Tuesday, December 11, 2012

Propaganda Never Sleeps

"Jeffers Media Theory" states that no article makes its way into the mainstream media without being bought and paid for. I can only imagine who is paying for these articles and WTF the EIA is up to:

"U.S. rethinks security as Mid-East Oil imports Drop"

Oil imports into the U.S. continue to contract - right on schedule. In 20 years or less, Oil imports into the U.S. will be, with the possible exception of Canada, essentially zero. The slow grind of Peak Oil is here for the OECD. It may have schmooshed (that's a technical term used daily on Wall Street) Europe first but I think it is pretty clear that the air is leaking out of the U.S.'s tire. We have been fortunate to be able to increase domestic crude production by a whopping 600k BPD and 900k in ethanol which went directly into gasoline. (Of course, the mathematically and technically inclined will recognize that 900k BPD in ethanol = 600k in petroleum equivalent. Ethanol contains 1/3 less energy per unit of volume.)

So, the U.S. is going to replace the Middle-East/North Africa ("MENA") with "Tight Oil" from the shale regions? Who writes this SH#!? Who paid them to write this SH#!? And why do "educated" people believe such nonsense??? 

From the article:

The United States is now producing more of its own oil. Plus, it's getting more from Canada, Mexico and Brazil.
Really??!!

While true in Canada's case, Mexico's exports have been in decline for years and Brazil is not a net exporter of Petroleum products (exporting crude and importing gasoline does not make you a major export power!) 

So why does Reuters say such nonsense?

Good question (if I do say so myself), but there is more to this story. The examination of China's position in all of this simply stands U.S. policy outcomes on its head in the land of unintended consequences.

We fought war after war after war, killing and maiming millions of the world's people and several million American dead and horribly wounded to contain communism and maintain the flow of Oil while the domestic socialist/Statist BASTARDS/SCUM back home in the U.S. have demolished the family, enslaved those that actually work, and murdered 60 million unborn children?

And then rejoice at the re-election of a failed president (but who does give good teleprompter) who supports that policy agenda?

Yep.

And now the propagandists are telling you that "TIght Oil" (for those that don't know what "Tight Oil" is: Despite the propaganda that the U.S. is producing "Shale Oil" or Oil from Shale, the truth is is that we, that is the U.S., has not produced a single drop of the Oil squeezed from Kerogen rocks, otherwise known as "Shale". What we have done is use horizontal drilling technology to access small pockets of conventional oil locked in "Tight" formations contained within the Shale. Oil from Shale? Zero. Conventional Oil from Tight Oil deposits? The U.S. has increased production of this resource from ZERO in 2004 to 600,000 BPD today. The EIA expects peak Tight Oil production sometime next decade of 1.2 million BPD and then to decline thereafter) is going to replace U.S. Oil imports??!! 

Mashuga! (That's crazy) But every day, I get email from well meaning folks linking me to an article like this one, tacitly telling me that Reuters is correct, I am an incompetent alarmist, and all is right with the world - and that average Oil prices for 2012 were a new record is an anomaly; we invaded Iraq to bring freedom to the Iraqi people; and if we would just amend the Constitution to ensure the Right of every woman to kill her unborn child, and recognize that White Men are evil, everything will be right with the world!

The other side of the Propaganda coin is "America is going to run on Frac Gas".

I gotta tell ya... sometimes I think I am the only normal person left.

Here is a historical graph of Nat Gas production from the U.S. Department of Energy. There is good news here. The good news is that it is extremely unlikely that Nitrogen fertilizer supply shortages will lead to a severe food shortage (had Fracking not worked out so well, and conventional Nat Gas production continued its decline, that outcome was an entirely reasonable outcome to worry about. If you are unfamiliar with the relationship between Nat Gas and Fertilizer, and Fertilizer and Food production please feel free to Google). There is also good news for the costs and availability of space heating fuel in the U.S., the environment, and the cost of electrical generation.

With all of that good news - how did the U.S. economy do? Do we have Nat Gas infrastructure for the installed auto fleet? Has all of that Nat Gas production increase replaced coal? (Think about that for a moment... when Nat Gas replaces all coal for electricity generation you will know that the Nat Gas glut is a permanent fixture and solution to the American Energy Crisis.) Can the production companies turn a profit from Fracking at these prices? How about double these prices? If not, stand by and watch the bottom fall out of Nat Gas production.

(The market will move equipment and make investment where there are profits to be had. If Fracking Nat Gas is profitable, why are the number of rigs drilling for gas plummeting?)

Wall Street, the Office of Management and Budget, the Federal Reserve, the IRS, and a few other massive institutions are in need of the above mentioned propaganda, and they have done a masterful job of "kick the can" over the past 4 years. Yet the American economy is still moribund and 1/6 of its citizens requires food assistance from the Federal Government - nearly double the rate of just 5 years ago.

I find it hilarious that U.S. policy makers are taking credit for the U.S.'s soon to be status as "Energy Independent! That circumstance had nothing to with anything the U.S. - and everything to do with the fact that Oil Exporting Nations are running out of available Oil to export. Peak Oil Imports (if not Peak Oil) is killing Europe and slapping the U.S. economy around - it could have been a lot worse. Increases in Ethanol and Tight Oil supplies helped the U.S. avoid Europe's fate (so far), me thinks. Maybe exponential growth in wind and solar will make up the difference in time - and maybe not. So far, I would have to bet the "Don't Pass" bar on that one - but I reserve the right to change my mind in a freaking instant if the data changes.

More soon (on the economic outcomes resulting from that input).










5 comments:

tweell said...

I'm not so sure about your media theory - IMHO there's a sliding scale depending on how well the article fits the media narrative. Anything that isn't politically correct will cost incredible amounts, while the best progressive articles may just require buying a journalist lunch.

The narrative requires that we're fine on petroleum, that President Obama is moving Vorwärts! (so much better in the original German) and We Can Pay More!

Greg T. Jeffers said...

Tweel:

I stand corrected. I accept the "Tweel Addendum" of a sliding scale.

tweell said...

I've been thinking about this a bit. Wind and solar simply cannot compete against hydrocarbons until those hydrocarbons cost $8 per gas gallon equivalent, and only pull ahead if that cost is $10 or more.

While our government is doing their best to keep that boom in petroleum products down with permits, regulations and denying production on public lands, they also want to avoid being blamed for shortages and price hikes. One way is to suborn the conservative view of self-sufficiency and keeping work/money in the US. Claim we are self-sufficient (or becoming rapidly so) and that the higher costs are just to pay the American worker a living wage, and an incipient revolt/loss of power may be avoided.

Anonymous said...

Tweel- what the F are you talking about?

We have had oil and gas drilling on public lands going back to your great grandfather's day. Most of the Rocky Mountain oil&gas drilling is on public lands. The claims that oil drilling is prohibited on US public land is just more political insanity from the corrupt US political system.

I worked in oil geology all over the US and Alaska for over a decade. Most of the wells I drilled were on public lands.

Marshall

tweell said...

What I am saying is that the Obama administration has been very slow to approve permits for companies to drill or mine on public land. The oil and natural gas boom we are seeing is overwhelmingly from Bush administration permits. Exploration rigs (as noted by our host) are getting fewer, when they should be growing in number to take advantage of the new technology.

Oh no, no prohibition. Just slow approval and a lot of denials for what seem specious reasons. I have part of a privately-held petroleum exploration company. They have ceased to apply for permits to drill on public land, and instead are partnering with Native American tribes in Arizona. Dealing with the tribes is... not easy, which speaks volumes about the current administration's behavior.