The free market of high oil prices for the past few years has made a Renaissance in this country for crude oil. With no help and lots of barriers and new expenses the oil industry has powered right on lifting the U.S. to producing nearly 7 million barrels a day and going over and more is looking like a sure thing.
The oil boom happened all on its own without government subsidies, and the oil and gas boom is the reason that things are going to get real tough for the alternative energy folks over the coming years as those government subsidies wind down. Those subsidies won’t make sense from an economic standpoint once oil prices come down, and from a government budget view we can no longer afford propping up industries that cannot sustain themselves on their own merit in the free market.
If that’s not enough, the impossible to comprehend Iranians have enough money to go ahead with their nuclear program and fund no less than 57 oil projects by June of this year. The idea of sanctions doesn’t seem to accomplish much other than make news.
Even more disconcerting to the peak oil folks is that Saudi Arabia’s Oil Minister has confirmed the discovery of new oil fields in the Tabuk region. This news has a long lead-time, but the news has it that there is lots of natural gas as well. The Madian Gas Field will be developed in 2013 to provide power plants with gas. Today reports have it that the Saudis burn a million barrels of oil to generate electricity – a model soon to stop that would put another million barrels per day on the open market.
On the significant but smaller list is Columbia who should clear the million barrel per day line, Angola is on a roll, and even tired, mired, corrupted and taxed near to exhaustion Mexico is looking up.
But the major players, the U.S. among them, are pouring on the investment and technology. Iraq is now OPEC’s second largest producer with reserves to rival Saudi Arabia. Venezuela has started producing from the rich Carabobo field.
It’s not just the U.S. push. While most of the technology and innovation comes from the U.S. lots of new investment is coming from the BRIC countries (Brazil, Russia, India, China) that are making money with their businesses. That means China with big stakes in Africa and Venezuela with an effort working in Canada at cross-purposes to U.S. interests even though the current U.S. administration doesn’t seem to get it. India also is dabbling in investment off its shores.
But the Big News is Brazil where not only is capital and credible partnerships getting organized, there seems to be a huge regional sized oil field close offshore.
That leaves Russia. This is a government that can’t get it right. With oil and gas resources near the top of everyone’s lists, the economic model that’s developed since the Soviet Union fell apart has trapped the oil and gas resources into oligarchies or really government control.
Investment has floundered, capital has been squandered and the ethics needed to participate both on sharing development technology as well as with treating the customers decently is a slow moving disaster. Now more than twenty years on from the Soviet collapse the Russian people are just as vulnerable to authoritarian mismanagement. Putin has managed without intending to be the key for oil prices while simultaneously facing a government and population dependent on oil production and high prices.
Other than the Russian problem consumers worldwide can expect some relief. The U.S. administration, government run oil businesses and peak oilers, climate change hysteria and adversarial mass media have been conquered by small, medium and large free world oil companies.
It took a while, but the fruits of freedom, free enterprise and free markets are winning. 2013 will be a year of oil and gas.