Editorial: Shale oil offers hope of cheaper gas and freedom from foreign oil
If you traveled over the Thanksgiving holiday, or plan on traveling for Christmas, you're probably watching the price of gas like me.
I spent Thanksgiving in Lake Charles with my daughter and newborn grandson Mason. In anticipation of the trip, I shopped around for cheap gas and found a station charging $3.07 per gallon. So Tuesday night I filled up the car. I was glad I did because by Wednesday morning the price had jumped to $3.15 at the same station.
That's nothing compared to what they pay in Europe. Folks in cities like Paris and Milan pay well over $5 for a gallon of gas. If the prices climb that high here, many of us won't make it.
Perhaps with the drilling of shale oil, we won't have to pay those prices.
I read a recent report issued by the International Energy Agency (IEA) which says by the year 2020, the U.S. will be the world's largest oil producer. The IEA is counting on U.S. shale oil deposits and natural gas liquids to be a game changer – along with the higher prices we are now paying.
Higher gas prices make it economically viable to go after what the industry calls "tight oil" trapped in shale deposits.
Petroleum geologists have known about shale deposits for years, but investors weren't willing to spend money to bring it to the marketplace. That's understandable because in a highly-regulated industry, there are a lot of risks.
For example, shale oil extraction is more complicated than the conventional process. It takes two barrels of water to produce one barrel of shale oil liquid. And without cutting-edge water treatment technology, the water discharge process will increase the salinity in surrounding water, poisoning the local area.
I don't know if shale oil will lower energy prices anytime soon, but it certainly has the potential to remove our dependency on foreign oil.
Right now we rely on cheap oil from both Venezuela and Saudi Arabia, among other countries.
Over the years, we've learned about the political unrest in the Persian Gulf with the rise of the fundamentalists, but we haven't paid much attention to Venezuelan President Hugo Chavez in South America.
The term "frenemy" probably fits President Chavez pretty well. If you don't follow pop culture, a frenemy is a blend of friend and enemy.
Although Venezuela is an important trading partner with the U.S., President Chavez has made it clear he is not our friend. In fact, he continues to define himself in opposition to the U.S.
Not only has he expelled our U.S. Ambassador, but also he's deepened his relationship with Iranian President Mahmoud Ahmadinejad, signing agreements supporting Iran's development of nuclear energy. He's also reached out to support North Korea and Syria.
That's not all. In order to do business in Venezuela, oil companies must partner with the government-owned oil company there.
What's Chavez doing with the oil money? He's buying arms for the Venezuelan Armed Forces, purchasing more than $4.4 billion worth from Russia.
Despite political tensions, we've continued to trade with Venezuela. The fact is we've needed its oil for our way of life.
As much as I complain about the price of gas, it's still one of the cheapest things you can buy. That same gas for $3.07 a gallon averages out to less than 20-cents a cup. What else can you by for 20-cents a cup? You can't buy coffee or a bottle of water for that price.
The cheap cost of energy has made our country the industrial giant that it is today. But what happens when we run out of cheap oil?
I asked that same question back in 2008, when I interviewed Steve Jordan, CEO of Central Crude, Louisiana Tank and Jordan Oil. He had just been named as a member of Gov. Bobby Jindal's Energy Commission.
Steve told me without affordable energy, our lifestyles would become a thing of the past. In fact, he predicted massive energy shortages which would make the Great Depression of the 1930s look like the good old days.
I'll never forget that interview. Here was an oil industry insider discussing peak oil.
Steve admitted we couldn't drill ourselves out of the problem, but he stressed public policy had to be changed. He said in order to meet our energy needs, we must allow drilling off the coasts of California and Florida, as well as in the Artic National Wildlife Refuge.
His long-term solution involved diversification. He suggested utilizing a combination of traditional fossil fuels along with viable renewable energy sources. These included biofuels, coal, geothermal energy, hydroelectric power, nuclear energy, as well as oil and gas.
It was good plan – and one I hope we will follow.
Of course all of this was before the shale oil boom. The economics of shale has changed everything.
As gas becomes more abundant and cheaper, there will be almost no incentive to cultivate renewable power.
Lisa Yates is the editor of Gonzales Weekly Citizen. Follow her on Twitter @Lisa_editor.