There's No Oil Shortage

BEGIN TRANSCRIPT Let me dig out that story here and then go back to the phonecalls. It's in The Economist, which is a British publication, magazine, pretty high repute, and the title of the story, "A Bottomless Beer Mug: Why the World is not Running Out of Oil." Let me just read to you an excerpt.

"Peter O'Dell of Rotterdam's Erasmus University points out that since 1971, over 1500 billion barrels of oil have been added to our worldwide reserves. Over the same 35-year period, under 800 billion barrels were consumed. One can argue for a world which has been running into oil rather than running out of it. What makes the estimates go up continuously is a combination of economics and innovation." Let me give you a word for that. It's called capitalism. "The IEA explains the process this way. Reserves are constantly revised in line with new discoveries, changes in prices, and technological advances. These revisions invariably add to the reserve base. A few decades ago the average oil recovery rate from reservoirs was 20%. Thanks to remarkable advances in technology this has risen to about 35% today." Let me give you another word for "advances in technology." It's called "capitalism." Capitalism is out there finding all this oil. He also says this under the section called The New Age of Discovery. "But there is a more practical fallacy embedded in the gloomy forecast, too. 'I challenge the idea that the era of discovery is over in oil,' says one expert. Thanks to the Cold War and other political constraints on western investment, much of the world has yet to be explored with the aid of the latest technologies. Most of the oil still undiscovered thanks to the Cold War and other political constraints on western investment, called environmentalism. New word for political constraints on western investment, environmentalism. Already, the industry, (the oil industry), is exploring underwater at depths that were unimaginable a decade or two ago. In the Gulf of Mexico and elsewhere, oil rigs now float atop 3,000 meters, or 10,000 feet of water. These marvels of engineering [capitalism] are stuffed with the latest in robotics, electronic sensors, and satellite equipment using fancy multilateral wells that twist and turn in all directions, they can hit giant underwater oil pockets miles away from the rigs."

There's more oil being discovered out there. It's just a question of profitability and getting it, and eliminating the political constraints of western investment, i.e., environmentalism. Because that's what's holding us back. There's so much oil out there that we have enough that we could go get on our own, that we wouldn't need to be nearly as dependent on the Saudis and other foreign sources as we are. But it is my contention, folks, that the people on the left in this country who are bemoaning our dependence on foreign oil actually wish to encourage it. They want us held hostage, particularly when a Republican is in the White House.

BREAK TRANSCRIPT RUSH: Mark in Midland, Texas, it's your turn. Welcome to the program, sir.

CALLER: We just wanted to let you know, not only are they drilling offshore now in deeper depths, but I'm actually in the oil industry, and here in Midland, Texas, which is the only place that you're more popular than George W. Bush, I think he's the only man that is as popular as you are out here, but we are drilling in areas out here horizontally that are thought to have been drained years and years ago. So there's an awful lot of technology moving forward because the price will dictate it now.

RUSH: But how much opposition do you face? How many hoops and hurdles do you have to jump through to get your process restarted?

CALLER: Well, there's quite a bit of government opposition even with the current administration. We do a lot of drilling on federal lands and it just takes forever to get permits to get things drilled, but overall things have been better since Bush has been in, but it's obviously still just a matter of time.

RUSH: Well, it's a matter of time. It's a matter of necessity. But it's interesting to note the obstacles in your way generally come from liberals in government. You know, there's all kinds of liberals that are in permanent positions in these bureaucracies like the EPA.

RUSH: The EPA is probably the primary bureaucracy you deal with in trying to bring this oil out. And believe me, it's just like the state department, they've got people in there, career people been there a long time that openly despise the president's policies, openly despise the president for not signing Kyoto and this sort of thing, all over the place. But it's a sign also that all these discoveries are taking place, and that we are going to get the oil eventually. It's a sign of triumph over all of these environmentalist wackos, despite their best efforts. The way to explain this is this guy is in business. He's in Midland, Texas. He's in the business. It's a tough business. Domestic oil is a tough business. They've done their best to shut it down, cap wells back in the seventies when the price skyrocketed, and there was no way that domestic oil could compete on the world market given the production costs and so forth. But what's happening is, what you need to consider is, that conservation, while laudable, and while conservation is of course makes sense, it's not the answer to fuel an ever-growing economy. You have to have new discoveries and if an economy is going to grow, all aspects of it must grow, and especially that aspect that provides the fuel. Whether people want to admit it or not, fuel and oil are the -- well, oil is the fuel of democracy. You take oil out of our equation, like fossil fuels out of our equation, out of our economy, and you tell me the number of businesses that are going to survive as they currently are. You talk about staggering, and yet there are people out there that are attempting to get this done over time, not overnight, but over time, and that's not the answer to our problems. And of course all of this business of conservation and hybrid cars, it's all based on the fact that, "We don't have much oil left, we're going to have to do something fast." It's just the opposite. There's all kinds of oil out there so then the environmentalists say, "Well, it's polluting, it's dirty, it's like filthy," blah, blah, blah, "it's exploitative," all of that, and yet it is what our society is built on, and the world's as well. As long as there's plentiful supply we continue to make progress in cleaning up our messes. We're now able to drill in places that actually provide interesting cohabit.

By the way, should we be screaming when gas prices have been at historically low prices???? ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ from the April 19, 2005 edition

Is it all relative? Maybe oil prices aren't so bad, after all.

Yes, gas prices have soared, but they're still 34 percent below 1980 levels. Housing and baseball tickets are another story.

By Kris Axtman | Staff writer of The Christian Science Monitor

HOUSTON – We groan when our grandparents go on about Coca-Cola costing only a nickel in their day. How did things become so much more expensive, they always want to know?

Here's the short answer: With inflation factored in, that same bottle of Coke during World War II would cost roughly what we pay for it today. Eggs, milk, and bread now cost less.

But when the subject of gasoline comes up, we sound like our elders. How did it get to be so much?

The fact is, oil is still relatively inexpensive. By one measure tracked by Dow Jones, we are still far from matching an April 1980 spike in US oil prices. The $39.50 per barrel price that month exceeds $90 in today's dollars.

We remain a long way from that, with oil easing below the $50 mark in trading Monday.

That's not to say that energy costs aren't hitting families and corporations in the pocketbook. Even as oil prices have softened in recent days, there's been new concern about energy dampening economic growth. But a broader view - looking at oil over a longer period and against other goods and services - puts the impact in a less dire perspective.

"Gas is actually cheap right now," says Timothy McMahon, editor of InflationData.com. "Up until a year ago, oil was at a historic low, and they were giving this stuff away. And so to go from $20 a barrel to $50 a barrel looks like a big increase in a small period of time. But if it were spread out over those 25 years, nobody would say a thing."

Even with the rising costs, economists say, energy still makes up a small percentage of a family's budget, about 4 percent. That's half what it was in the early 1980s.

In fact, lots of goods and services have gone down in price during that time, including clothes, electronics, and food. But don't dismiss your grandparents that quickly. Certain things like new cars, new homes, healthcare, and a college education are considerably more expensive today.

AAA, the nation's largest organization for motorists, is quick to point out that most families try to stick to some kind of household budget and do feel the pinch when oil prices fluctuate.

"AAA's view for a long time has been that inflation-adjusted prices for energy are probably helpful to economists and policymakers, but not for the typical family that has to pay a gasoline credit-card statement every month," says Geoff Sundstrom of AAA. "The prices are paid with real dollars or current dollars."

Consumers seem to be taking the rapid rise in oil prices in stride. Many aren't cutting out that weekend movie to make up for the damage at the pump.

Jeff Stepanik, for instance, says gas prices over $2 a gallon have not had any impact on his family's budget (or lack thereof). He is still tinkering around with motorcycles and his wife is still happily hitting the mall. "We don't live any differently than we did before," says the Houston account manager. "It's not like we're going without a meal because of gas prices." But he is considering a life with routinely higher gas prices - as witnessed by his family's most recent purchase.

Three weeks ago, Mr. Stepanik sold his wife's "gas-guzzling" Ford Expedition and bought a hybrid Nissan. "This vehicle made more financial sense, because we are not going to stop driving," he says.

He estimates that gas prices would have to exceed $10 a gallon before he considers changing his driving patterns.

That's not an uncommon attitude in the United States. Even during the oil embargo of the 1970s, it took a while before consumers began buying smaller, more fuel-efficient cars or moving closer to where they worked.

"It's going to take a lot higher gas prices for people to consider using mass transit or carpooling again," says Mark Baxter, director of the Maguire Energy Institute at Southern Methodist University in Dallas. "It is really difficult for Americans to give up the freedom they have with the automobile."

He sees it happening perhaps first with the younger generation, who are more shocked by the rising prices because they have grown up with cheap gas. For instance, he knows a college student who took a lower-paying summer job because it was 20 miles closer to where he lived.

"They are doing the math," says Mr. Baxter.

But Michael Solomon, consumer behavior expert at Auburn University in Alabama, calls the frenzy over rising gas prices "a tempest in a teapot," considering the amount of money people spend on small indulgences.

"The same people who are complaining about gas prices don't blink when they pay $3.50 for a latte," he says. "That's different somehow."

What's different is the changing perception of certain goods and services, he says. The necessities, such as food, clothing, and energy, are supposed to stay relatively constant, so that every year consumers are able to afford a little more of the "good stuff."

"We learn that a loaf of bread is $2.29 and we base our expectations on that. The usual becomes the right," says Dr. Solomon. "But the 11th Commandment is not that bread shall be $2.29."

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