The quick answer is no, we shouldn’t care. But that’s not true for everybody. Say you’re somebody who owns BP stock, or perhaps you work at BP or maybe you’re an offshore drill rig specialist. Then you should care. Otherwise, go back to sleep and ignore those who may pelt you with worn out oil-world platitudes such as, “This is huge! This will help us reach energy independence! This is what ‘drill, baby drill’ is all about!”
If you hadn’t heard, read or seen, BP made what it calls a “giant” oil discovery in a deep-water section of the Gulf of Mexico, about 200 miles due south of Lake Charles, Louisiana. The oil is said to be more than 30,000 feet (almost six miles) below the surface of the Gulf. The Wall Street Journal account of the find is here.
But if you’re starting to puff out your chest, dust off your American flag and getting ready to make gloating, filthy hand gestures in the general direction of the Persian Gulf, you may want to pause for a moment.
Despite the fact that BP proclaimed the find to be “giant,” it’s not something that will make a difference in your life today, tomorrow or ever. The find has been pegged at about 3 billion barrels of oil total. Not bad. Analysts say, however, that only about a third of that oil will be recoverable in the most optimistic scenario. So now we’re down to 1 billion barrels of crude. Still, that sure sounds like a lot, eh? But it’s not.
The United States uses a ridiculous amount of oil: 7 billion barrels a year. So this find in the Gulf of Mexico wouldn’t even last us 2 months as a country — and that’s if we could pull the stuff out as fast as we wanted. We can’t. Engineers figure we’ll be able to get 100,000 to 150,000 barrels of oil a day out of this thing. That could be in a decade. In a world that produces 85 million barrels of oil a day, this kind of amount is less than a rounding error. It will have no effect on world markets, nor will it lower the cost of crude palpably whatsover.
Of course, this 1 billion barrels of recoverable oil is worth about $70 billion today and that’s a value that will only go up over the years. So it’s good news for BP and its employees and shareholders, and pretty much not news at all for the rest of us.
So go forth, enjoy your Labor Day and drill, baby, drill. Or don’t. Because it really doesn’t matter.
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[...] article once again recounts BP’s GIANT find in the Gulf from last fall. Never mind the fact that of those 3 billion barrels, only 1 billion are recoverable and that, [...]