Saturday, March 12, 2011

Was Obama Fibbing About Oil Production?

The President took to the bully pulpit for a presser covering a wide range of topics including the Japanese earthquake and the situation in Libya. He also took time out to make a rather curious claim about US oil supplies.
“We’re adapting. We’re producing more oil, and we’re importing less,” he remarked.
“Now, the hard truth is, is that as long as our economy depends on foreign oil, we’ll always be subject to price spikes,” he noted.
He indicated that “our oil production reached its highest level in seven years. Oil production from federal waters in the Gulf of Mexico reached an all-time high,” adding that “for the first time in more than a decade, imports accounted for less than half of what we consumed.”
That’s an interesting claim, particularly given Hot Air’s coverage of the subject just prior to the press event. But record setting production would certainly be good news, wouldn’t it? Sadly, it seems that the President was basing his claims on some recent comments by Ken Salazar. While they sound great on paper, Ken was talking about the total number of oil rigs in the gulf, not the total amount of oil being produced. Jack Gerard of the American Petroleum Institute attempts to straighten out the math for the Oil Analyst in Chief.
Salazar’s numbers distort the true number of working rigs in the Gulf of Mexico. According to Baker Hughes:
  • Four days before the Deepwater Horizon accident there were 55 rotary rigs actually drilling offshore in the Gulf of Mexico.
  • On May 28, 2010, when the administration announced the six-month moratorium on deepwater drilling, there were 46 rotary rigs operating in the Gulf.
  • Last week, 25 rotary rigs were operating in the Gulf of Mexico.
So the fact that there is an “all-time high” number of rigs in the Gulf ignores the fact that most of those rigs are not working. Claiming an increase in idle rigs in the Gulf as a success story is like claiming the job market is great because a lot of people are unemployed and available to work.
With all due respect to API, a better analagy would be to have a poultry farmer claiming that egg production was at an all time high based on the number of chickens he has, regardless of the fact that more than half the hens have stopped laying. But in fairness to America’s poultry farmers, your average chicken doesn’t have to wait for a permit from the federal government before dropping more eggs in the nest.
The president needs to go back and do a bit more work on his math. Or possibly pardon a few chickens. Perhaps the new media meme for 2011 could be the one put forward by a good friend of Hot Air on Twitter. So… “Obama lied, Gulf oil workers cried”?
Update (Ed): Over at American Solutions, Steve Everley debunks a few more claims from Obama:
  • “We can’t escape the fact that we control only 2% of the world’s oil.” This is a common refrain among anti-drilling Democrats and environmentalists, and it’s repeated enough that many people accept it as true. In reality, it’s 100% false. The number comes from a highly conservative estimate from the Energy Information Administration totaling America’s proven reserves where we are already drilling. It does not include the 10 billion barrels available in the Arctic National Wildlife Refuge. It does not include most of the 86 billion barrels available offshore in the Outer Continental Shelf, most of which President Obama has placed under an executive drilling ban. And it does not include the 800 billion barrels of oil we have locked in shale in Wyoming, Utah, and Colorado. Those shale resources alone are actually three times larger than the proven reserves of Saudi Arabia, so the claim that the U.S. only has 2% of the world’s oil is clearly false.
  • “Industry holds leases on tens of millions of acres both offshore and on land where they aren’t producing a thing.” President Obama adds to this whopper by saying he wants to “encourage companies to produce [on] the leases they hold.” While this sounds like a common sense fix, it’s actually just blind rhetoric reserved only for people with a shocking ignorance of drilling. You can read more about this here and here, but it basically boils down to this: A lease is for exploration and production, not just production, and because oil is not equally distributed across the globe, one parcel of leased acreage may not hold any oil. Moreover, due to the circuitous and needlessly complicated permitting process, it can take years for companies who own a lease to complete their exploration activities. To get to the production phase, it could take as long as ten years. Ironically, President Obama wants to tax companies for not producing on their leases, even if the federal government’s refusal to grant permits is the reason why those companies are not drilling.
  • “Last year…our oil production reached its highest level in 7 years.” This is pure spin. President Obama is deliberately trying to take credit for actions unrelated to his policies. The increased level of production is due to the actions of previous administrations and production in the Dakotas where most drilling is occurring on private land. By contrast, the Energy Information Administration projects that there will be a decline in production of 220,000 barrels of domestic oil per day in 2011, and in 2012 America will produce 150 million fewer barrels in the Gulf of Mexico, all because of President Obama’s policies to discourage or ban domestic drilling. In addition, President Obama’s drilling moratorium (and subsequent refusal to issue drilling permits) has forced at least 7 rigs to leave the Gulf and sign contracts in other countries, taking much needed jobs and revenue with them.
Remember when Presidents held press conferences to clarify issues?

Isn't it great that Obama is taking credit for something he had nothing to do with? This gives us even more proof that Obama is enept. It's no wonder this country is in the shape that it is.


  1. Along with Oil production I beleive that Refineries are another problem. We can drill all the Oil we want but without Refineries production is dictated by TIME and that is not a way to solve OUR energy problems.

    I also understand that COAL permits are being pulled in West Virginia yet we send Unknown tons of OUR coal to China. My question if its good enough to EXPORT why is it not Good enough to USE more here? Both Oil and Coal production are control by politicans paid for by Eviromentilist.

    Opening Oil reserves is a stop gap solution at best. Obama must declare OUR intention to Drill. It would then be interesting to see the effect that has on PRICE. We seem to be a SHIP without out a RUDDER. Leadership is NOT Community Organizing.

  2. Chris, well that's really two stories in one.

    In fact the first story isn't really the story at all. The update is the actual story that needs to be looked at.

    So in the first article.
    1. we haven't produced the much oil since 6 or 7 years ago.
    2. I haven't found anything confirming or denying gulf production yet.

    The second article. Well thought out and written, but makes a few flaws that standout.

    1. Oil reserve claims. If the president uses known reserves which he did, its okay to suggest that unproven reserves could change the claim, but it doesn't make it false. My parents always told me about counting chickens before they hatch. And you can't compare a potential field to a known field because it might not happen.

    With respect to Hot Air a better analogy would be, You can't say that this first round draft pick will be better than this Pro Bowl player because he's never played yet.

    Thats all i have for right now. I do hope he's right and the shale fields turnout. I'm alittle leery given what I've read about the chemical usage, ground water contamination from industry practices and other potential issues.

  3. Chris, I looked and found that the American Solutions blog is wrong on the oil production estimates. I'm not sure if he's lying or made a mistake.

    American Solutions, Steve Everley said,

    By contrast, the Energy Information Administration projects that there will be a decline in production of 220,000 barrels of domestic oil per day in 2011, and in 2012 America will produce 150 million fewer barrels in the Gulf of Mexico.....

    Actually the estimate for 2011 is 5.4 million barrels and day, down from 5.51 million in 2010. The it would drop to 5.27 million barrels a day in 2012, EIA says.

    The drop in the gulf production would be 220,000 barrels in 2011 and 130,000 in 2012. That partially be offset by increased land production.

    I can't figure out how he thinks we are losing 1.5 million barrels in 2012 and the EPI estimate on production for 2011-12 is still has total US production higher than 2005, 2006, 2007 and 2008 and 2011 looks to exceed the numbers of 2009 too.

  4. Sorry EIA estimate. My bad.


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