation in North Dakota, as the U.S. Geological Survey will give a new assessment report soon, will give the United States a really unprecedented advantage of oil geopolitics over the world for the next 40-50 years: a super-massive oil deposit holding a possible 200 billion barrels of recoverable oil! Wow, this is an AMAZING news!

Few years ago, after Bush was re-elected to another term, he was pressured by Congress to release 1-2 million barrels of oil from the Strategic Petroleum Reserve to address lack of oil production out of Saudi Arabia due to the war in Iraq. Bush said no, leave the nearly 700 millions barrels of oil in the SPR as it is. I suspected his reasoning was based on receiving assessment reports that the United States of America would have a bonanza of massive oil deposits that would give the superpower a far greater strategic advantage over the world in the next 3 to 4 decades and increase the SPR capacity to an unheard level that would rival the amounts of oil from Saudi Arabia, Russia, Iran, Iraq and all other oil-producing countries altogether: a potential 1 trillion barrels of oil (emphasize on the potential).

The only problems are: the lack of new oil refinery capabilities, the need of expansion sites to hold more oils, and the question of environmental impacts under the cloud of climate change. President Bush told the Congress in his next to last State of the Union speech that he ordered the SPR to expand the current inventory to a new stockpile level of 1.5 billion barrels of oil in the next few years.

A lot of people think that President Bush is dumb in other national and international issues, but his greatest legacy, after he leave the White House, is his shrewdness, in term of his oil business thinking, in giving the United States a much greater leverage in the future in the face of a coming oil crisis out of the Middle East, thus leading much of the world to eventually depend upon the United States as the new kingdom of oil.

We shall see.

For further research, see the global strategic petroleum reserves and the U.S. Strategic Petroleum Reserve.

Oil Price Went Up and Over A Benjamin

UPDATE ~ 1.26.2009: a 6 years gas pricing chart graphic added below. I predicted the upsurge of gas prices before March of 2005 and it would continue until its decline before the end of 2008. Toward the fall of 2009, gas price would rise toward $2.50 at the national average but it could subject to change in any fashion. We’ll see.

It’s been almost two years since Goldman Sachs foresaw that the price of oil per barrel would goes to $100 mark in a super-spike drive. This article, dated April 1st, 2005 (not an April Fool’s Day joke since it was following the original report the day before) pointed out the discrete forecasting. At the time, the price of oil per barrel was $56, up from $41 a year before. Oh, those were the days.

However, the $100.05 mark for oil price today would still not match or break the oil price mark in 1980, then set at $38 per barrel but adjusted for inflation in today’s dollars. I’m stumped at math but use the inflation calculator to piddle around the numbers if you desire. Look at the Inflation Data Chart on oil pricing from 1946 to Jan. 2007 (only latest chart so far). Back in 1980, people must have tear out their hairs or cuss out at the gas station attendants while waiting in the line for gas. Oh, yes, those were the days!

Recently, on one of those lame-streamed media networks, some “bright” talking head is saying the $100 mark (and the current gas prices at the gas stations) would be the new norm for 2008. Yeah, get ready to tear out your hairs and cuss out at the gas stations while filling up your gas-guzzling SUVs.

Twenty years later, you are going to look back and say, “Oh, those were the days.”