We are in an economic war—and it is bigger than Republicans and Democrats battling over tax increases and spending cuts. It is global.
The stock market has gone up and down, based on news of Europe’s financial solutions one day, and demise the next. Their success or failure impacts the global economy—including the United States.
The various troubled countries: Portugal, Italy, Ireland, Greece, and Spain are often referred to as the PIIGS. While there are myriad reasons for their difficulties, one not discussed on the nightly news is their lack of natural resources. By comparison, the BRIC countries—those with growing economies: Brazil, Russia, India, and China, are rich with resources, which they maximize.
America has an abundance of natural resources, yet our policies keep them locked up. We can’t drill in the Gulf. ANWAR is off limits. Mining is nearly impossible due to regulations. “Endangered species” threaten existing supplies.
Meanwhile resource discoveries are being made the world over.
Last week, Repsol announced a new discovery in Argentina—estimated to be more than 900 million barrels of oil. The oil shale find is reported to be Repsol’s largest ever. Argentina’s potential has attracted investment from both majors and independents. Argentina’s rising energy consumption and higher prices make Repsol’s success especially welcome, representing a potential windfall for the country. Argentina is not crying.
On October 20, a “giant” gas discovery was announced off the coast of Mozambique. It is reported that the results of the exploration well “exceed pre-drill expectations and confirm the Rovuma Basin as a world-class natural gas province.” Then, one week later, word came out that the find was 50% greater than originally estimated with up to 22.5 trillion cubic feet of gas. Estimates are expected to increase. Infrastructure, including LNG facilities, will have to be built to support the recent exploration successes with the natural gas expected to be brought to the market in 2018.
The day before the original Mozambique “giant” discovery announcement, it was reported that companies such as ExxonMobil would invest $100 billion to develop and upgrade oil fields in Iraq. The investment is expected to up Iraq’s oil production to at least 6.8 million barrels of oil a day by 2017—making Iraq one of the world’s largest producers of crude oil.
Also, on October 19, reports came out saying that the North Sea Statoil discovery is bigger than originally estimated with a potential of 2.6 billion barrels of oil equivalent—which would make it the third-largest find ever made on the Norwegian shelf. Production is expected to begin by 2018.
One day earlier, October 18, service provider Odebrecht announced plans to triple its revenues over the next three years. In support of Brazil’s vast deepwater oilfields, the company is spending $5 billion in equipment, from drilling ships and floating oil platforms to pipeline-laying vessels. Odebrecht says: “This year we should [have] revenues of about $500 million and we are going to double that next year, and be at $1.5 billion by 2013.”
This, all in the past couple of weeks.
In late-December 2010, 16 trillion cubic feet of gas was found off the cost of Israel in what is being called the Leviathan Field. The Julia Field was discovered in 2008 in the Gulf of Mexico and is called one of the greatest discoveries of the Gulf with an estimated 1 billion barrels of oil—but the Interior Department is now fighting ExxonMobil over its control.
Clearly there is no energy shortage.
While Europe is not rich in energy resources, they do understand their importance. They know they need energy.
Last week, on November 8, the Nord Stream Pipeline opened and began delivering Russian gas to Germany. With proposed plans to close their nuclear power plants by 2022, Germany needs the resource from Russia—though it does raise the specter of dependence on Russia/Russian energy control. Work is underway to build pipelines from other sources, which will minimize Russian domination.
Two days later, on November 10, President Obama announced a delay of more than a year to the true-shovel-ready XL Pipeline that would have created thousands of jobs and reduced America’s dependence on Middle Eastern oil. The pipeline would have brought both Canadian and northern US oil to refineries in the southern United States. Instead of diversifying our energy supplies and suppliers, we remain reliant on unfriendly countries.
Some might point to the November 8 announcement of a “modest expansion” in offshore leasing to indicate a change in the Obama administration’s attitude—though, in light of his ideological opposition to oil, gas, and coal, the proposed plan is more likely the result of public and industry pressure and the upcoming presidential election. Many of the most promising energy resources in the world will still be off limits.
Worldwide, more and more energy resources are being discovered, developed, and delivered. In the United States, not so much. In the global economic war, America is not poised to win.