Tuesday, July 29, 2008

Gartman: Pass it on, Pass it on.

Dennis Gartman of "The Gartman Letter" a daily commentary on the markets and events driving market action yesterday repeated some comments on the energy policy debate that I am lifting whole from his letter. I am passing it on with full credit to Mr. Gartman.
THEME: Friday we took the time to write about the
recent "discovery" of huge new deposits of crude and
natural gas by the US Geological Survey team in the
Arctic. We spoke at some length about what the USGS
had found, and we took the Left to task for its improper
understanding of what had been found. The response to
this comment on our part was perhaps the strongest we'd
gotten on anything we'd written in a very long while, so
we thought we'd repeat a portion of it again here this
morning so that our clients in the US might take the time
to send a note to their Congressman (or woman, as the
case may be) and to their Senators to show them the
fallacy the Left is beholden to regarding oil exploration
and discovery.
The problem, as we said Friday, is that the Left is
misleading the public on what the USGS found and no
one from the energy industry or from government or from
the free market is taking the Left's spin to task. The Left
said that the 90 billion barrels of crude it believes exist in
the Arctic will amount to only three years of demand and
that this is too little to put the Arctic at risk. The Left
arrived at this 3 year figure by taking the 90 billion barrels
of crude and dividing it by 86 million barrels, which is the
amount of crude oil used globally on a daily basis. That
is indeed 1046 days worth of crude oil at today's usage
rate; however, what the Left conveniently has forgotten to
tell anyone is that they've not taken into consideration the
fact that the world is using 86 million barrels of crude
each day and it has them to use! These current supplies
are not going to suddenly cease to exist; they will
continue on for years into the future, and even the "Peak
Oil" theorists shall not argue that fact. Thus, the 90
billion in undiscovered crude would be new supplies
added at the margin. If the world might increase its use
by an additional 2 million barrels/day, it would take 123
more years to use up this new crude oil! No one on the
Left would ever make that case, for the public would say,
collectively, "What the heck are we waitin' for? How come
we are not drillin' right now; right this very afternoon, to
find this crude up there in the cold, cold north, populated
only by an increasing number of polar bears and elk?"
The NY Times, the LA Times, The Washington Post, all
represented the new crude oil in the "only three years
worth of crude" manner. No one, other than TGL, is
presenting it in the proper 123 years manner. Further, the
Left will argue that drilling in the Arctic shall be
ecologically damaging, citing the Exxon Valdez accident
of two decades ago as evidence. This is nonsense for the
simple reason that since then single hull tankers are
illegal. What might have been an accident two decades
ago is nearly an impossibility now.
Further, the Left argues that drilling is itself fraught with
disaster, but if we are to learn anything from the
aftermath of Hurricane's Katrina and Rita of two years
ago it is this: these "once-in-a-century" weather
problems resulted in not one leak from any well drilled in
the Gulf of Mexico! Not one! Not one barrel of crude
leaked out; not but a very, very few cubic feet of natural
gas escaped. The oil companies and the drillers have
advanced their activities to a level simply not understood
by the eco-radicals and those on the Left. This needs to
be passed on, so pass it on
Finally, we note that the USGS reports energy
discoveries using what it calls "undiscovered technically
recoverable resources" in this report. By that the USGS
means crude and nat-gas that can likely be produced
using only "current technology." That then is another
important point, for we know of one thing upon which we
can count in the modern world: technology continues to
push the energy business. What is currently possible was
not ten years ago, and what is currently possible now will
look comical and unsophisticated ten year hence. If
there is 90 billion of undiscovered crude beneath the
Arctic using current technology, then it is reasonable to
believe that there will be a good deal more than that
using future technology.
There are few things in the world of energy one can rely
upon, but one can rely upon the fact that technology
expands supplies more swiftly than we can use them. As
we are wont to say "We did not leave the Stone Age
because we ran out of stone." We left the Stone Age
because new technologies ended it for our ancestors,
just as we shall end the present carbon fuel era for our
children and their children and their children's children by
pushing for technological change. This is the real change
we can count up, to steal Sen. Obama's tag line.
Tuesday, July 29, 2008 Tel: 757 238 9346
Fax: 757 238 9546
E-mail: dennis@thegartmanletter.com
London Sales Office: Donald Berman, Alberdon Int'l. London
Fax 442076286811
Phone 447986221110

I agree and endorse these comments fully. Pass it on.

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