North Dakota Oil: Reality Beginning to Settle In?
If a majority of today's Republican politicians were rational instead of off in never never land trying to recreate the 1920s, they would agree that we face major issues.
They would agree that the first priority of Americans in 2011 is the creation of new jobs. They would also agree that global warming and the depletion of fossil fuels are also major issues that cannot be ignored.
They would not fantasize, as some business people do, that someone will invent the way out of our problems at any moment using a trickle of narrowly focused corporate research dollars (the situation is so bad that in the last six years, scam artists have played on such beliefs with gullible business investors willing to put their money in new types of energy projects, except the schemes turn out to be bogus or produce only a very small amount of energy gain).
A Republican Party controlled by rational pragmatists would see that major research dollars are needed for our society to move forward. They would see that we are running out of time to make a difference. We need major, intensive research now to dig our way out of our problems. Rational Republicans, if there were enough around, would be joining with Democrats to find a way to fund those research dollars in today's troubled economy. They would know that delay is not an option, for things can only get worse if we wait.
Rational Republicans would see the oil play in North Dakota as a bit of luck that is buying us time (and jobs to boot) to get our act together. They would not fantasize as so many radical Republicans do that global warming is somehow a left wing conspiracy and that the oil and gas projects around the country are going to save our energy future.
Democrats like me have no serious problem with the North Dakota oil play. I admit I'm unhappy with the problems associated with fracking but 80% of all energy technologies in use today are problematic. That's an additional reason we need a major research initiative in this country. But we need to be able to fund that initiative while there is still time. I'm a realist about North Dakota and the other oil and gas plays. These projects are not a game changer as some conservatives so desperately want to believe (they would object to the word 'desperately,' but they have little idea just how much in denial they have become). But as we transition to alternative energy, I would far rather see gas and oil burned than coal. Nearly everything we burn produces CO2, but no fossil fuel produces as much carbon dioxide than coal. Coal is the planet killer. Make no mistake, every green energy project is a step in the right direction, and the faster we can transition, the better. But I'm a realist, as I said. It is going to take time.
U.S. oil production is way off from what it was back in the 1970s. We were fortunate, in a way, that we had oil from the North Slope of Alaska to mitigate the fall in US oil production. There was even a brief upward blip from that production, though we came nowhere close to the maximum production we reached in the early 1970s. Since the North Slope reached its maximum production in the late 1980s, total American oil production has continued to decline in most years. The maximum production of oil in Alaska was 2.2 million barrels a day.
In North Dakota, using the new fracking method, oil production has been increasing dramatically since early 2008. Despite the good news, there's a small problem: production may be on the edge of leveling off. We don't know yet. In May, 2009, oil wells in North Dakota produced 205,995 barrels of oil per day. By May, 2010, the number of barrels produced per day increased to 298,975 barrels of oil, an increase of 93,000 barrels. Oil production has continued to rise. In May, 2011, 361,438 barrels a day were produced. Not bad, though nowhere close to the North Slope. Some argue that production will continue to rise. No doubt it will, but it will not surpass or even approach the maximum production from the North Slope. Unfortunately, there's that worrisome difference to note from the figures above: the increase in May production from 2010 to 2011 was only 63,000 barrels a day.
All along, there has been strong suggestive evidence all along that North Dakota is not going to be a replay of Alaskan oil. It's a help, but already the falling increase suggests a leveling off of oil production. It's entirely feasible that oil production will be much greater next year, but the production of individual oil wells in North Dakota tend to fall off rapidly after the first year. The long-term prospects are not good, though the Bakken oilfield in North Dakota will remain an important source of oil for some time to come.
Again, North Dakota is a good oil play (though admittedly, the fracking problems are unsettling). But all the Bakken oilfield can do is buy us time. We need to use that time wisely. Instead, we have watched tea party Republicans waste an entire year that should have been spent creating jobs instead of destroying them. We need to create jobs where they matter most: alternative energy projects, major research projects to deal with global warming and energy issues, and modestly increasing the number of teachers instead of firing them. We need an educated and creative population, not a road map to third world status courtesy of tea party Tories.
S & P Rating Games: A Quick Mention
Let's just say I'm very skeptical about the S & P downgrading of US debt, particularly after the fiasco by the tea party Republicans where they got more than any other debt conscious group of politicians in history. Both Moody's and the S & P lost considerable credibility during the financial meltdown in 2008. Both rating firms were giving high ratings to banks and Wall Street firms that not only contributed to the financial meltldown but that were, in many cases, the explicit and gloriously crooked cause of it. When such institutions do not have the money to pay off on bad loans, why should they have such high ratings? Was the 2008 election part of the reason for the high ratings? I don't know.
It is a historical fact that in June of 2007, a frigid wind of reality blew through the banks of the world. Everybody in the financial sector knows what happened. Everybody discovered in that month that the complex diced and packaged financial instruments they were holding were probably worthless (banking executives should have known earlier but they were too busy counting their fat commissions and fat salaries to take the trouble to understand the financial fraud they were a part of; actually Moody's and the S & P should have known earlier). And yet, despite the discoveries, despite the enormous shudder that went through all the markets, the high ratings continued for more than a year. Are we seeing a replay of recklessness? And why now? Why the downgrading after rather than before the vote? I don't know. We'll see. But I remain skeptical.