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One measure of economic development of nations is the per capita use of energy. The United States has attained the highest standard of living and economic development in all history because of a plentiful supply of inexpensive primary energy. The consumer has come to take this low cost, constantly replenishing energy pitcher for granted.
Unfortunately, this nation now finds itself in the position of a "have not" instead of a "have" nation insofar as oil and gas, our principal sources of primary energy, are concerned. Domestic sources are rapidly drying up, although those of us who continuously study the situation know that there is a large potential supply of both oil and gas awaiting discovery in the contiguous United States. What has gone wrong? There are many reasons, but principal among them is that oil and gas have become the whipping boys of politicians, "instant" environmentalists, and the sensationalist
press. Moreover, we have approached the economic limit of our conventional structural oil and gas finding methods, except for a few favored locales.
It is impossible to separate the discovery of oil and gas. Reasonable calculations indicate that 75 percent of all the 641 Tcf of natural gas discovered in the "Lower 48," whether nonassociated or associated-dissolved, has been discovered (not necessarily developed) incident to the search for oil.
All exploratory activity has declined drastically since 1955, until it is now less than at any time since the end of World War II. Since 1955, more and more effort and money have been diverted to foreign exploration and production. This resulted from ever-increasing domestic costs and a continuously deteriorating political climate for oil and gas activity. As the excess oil producing capacity in this country diminished, those countries with excess capacity were quick to take advantage of the situation. Declining discoveries of natural gas lie at the root of the energy crunch. Whether or not increased incentives to spur exploration and drilling, offered at the eleventh hour, will forestall shortages in the next 3 to 5 critical years is highly problematical.
The oil and gas industry has no reason to apologize or take the defensive. Studies by the Chase Manhattan Bank indicate that less than 4 percent of its "Group's" revenue comes from the sale of dry natural gas at the wellhead. Moreover, the independent operator, so important in discovering oil and gas in this country, is being forced out of the industry by adverse government regulation and political interference. The First City National Bank's studies of annual yield on stockholders' equity clearly refutes charges of both excessive earnings and monopoly. It would appear that a group of ultra-liberal congressmen and much of the press would rather see the consumer dependent on foreign sources of energy, which not only are far more expensive but also jeopardize our national security, than see a viable healthy domestic industry with adequate excess productive capacity to meet any emergency.
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