What does ‘proven oil reserves’ mean in the U.S.?

Here’s an interesting post at Power Line. President Obama was apparently fond of making it seem as if the U.S. has a wildly unbalanced demand for oil. Q.v., “We consume about 25 percent of the world’s oil. We only have 2 percent of the reserves.”

But as John Hinderaker points out, unlike the rest of the world, the U.S. regards “proven oil reserves” as a legal term. It has a specific, legal meaning. The Securities and Exchange Commission defines “proven oil reserves” this way:

The quantities of hydrocarbons estimated with reasonable certainty to be commercially recoverable from known accumulations under current economic conditions, operating methods, and government regulations. Current economic conditions include prices and costs prevailing at the time of the estimate.

As Hinderaker explains,

So in the U.S., “proven oil reserves” has nothing to do with the total amount of oil in the ground. It includes only those hydrocarbons that are “commercially recoverable” under “current economic conditions” (which means that when the price of oil increases, our “proven reserves” increase, too) and, most notably, under current “government regulations.” So, for example, ANWR has never been included in the tabulation of U.S. oil reserves, nor has offshore oil in the areas–most of them–where drilling is prohibited by regulation, nor has oil on federal lands where current regulations don’t allow it to be developed.

In fact, the U.S. has more fossil fuel reserves than any other country. More than Russia, more than Saudi Arabia. Fracking has alerted most Americans to the fact that we have far more recoverable oil than they thought, but it only scratches the surface of what we could do under a pro-America regime.

I am reminded of this by this story about the shale oil boom. Currently, the U.S. is producing more than 9 million barrels per day of oil. World-wide production is around 96 million barrels per day. Which means that the U.S. now accounts for 9 or 10 percent of the world’s oil production.

There is a reason why, as warned by the secretary-general of NATO in 2014 and more recently as reported in Newsweek, “the Kremlin is financing and choreographing anti-fracking propaganda in the United States.”

It’s basically this:

cnn fracking

 

Jon Sanders / Director of Regulatory Studies

Jon Sanders studies regulatory policy, a veritable kudzu of invasive government and unintended consequences. As director of regulatory studies at the John Locke Foundation, Jo...

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