Pyle: One job killed as a result of reactionary government policy is one job too many

WASHINGTON – In response to news reports detailing the Administration’s misguided approach to the economic and employment impacts its drilling moratorium has had on Gulf Coast communities, Institute for Energy Research President Thomas J. Pyle released the following statement.

“When we first learned that the Administration would halt all deepwater exploration in a misguided attempt to respond to the oil spill, we had to assume that they just didn’t understand the importance of the industry and the thousands of jobs it provides to the communities along the Gulf Coast. After all, what government would knowingly and purposely put thousands of its citizens out of work? But now we learn that it wasn’t a lack of knowledge about the consequences that led to the unwarranted policy, it was an outright lack of concern for the livelihoods of these hardworking Americans.

“Moreover, in addition to this premeditated destruction of jobs in the deepwater, the Administration is starving the workers in the shallower waters of the Gulf by slow-walking the permit process. It now appears that even if the Administration lifts the moratorium, their deliberate stonewalling in the shallow waters of the Gulf will kill any hope of jobs and American energy production.

“While one could reasonably assume that this should be self-evident, it appears the American people need to send a message to the President, his Interior Secretary Salazar, and his offshore regulator, Michael Bromwich: one job killed as a result of a reactionary government policy is one job too many. While you write memos and hold hearings, Gulf Coast residents are suffering. And they don’t want handouts, they want their jobs back. Now is the time to end this moratorium and let these men and women to get back to work providing the American people with affordable, reliable, domestic energy.”

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“The Administration continues its assault on US energy production, this time trying to convince us that a shortage of paperwork led to the Gulf spill.  No amount of Government Green Tape would have stopped the spill, and in fact, Americans saw that it actually made cleanup harder.

“The Administration continues to ship our energy security and our jobs overseas, and all this is just another example of their energy extremism.  And with this Administration, extremism in defense of dogma is putting the American economy in a vise.”

FOR IMMEDIATE RELEASE:
August 17, 2010
CONTACT:
Laura Henderson, 202.621.2951

History and Projections

Just a short seven years ago, China consumed less than half the energy that the United States consumed.[iii] By 2009, China had not only caught up with the United States as far as energy consumption was concerned, but consumed almost 4 percent more energy than the United States, which was suffering from an economic downturn. According to the IEA, China consumed 2,252 million tons of oil equivalent last year, compared to 2,170 million tons of oil equivalent consumed by the United States.[iv] China’s economy and energy demand have grown at breakneck speed as it has become the world’s leading exporter, and it stands poised to overtake the United States in manufacturing output in 2011. [v]

The United States is the largest consumer of energy on a per capita basis, according to the IEA, using about 5 times the amount of energy as China per inhabitant, in part because of the much wider use of personal transportation in the United States. [vi] However, sales of automobiles in China have now outstripped those in the United States.[vii] So that U.S./China per capita ratio is not likely to continue for long.

China recorded its largest oil demand in June of 2010 at 8.98 million barrels per day, 10 percent higher than a year before, and 0.7 percent higher than May 2010, the previous record.[viii] And China is expected to build an additional 1,000 gigawatts of generating capacity, about the total U.S. electric capacity base, in the next fifteen years, according to the IEA.   In contrast, growth in U.S. energy demand has been reduced by the recession, efficiency and intensity improvements, and regulations, while supply has been constrained by opposition to all forms of non-renewable energy and its transport.

The Energy Information Administration projects that by 2035, China will have a total of 1,924 gigawatts of electric generating capacity, compared to 1,216 gigawatts for the United States, with an annual growth rate of over 5 times that of the United States. [ix] Over 60 percent of that new generating capacity is projected to be coal-fired. And while there are “clean” coal technologies for removing sulfur dioxide and nitrogen oxide, there is no commercial technology as yet for removing carbon dioxide emissions. Thus, the EIA projects that China’s carbon dioxide emissions will be over twice that of the United States by 2035, with its emissions from coal being 4.5 times as much as those in the United States.[x]

Global Carbon Dioxide Emissions

According to the  Netherlands Environmental Assessment Agency (PBL)[xi]—using data from British Petroleum (BP), the U.S. Geological Survey (USGS), and the latest version of the Emission Database for Global Atmospheric Research—global carbon dioxide emissions were constant in 2009. (See chart below.) The developed world’s recession brought about reduced fossil fuel consumption, but China and India together offset those reductions.[xii] China increased its coal consumption by 9.6 percent in 2009, and India increased coal consumption by 6.8 percent.[xiii]

According to PBL calculations, emissions from fossil fuel combustion in the industrialized countries (including those from gas flares, the burning of waste gas from oil drilling, and other industrial processes, such as the production of cement and ammonia) decreased by 7 percent owing to an attempted compliance with the Kyoto Protocol by countries that have ratified it and to the global recession. In China, despite a doubling of wind and solar energy for the fifth year in a row, carbon dioxide emissions increased by 9 percent, and in India, they increased by 6 percent.[xiv] Owing to the United Nations’ Clean Development Mechanism (CDM), the developed countries have been funding wind and solar projects in underdeveloped countries as a form of compliance with the Kyoto Protocol.[xv] China has benefited from the CDM to the point that 30 percent of its wind units are still not connected to its electrical grid.[xvi]

China’s Goals for Emission Reductions

China has set targets to reduce energy consumption per unit of economic output by 20 percent this year compared with 2005, and to reduce emissions of greenhouse gases per unit of economic output by 40 to 45 percent in 2020 from its 2005 levels.  However, it is finding it difficult to meet these targets owing to its expanding economy and its population’s desires for Western conveniences (e.g., bigger cars, more appliances).   As a result, apartment and office buildings are being constructed at a rapid pace; sales of large household appliances (such as refrigerators and washing machines) have more than doubled in the past year in rural China alone, owing to government subsidies to help peasants afford modern conveniences; and Chinese malls, which are exempt from temperature regulations, are being built throughout Chinese cities. To provide the electricity needed, last year, China built new coal-fired power plants with a total capacity greater than all the power plants in New York State.[xvii]

Further, China’s auto sales increased by 48 percent last year, surpassing U.S. auto sales for the first time, and they continue to increase.  With its economy shifting away from light industries for export (e.g., toys and clothing) and toward energy intensive industries such as steel and cement to satisfy domestic demand for goods, China has seen its efficiency gains reverse, having declined by 3.2 percent in the first quarter of this year. China uses twice as much energy per dollar of output as the United States and three times as much as the European Union. Further, manufacturing, which is energy intensive, makes up three times as much of the Chinese economy as it does the U.S. economy.[xviii]

With huge demand increases in electricity generation and steel mills, Chinese coal imports are expected to reach a record in 2010. According to Peabody Coal, China imported 70 million metric tons of coal during the first 6 months of this year, double the amount it imported through June of last year.[xix] China uses coal in its industrial processes in addition to its electricity production. In 2007, for example, China produced  50 percent of the world’s cement, more than 13 times as much as the United States.[xx]

Conclusion

As a result of its economic growth—expected to be 10 percent this year—and its citizens’ demand for Western conveniences, China’s energy requirements are increasing and it is becoming less energy efficient, contrary to its stated goals. Because most of its energy is produced from coal, China’s carbon dioxide emissions are increasing at a rapid pace. In fact, China’s carbon dioxide emissions have shown the largest six-month increase ever by a single country.[xxi] With double-digit economic growth, plus growing consumer demand and manufacturing capabilities, China is focused on supplying energy to feed its economic growth and to meet the needs of its population.  As Faith Birol, head of the IEA said when announcing China’s new status as the world’s number one energy consumer, China’s ascendancy marks “the start of a new age in the history of energy.”

[ii] Energy Information Administration, Monthly Energy Review, http://www.eia.doe.gov/emeu/mer/pdf/pages/sec2_3.pdf

[iii] Energy Information Administration, http://tonto.eia.doe.gov/cfapps/ipdbproject/iedindex3.cfm?tid=44&pid=44&aid=2&cid=&syid=1999&eyid=2004&unit=QBTU

[iv] According to the BP Statistical Review that includes oil, natural gas, coal, nuclear, and hydroelectric power in its primary energy statistics, China was still slightly behind the U.S. in energy consumption with the U.S. consuming 2,182 million metric tons of oil equivalent, and China consuming 2,177 million metric tons of oil equivalent.  See http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf

[v] “US manufacturing crown slips”, Financial Times, June 20, 2010  http://www.ft.com/cms/s/0/af2219cc-7c86-11df-8b74-00144feabdc0.html

vi The Wall Street Journal, China Passes US as the World’s Biggest Energy Consumer IEA, July  19, 2010, http://online.wsj.com/article/SB10001424052748703720504575376712353150310.html?hat_input=China+Passes+U.S.+as+World%27s+Biggest+Energy+Consumer

[vii] “China overtakes US as world’s biggest car market” The Guardian, January 8, 2010. http://www.guardian.co.uk/business/2010/jan/08/china-us-car-sales-overtakes

[viii] Platt’s Report: China’s Oil Demand in June Hits New High, Up 10% from Year Ago, July 21, 2010, http://www.prnewswire.com/news-releases/platts-report-chinas-oil-demand-in-june-hits-new-high-up-10-from-year-ago-98919164.html

[ix] Energy Information Administration, International Energy Outlook 2010, http://www.eia.doe.gov/oiaf/ieo/pdf/ieoecg.pdf

[x] Ibid., http://www.eia.doe.gov/oiaf/ieo/pdf/ieorefcase.pdf

[xi] “No growth in total global CO2 emissions in 2009″, Netherlands Environmental Assessment Agency, July 1, 2010, http://www.rivm.nl/bibliotheek/rapporten/500212001.pdf.

[xii] Financial Times, China and India, the CO2 culprits of 2009, July 5, 2010, http://blogs.ft.com/energy-source/2010/07/05/china-and-india-the-co2-culprits-of-2009/

[xiii] BP Statistical Review of World Energy, June 2010, http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf

[xiv] “No growth in total global CO2 emissions in 2009″, Netherlands Environmental Assessment Agency, July 1, 2010, http://www.rivm.nl/bibliotheek/rapporten/500212001.pdf.

[xv] Institute for Energy Research, http://www.instituteforenergyresearch.org/2010/03/24/kyotos-clean-development-mechanism-is-it-producing-results-for-whom/

[xvi] Wall Street Journal, China’s Wind Farms Come With a Catch: Coal Plants, September 28, 2009, http://online.wsj.com/article/SB125409730711245037.html

[xvii] New York Times, China Fears Consumer Impact on Global Warming, July 4, 2010, http://www.nytimes.com/2010/07/05/business/global/05warm.html?_r=1

[xviii] Ibid.

[xix] ClimateWire, Coal: Peabody’s 2Q earnings surge on China’s galloping energy demand, July 21, 2010, http://www.eenews.net/climatewire/2010/07/21/3/

[xx] U.S. Geological Survey,  http://minerals.usgs.gov/minerals/pubs/commodity/cement/mcs-2008-cemen.pdf

[xxi] New York Times, China’s Energy Use Threatens Goals on Warming, May 6, 2010, http://www.nytimes.com/2010/07/05/business/global/05warm.html?scp=3&sq=China’s%20Energy%20Use%20Threatens%20Goals%20on%20Warming&st=cse

EIA’s Short-Term Forecasts

Because of the global recession and the slow U.S. recovery, the EIA expects U.S. petroleum demand to increase by only 200,000 b/d in 2010 and by 170,000 b/d in 2011, an increase of approximately 1 percent in each year. Despite the moratorium, domestic production is still expected to increase in 2010, but by only about 70,000 b/d, one-fifth of the previous year’s increase. Because of the Energy Independence and Security Act of 2007 mandating biofuel production, ethanol is expected to increase by 150,000 b/d in 2010. Together, domestic oil production and ethanol production will thus be able to meet the increased demand levels for 2010.

In 2011, however, the story is expected to be different. Although onshore oil production is expected to increase from 2010 levels, it will not be enough to compensate for the losses caused by the Administration’s drilling moratorium. As a result, EIA is projecting a decline in oil production of 26,000 b/d.  That production decline will be offset somewhat, the agency’s expects, by ethanol production that will increase 30,000 b/d from 2010 levels. Nevertheless, because petroleum demand is expected to increase, imports must compensate. EIA projects those imports to be petroleum products, which will be 190,000 b/d higher than they were in 2010, helping to not only meet the demand increases in 2011, but also to offset a forecasted decline in crude oil imports of 11,000 b/d.

The decreased production impacts from the Gulf of Mexico that are forecast by EIA in its July Short-Term Energy Outlook are higher than they were in the June Outlook. EIA indicates that it will continue to refine the estimates as more information becomes available. And more information has become available. The moratorium has now extended to 3 rigs in the Pacific, off the coast of Santa Barbara. A prolonged moratorium in the Pacific would impact more than 100,000 barrels of oil a day, resulting in even more dependence on foreign oil. It is unclear why the U.S. Department of Interior extended the moratoria to the Pacific, inasmuch as operations there differ from those that caused the oil spill in the Gulf and drilling operations there have been performed for over 40 years without a spill.[iii]

EIA’s Long-Term Projections

According to EIA, 30 percent of total oil production in the United States in 2009 came from the offshore area of the Gulf of Mexico [iv] and more than 80 percent of Gulf production was from deep water.[v] EIA’s long-term projections expect total offshore production to reach 38 percent of domestic production by 2035, increasing by 1 million barrels per day between 2007 and 2035, an annual rate of increase of 2.3 percent. That increase includes drilling off the Atlantic and Pacific coasts, owing to the expiration of the moratoria on offshore drilling that was permitted by both Congress and the administration in 2008. Of course, that was before BP’s oil spill on April 20, 2010, and the 6-month drilling moratorium enacted by the Obama administration.

The result of the Obama administration’s moratorium on deepwater exploratory oil drilling and increased offshore drilling regulations was to shut down the operation of 33 deepwater rigs and stall permits in shallow water.  It took the Federal government until July 19^th to issue a permit to drill in shallow water.[vi] In the deepwater areas, things are even more grim. Because keeping rigs idle costs their owners $500,000 a day (in the lost opportunity costs of drilling elsewhere),  2 oil rigs have left the Gulf of Mexico for foreign countries where the rig owners feel the atmosphere is more conducive to offshore drilling; the owners of an additional rig are contemplating a move. More owners may make the move if the drilling moratorium goes past November.[vii] Rep. Pete Olson (R-TX), who called for lifting the moratorium, said: “Once the rigs relocate, it could be a minimum of five to 10 years before they return.”[viii] Others are not so pessimistic, however, because of a possible surplus of newly built rigs next year. Nonetheless, there is a great deal of uncertainty as to whether the EIA’s long-term oil production forecasts will come to fruition.

That uncertainty includes whether the Obama Administration will open the waters off the Atlantic and Pacific coasts to oil and natural gas exploration. While President Obama had previously been open to such a move, the actions that are required to open those areas to exploration have been delayed by his administration.[ix]

Long-Term Impacts

Of course, if shut-downs in the Gulf were to continue, whether because of a moratorium or because of economic conditions that made drilling in the Gulf a sub-par investment, the short-term impacts noted above would get magnified over time.  A complete shut-down of deepwater drilling would reduce U.S. oil production by more than 27 percent by 2035, and oil imports would be 19 percent higher.[x] Further, employment would be reduced by 175,000 jobs (direct and indirect) each year between now and 2035, and GDP would be reduced by $500 billion ($20 billion annually).[xi]

The above estimates were based on the reference case forecasts from EIA’s Annual Energy Outlook 2010[xii] and projected development expenditures for deep water development in the Gulf from a 2009 IHS Global Insight study. A more recent analysis by Wood Mackenzie substantiated the project cost assumptions, indicating that higher drilling costs, an estimated 25 percent increase in capital costs from increased regulations and taxes, and regulatory delays would make the deepwater fields of the Gulf of Mexico sub-economic, that is, unable to achieve a post-tax internal rate‐of‐return of 10 percent.

Conclusion

With the oil spill from BP’s Macondo well essentially contained and only some tar balls left, the question is still open as to whether the Obama administration will restore drilling in the Gulf and the Pacific and lift the moratoria or at least not extend them past November so that the nation can benefit from its domestic resources, instead of competing with China and other countries for additional foreign oil supplies. Also at issue is whether oil companies will be subjected to unreasonable rules that will make offshore oil production unprofitable. Congress[xiii] is currently working on legislation to improve safety and to help prevent future oil spills from occurring,[xiv] but that legislation may prove too onerous for the industry, subjecting the American public even more to the whims of foreign countries.

[ii] BP Statistical Review of World Energy, June 2010, http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf

[iii] New offshore drilling moratorium lays off dozens of local workers, July 29, 2010, http://www.vcreporter.com/cms/story/detail/new_offshore_drilling_moratorium_lays_off_dozens_of_local_workers/8107/

[iv] Energy Information Administration, Gulf of Mexico Fact Sheet, http://www.eia.gov/oog/special/gulf/gulf_fact_sheet.html

[v] Energy Information Administration, Annual Energy Outlook 2010, Table 113, http://www.eia.doe.gov/oiaf/aeo/aeoref_tab.html

[vi] Reuters, U.S. issues first shallow-water drilling permit, July 19, 2010, http://www.reuters.com/article/idUSTRE66I5DG20100719

[vii] The Wall Street Journal, Exodus of Rigs Hasn’t Happened, July 21, 2010, http://online.wsj.com/article/SB10001424052748704723604575379332167380458.html?KEYWORDS=Exodus+of+Rigs+Hasn%27t+Happened

[viii] Deep Water Oil Drilling Rigs Leaving the Gulf Region, July 29, 2010, http://yoursinglesourcefornews.com/deep-water-oil-drilling-rigs-leaving-the-gulf-region/1712/

[ix] The Guardian, Barack Obama orders six-month freeze on offshore drilling and expansion, May 28, 2010, http://www.guardian.co.uk/environment/2010/may/27/obama-strategy-offshore-oil-drilling

[x] Potential Impacts of Proposed Increases in Regulations & Taxes on Deepwater Drilling in the Gulf, http://www.scribd.com/doc/34950965/Potential-Impacts-of-Proposed-Increases-in-Regulations-Taxes-on-Deepwater-Drilling-in-the-Gulf

[xi] Ibid.

[xii] Energy Information Administration, Annual Energy Outlook 2010, http://www.eia.doe.gov/oiaf/aeo/index.html

[xiii] The U.S. House of Representatives passed its version of the “oil spill” legislation (H.R. 3534)  on Friday, July 30, 2010. See http://www.eenews.net/eed/

[xiv] Bloomberg Businessweek, Congress Moves to Restrict Drilling, Shelves CO2 Cap, July 28, 2010, http://www.businessweek.com/news/2010-07-28/congress-moves-to-restrict-drilling-shelves-co 2-cap.html

The House Energy & Commerce Committee (E&C) — chaired by Representative Henry Waxman (D- Hollywood) — continues to work overtime to make energy harder to produce, more expensive, more imported and more rare. Using the tragic Gulf spill as justification, the committee unanimously passed the “Blowout Prevention Act of 2010” on the same day BP finally achieved some success in controlling its out-of-control Macondo well. With this bill, Chairman Waxman is leaping before he looks, with serious consequences for US energy and national security, as well as for the jobs of not just the hundreds of thousands who work in the offshore energy industry, but their counterparts on land, as well. He is leaping off a cliff while holding onto America’s arm.

Rather than waiting to find out what went wrong and working to fix it, E&C passed an expansive new bill that micromanages federal offshore oil rig technical requirements, in a “shoot first and then ask questions” approach that helps explain congress’s growing dislike by the public.

Although it is common today for congress to leap before they look in an attempt to be seen as doing something, anything, about the issue du jour, it was not always so. For example, when the Space Shuttle Challenger explosion in 1986 prompted the establishment of a blue ribbon presidential commission to investigate, they discovered the problem and said this about the legislative branch of government in their report:

“Congress recognized the desirability, in the first instance, of having a single investigation of this national tragedy. It very responsibly agreed to await the Commission’s findings before deciding what further action might be necessary to carry out its responsibilities.

In today’s case of the gulf spill, the president has appointed a panel of apparently like-minded individuals so controversial that committees in both the House and Senate have passed legislation establishing an independent panel. And with the passage of this bill, congress is clearly not “responsibly await(ing) the Commission’s findings.”

But in what is the most stunning power grab of all, the bill for the first time ever requires federal permission for every onshore oil or gas well drilled in the United States, including those on state and private lands. If you’re wondering why a bill prompted by an offshore oil spill should have any effect on wells on land, you’re not alone. Washington politicians apparently think they can do everything better than states and local governments. And they also appear to never want to “let a crisis go to waste.”

Ever since Colonel Drake drilled the first well in 1859, permitting wells on private and state lands has been the responsibility of the States. Certain federal laws, such as the Clean Air Act and Clean Water Act, apply to the drilling of a well, but not the actual practice of drilling the well. The Waxman bill makes state regulation of wells subject to federal approval, and in the absence of such approval, requires operators to obtain federal permits. In other words, drilling an oil or gas well under this bill has become federalized.

Currently, there are about 1 million producing oil and gas wells spread throughout the United States, the vast majority on state and private lands. States have adjusted their permitting to meet the conditions on the ground and have a stellar track record of working to enhance and improve operational safety while minimizing environmental impacts. After all, a state’s residents are the ones who live with the consequences of bad decisions, and are best prepared to balance the costs and benefits of a particular regulation.

But under this bill Texas – with almost 250,000 operating wells and California – with over 50,000 wells, are deemed incapable of what they’ve been doing for a century unless they seek and are awarded federal approval. And while “marginal wells” (those producing 10 barrels or less per day) are exempted from the bill, it is silent on how someone can validate that a well he intends to drill is marginal before he drills it.

This is the kind of nonsense that passes for legislation today. The only thing that is certain about this bill is that it will make it harder to produce domestic energy, create uncertainty for domestic producers and all the jobs they support, and lead to making the US less competitive in energy production and more reliant on foreign sources of energy made competitive by the visible hand of government malfeasance.

If it is truly Washington’s wish to “get us off of oil” they should have the discussion out in the open, rather than hiding it behind the public’s rational concern about the spill in the Gulf. Leadership in Washington also requires them to review whether their own actions are making our energy outlook worse, rather than better. But don’t expect to see those types of hearings from a group that leaps before it looks.

“This moratorium is nothing but a kick in the face to the hardworking men and women who have lost—and will continue to lose—their jobs as a result of this Administration’s politically motivated actions. A federal court and an appeals court ruled the first moratorium was illegal, in large part because the Administration overrode the advice of engineers and experts with a political decision. In addition to politicizing science, the Obama Administration is putting the wishes of anti-energy special interest groups ahead of the American people. Americans will now undoubtedly face higher prices at the pump, more job losses and even more uncertainty each day energy exploration is banned in the Gulf of Mexico.

“In addition, this new moratorium will force Americans to purchase more oil from unfriendly nations—compounding an economic disaster with potential national security concerns—despite the fact that America has a plentiful supply of job-creating, energy stimulating energy resources right here at home. Unfortunately, these resources are now off limits as a result of this politically driven ban on domestic energy exploration. ”

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FOR IMMEDIATE RELEASE:
July 12, 2010
CONTACT:
Laura Henderson, 202.621.2951

Despite the timing, there is important information in this review. According to the report:

• The United States increased its oil and natural gas production more than any country.
• In 2009, Russia surpassed Saudi Arabia as the world’s largest oil producer.
• Global proved oil reserves are at the highest levels of all time. At the end of 2009, there were 1,333.1 billion barrels of proven reserves. Including Canadian oil sands brings total oil reserves to 1,476 billion barrels.[ii]
• The United States surpassed Russia as the world’s largest producer of natural gas.
• Global proved natural gas reserves are at the highest levels of all time. Global reserves of natural gas at the end of 2009 were 6,621 trillion cubic feet[iii], an increase of 1.2 percent. These reserves would last about 63 years at 2009 world production levels.[iv]
• China’s carbon dioxide emissions grew by 9.1 percent in 2009
• Carbon dioxide emissions in the United States declined by 6.5 percent mainly due to lower energy usage resulting from the recession.[v]
• China is not the only emerging country with increased emissions from carbon dioxide in 2009. India’s carbon dioxide emissions increased by 7 percent in 2009, Saudi Arabia’s by 5.4 percent, Iran’s by 4.6 percent, and Indonesia’s by 2.5 percent.
• China’s oil consumption increased by 6.7 percent in 2009, compared to a drop in the oil consumption of the United States by 4.9 percent.[vi]
• Global proved coal reserves are at the highest levels of all time. Global reserves of coal totaled 826,001 million tons at the end of 2009. This is 119 years of production at 2009 production levels and the United States has the largest share (28 percent) of these coal reserves.

Carbon Dioxide Emissions Fall in Developed Countries, Rise in Developing Countries

According to BP’s 2010 Statistical Review of World Energy,[vii] the global recession has not affected China’s thirst for fossil energy. Its subsequent emission of carbon dioxide, the largest component of greenhouse gas, is at an all-time high.  China’s carbon dioxide emissions grew by 9.1 percent in 2009, while those of the United States declined by 6.5 percent primarily owing to lower energy usage resulting from the recession.[viii] [ix] Further, China was not the only emerging country with increased emissions of carbon dioxide in 2009. India’s carbon dioxide emissions increased by 7 percent in 2009, Saudi Arabia’s by 5.4 percent, Iran’s by 4.6 percent, and Indonesia’s by 2.5 percent.

Unlike the United States Congress and the administration, these emerging countries are not under the delusion that cap-and-trade or other tax-like policies for reducing greenhouse gas emissions are either good for their economies or that their unilateral action in reducing emissions would make a dent in lowering future temperatures. The American Power Act, a legislative proposal sponsored by Senators Kerry and Lieberman, has as its goal to reduce greenhouse gas emissions 83 percent below 2005 levels by 2050. That would reduce temperatures by only one-fifth of one degree Fahrenheit by 2100, a scientifically meaningless amount.[x]

BP’s Statistics for Global Energy Consumption

In 2009, global consumption of oil, natural gas, and nuclear power declined, while global coal consumption remained almost flat, and renewable consumption increased modestly. The increase in non-hydroelectric renewable consumption resulted from government subsidies and mandates, stimulus funding, feed-in tariffs requiring that renewable energy be purchased at higher than average retail electricity prices to cover their cost, the United Nations’ Clean Development Program (under which wealthy nations pay developing countries to construct renewable power projects), and other incentives.

Oil. Global oil proved reserves at the end of 2009 totaled 1,333.1 billion barrels, the largest ever recorded by BP. Including Canadian oil sands brings total oil reserves to 1,476 billion barrels.[xi] (Proved oil reserves are those quantities of oil that geological and engineering information indicates can be recovered from known reservoirs under current economic and operating conditions with reasonable certainty.)  This level of reserves is enough to support global oil production at 2009 levels for over 45 years.[xii] However, history has shown that as more oil is consumed, new technology and exploratory methods are developed to keep increasing reserves.[xiii]

Even with this level of global oil reserves, global oil consumption declined by 1.7 percent (1.2 million barrels per day) in 2009, the largest decline since 1982.  Oil consumption in the Organization for Economic Cooperation and Development (OECD) countries declined by 4.8 percent (2 million barrels per day) in 2009.  That decline was only partially offset by non-OECD countries, who increased their oil consumption by 2.1 percent.[xiv] The developing countries that incurred higher oil consumption were led by China, India, and the Middle East. China’s oil consumption increased by 6.7 percent in 2009, compared to a drop in the oil consumption of the United States by 4.9 percent.[xv]

Owing to oil production cuts by the Organization for Petroleum Exporting Countries (OPEC), global oil production declined by 2.6 percent (2 million barrels per day) in 2009, the largest decline since 1982. Non-OPEC countries increased oil production in 2009 by 0.9 percent (450,000 barrels per day). The largest increase in world oil production in 2009 was by the United States, which increased oil production by 7 percent (462,000 barrels per day). Other increases in oil production in 2009 were largely in Russia, other ex-Soviet states, and Brazil. Russia became the largest producer of oil in the world in 2009, surpassing Saudi Arabia.[xvi]

Natural Gas. Global reserves of natural gas at the end of 2009 were 6,621 trillion cubic feet,[xvii] an increase of 1.2 percent, which would last about 63 years at 2009 world production levels.[xviii] Global consumption of natural gas fell by 2.1 percent in 2009,[xix] the largest decline on record, and OECD consumption fell by 3.1 percent, the largest decline since 1982.[xx]

Global natural gas production declined by 2.1 percent in 2009, the first time on record, owing mainly to lower production by Russia (12.1 percent) and Turkmenistan (44.8 percent), which resulted from lower demand in Russia and Europe. Europe’s demand for Russian gas was less both because of the recession and because of competition from liquefied natural gas.[xxi]

The United States surpassed Russia as the largest producer of natural gas, having recorded the largest global increase in natural gas production for the third consecutive year, owing to increases in unconventional supplies such as shale gas. The United States increased its natural gas production in 2009 by 3.5 percent, according to BP.[xxii]

Surprisingly, the United States is reported to have had the largest 2009 increase in both oil and natural gas production of any country. With technologies such as horizontal drilling and hydraulic fracturing, production of shale gas has increased the availability of natural gas in the United States. But policies by the U.S. Government could make these increases disappear quickly by limiting off-shore and on-shore leasing, establishing moratoria and increasing costs and regulations on offshore drilling, and moving to restrict practices such as the hydraulic fracturing of wells, which has led to huge new supplies of natural gas.

Coal. Global reserves of coal totaled 826,001 million tons at the end of 2009, resulting in 119 years of production at 2009 production levels. Global coal consumption declined slightly in 2009, owing primarily to OECD’s reduced consumption of 10.4 percent and the Former Soviet Union’s decline of 13.3 percent, the largest declines on record, resulting from the recession and from the competition of natural gas. These reductions in coal consumption were counterbalanced by increased consumption of 7.4 percent in the rest of the world, of which China represented 95 percent.[xxiii]

China’s coal consumption in 2009 was 1,537 million tons oil equivalent, higher than its consumption level in 2008 by 9.6 percent. That level is 3 times the amount of coal consumed in the United States in 2009. U.S. coal consumption was 498 million tons oil equivalent in 2009, 11.5 percent lower than its consumption of coal in 2008. As a share of world consumption, China consumed 46.9 percent compared to 15.2 percent for the United States.[xxiv] No wonder that China has exceeded the United States in emissions of carbon dioxide.

Nuclear. Nuclear output declined 1.3 percent globally in 2009 with only countries in Asia increasing their nuclear output. For example, China’s nuclear power output increased 2.8 percent, India’s increased 10.7 percent, and Japan’s increased 9.4 percent. [xxv]

Hydroelectricity. Hydroelectric output increased 1.5 percent globally in 2009. China’s quantitative increase was the largest (5.5 percent), followed by Brazil (6.1 percent).[xxvi] Both water levels and new capacity additions affect increases in hydroelectric output.

Other renewable energy. BP does not include in their consumption statistics other renewable energy, such as biomass, wind, solar, and geothermal, because those estimates can be unreliable for some renewable resources. BP indicates, however, that global wind capacity increased by 31 percent in 2009, global solar capacity increased 47 percent, and global ethanol production increased 8 percent.[xxvii] While these were major percentage increases for wind and solar power, because of their low capacity factors (that is, the amount of generation obtained per unit of capacity), they remain a small portion of total world-wide consumption.

Conclusion

According to BP’s chief economist, Christof Ruehl, “The shift toward the developing world continues.”[xxviii] In 2009, many of the developing countries increased their energy consumption, particularly of fossil fuels, even with the global recession. China, for example, whose GDP increased by 8.7 percent in 2009,[xxix] fueled the growth by increasing its oil consumption by 6.7 percent, its natural gas consumption by 9.4 percent, its coal consumption by 9.6 percent, its nuclear output by 2.8 percent, and its hydroelectric output by 5.5 percent. While it added 13 gigawatts of wind power capacity,[xxx] a 9 percent increase in carbon dioxide emissions indicates that wind was not a major supplier of China’s energy in 2009. China’s government is clearly not hampered by policies and legislative proposals that would limit its economic growth by reducing its fossil fuel consumption to save only a fifth of one degree Fahrenheit by 2100.  At some point, opinion leaders in the United States may be forced to confront the reality that energy consumption and economic growth go hand-in-hand.

[ii] BP Statistical Review of World Energy, June 2010, http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf

[iii] BP Statistical Review of World Energy, June 2010, http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf

[iv] BP Press Release, Recession Drove 2009 Energy Consumption Lower, June 9, 2010, http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7062811

[v] Reuters, China top carbon emitter for second year running, June 9, 2010, http://alertnet.org/thenews/newsdesk/LDE6580Y1.htm

[vi] BP Statistical Review of World Energy, June 2010, http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf

[vii] BP Statistical Review of World Energy, June 2010, http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf

[viii] Reuters, China top carbon emitter for second year running, June 9, 2010, http://alertnet.org/thenews/newsdesk/LDE6580Y1.htm

[ix] These figures are most likely low because BP does not include cement production in its carbon data, an industry that makes up about 10 percent of total carbon dioxide emissions.

[x] The American Power Act: A Climate Dud, May 12, 2010,

http://www.masterresource.org/2010/05/the-american-power-act-a-climate-dud/

[xi] BP Statistical Review of World Energy, June 2010, http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf

[xii] BP Press Release, Recession Drove 2009 Energy Consumption Lower, June 9, 2010, http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7062811

[xiii] Institute for Energy research, Has Oil Reached Its Peak?, http://www.instituteforenergyresearch.org/2008/08/26/has-oil-reached-its-peak/

[xiv] BP Statistical Review of World Energy, June 2010, http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf

[xv] BP Statistical Review of World Energy, June 2010, http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf

[xvi] Ibid.

[xvii] BP Statistical Review of World Energy, June 2010, http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf

[xviii] BP Press Release, Recession Drove 2009 Energy Consumption Lower, June 9, 2010, http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7062811

[xix] Percent changes and world shares are calculated by BP based on million tons of oil equivalent figures.

[xx] BP Statistical Review of World Energy, June 2010, http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf

[xxi] Ibid.

[xxii] Ibid.

[xxiii] Ibid.

[xxiv] Ibid.

[xxv] Ibid.

[xxvi] Ibid.

[xxvii] Ibid.

[xxviii] BP Press Release, Recession Drove 2009 Energy Consumption Lower, June 9, 2010, http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=7062811

[xxix] The Washington Post, China may have dug a financial hole, June 18, 2010, http://www.washingtonpost.com/wp-dyn/content/article/2010/06/17/AR2010061705794.html

[xxx] Global Wind Energy Council, Global wind power boom continues amid economic woes, March 2, 2010, http://www.gwec.net/index.php?id=30&no_cache=1&tx_ttnews[tt_news]=247&tx_ttnews[backPid]=4&cHash=1196e940a0

Various legislative and other proposals have promoted policies that would tax or place a price floor on petroleum-based transportation fuels such as gasoline because as President Obama stated in his recent address, “we’re running out of places to drill on land and in shallow water.”[1] Their object is to spur conservation and promote the manufacture of more efficient vehicles, as well as reduce greenhouse gas emissions, increase national security (by lessening our dependence on foreign oil), and decrease congestion. But such policies assume that oil is unduly scarce, even though current worldwide oil reserves are the highest ever. And reserves are only a fraction of potential oil resources, not to mention that technology is continually unlocking new resources.  Moreover, as the experience of Europe has shown, setting an artificially high price for petroleum-based transportation fuels will not change the growth of U. S. carbon dioxide emissions, which are the largest component of greenhouse gas emissions. In any case, lessened U.S. carbon dioxide emissions would be dwarfed by future increases in those emissions from developing countries, particularly China, making unilateral action problematic.

Introduction

Numerous policy proposals advocate higher prices on gasoline and other transportation fuels in order to spur conservation by both producers and consumers. Advocates of such policies believe that charging customers a “fair” or “socially optimal” price for their use of a “depleting fuel” will promote the manufacture of more efficient vehicles and foster consumers’ use of mass transit, carpooling, home relocation, or other fuel-reducing endeavors. An example of such a policy is the tax on gasoline in the American Power Act, a legislative proposal by Senators Kerry and Lieberman to reduce greenhouse gas emissions.

Another proposal appears in a paper by Thomas Merrill and David Schizer,[2] where they advocate a plan that would both increase the stability of the price of transportation fuels by not allowing them to fall and be revenue neutral. According to the plan, a fee would be added to the price of transportation fuels, and that fee would rise if the price of crude oil fell, but fall if the price of crude oil rose. In theory, this would keep the price of transportation fuels more stable by setting a dynamic floor on the price. In any case, the price of transportation fuels would never fall below the prices they had when the plan was launched, since the fee would keep rising to offset any decline in the price of crude oil. In order to ensure revenue neutrality, and thus to sell the policy politically, the stabilizing fee would not be kept by the government but would be rebated back to citizens, minus administrative costs. The fee, however, would not be rebated back to purchasers but would be distributed to all persons of driving age, so that those who used mass transit or drove less than the average amount would garner a sizable share.

The goals of these policies are to reduce greenhouse emissions, improve national security by decreasing oil imports, and hopefully reduce road congestion. But another reason for promoting such a proposal is to “help the economy adjust to a future of scarce petroleum”. That is simply not an issue, as will be seen below. In addition, as history has shown and as forecasters continue to show, carbon dioxide emissions, the largest component of greenhouse gas emissions, will continue to grow despite increasing crude oil prices and thus despite any such policies.

Global Oil Reserves vs. Oil Resources

Almost as long as people have been using oil, people have been declaring that we are running out of it.  Ronald Bailey, science correspondent for Reason Magazine, writes:[3]

Predictions of imminent catastrophic depletion are almost as old as the oil industry. An 1855 advertisement for Kier’s Rock Oil, a patent medicine whose key ingredient was petroleum bubbling up from salt wells near Pittsburgh, urged customers to buy soon before “this wonderful product is depleted from Nature’s laboratory.” The ad appeared four years before Pennsylvania’s first oil well was drilled. In 1919 David White of the U.S. Geological Survey (USGS) predicted that world oil production would peak in nine years. And in 1943 the Standard Oil geologist Wallace Pratt calculated that the world would ultimately produce 600 billion barrels of oil.

During the 1970s, the Club of Rome report The Limits to Growth projected that, assuming consumption remained flat, all known oil reserves would be entirely consumed in just 31 years. With exponential growth in consumption, it added, all the known oil reserves would be consumed in 20 years.

Some other interesting factoids from the past regarding oil depletion are:[4]

• In 1885, the U.S. Geological Survey indicated that there was little or no chance of discovering oil in California.
• In 1914, an official of the U.S. Bureau of Mines estimated total future production at 5.7 billion barrels. (By 1984, more than 34 billion barrels had been produced.)
• In 1920, the Director of the U.S. Geological Survey predicted that the U.S. had nearly reached peak production. (By 1984, production was over four times the 1920 rate.)
• In 1939, the Interior Department predicted U.S. oil supplies would last thirteen years.
• In 1949, the Secretary of the Interior predicted that the end of U.S. oil supplies was almost in sight.

On the other hand, and more currently:

• Edward L. Morse, an energy official in Carter’s State Department, indicates that the world’s deep-water oil and gas reserves are significantly larger than was thought in the 1990s, and high prices have spurred development of technologies  for extracting them. The costs of developing oil sands are declining, so projects that were not economic last year with the price of oil under $90 a barrel are now viable with oil at $79 a barrel.[5]
• Daniel H. Yergin, co-founder and chairman of Cambridge Energy Research Associates, writes “careful examination of the world’s resource base . . . indicates that the resource endowment of the planet is sufficient to keep up with demand for decades to come.” [6]

According to the Journal of Oil and Gas, global proved oil reserves as of January 1, 2009, were 1,342 billion barrels,[7] the highest level ever, and about 10 billion barrels higher than in 2008. Thus, enough reserves were found in 2008 to meet demand in that year and to add 10 billion barrels to the global reserve level. The Middle East holds the majority of proved oil reserves at 746 billion barrels,[8] followed by North America with 210 billion barrels. Canada with 178 billion barrels (85% of the North American share)[9] is second in rank only to Saudi Arabia with 267 billion barrels of proved oil reserves.

Proved reserves of crude oil are the estimated quantities that geological and engineering data indicate can be recovered from known reservoirs with existing technology and current economic and operating conditions. That is, they are quantities of oil that can be retrieved by producing companies to meet demand in the near future, without needing new technology or having to explore and develop a totally new oil well.  As such, they represent the lowest estimate of petroleum supplies. Estimates of proved reserves are developed from data reported to the U.S. Securities and Exchange Commission,[10] foreign government reports, and international geologic assessments.

Thus, the term ‘proved reserves’ refers to oil deposits that have actually been discovered and carefully estimated. Although it is true that every barrel of oil removed from the ground reduces the physical total by one, the economically relevant fact is that humans historically go out and find more usable oil reserves in order to keep pace with consumption.

The Institute for Energy Research put together a table of global oil reserves beginning with the year 1971 (when proved reserves were at a level of 521 billion barrels) and continuing through 2007 (when they were at 1,317 billion barrels).[11] Between 1971 and 2007, the world consumed 910.3 billion barrels of petroleum[12], which would have made the reserve total 2,227 billion barrels were they not used. As the table shows, in this 36-year time span, proved oil reserves worldwide have grown by a factor of 2.5, while global oil demand over the same period has grown by a factor of 1.7.  Thus, at the 2007 level of global demand, 31.3 billion barrels per year,[13] proved oil reserves were capable of meeting that demand for 42 years. As the table indicates, there have been periods during which global oil reserves have increased more than 200 billion barrels.[14] One such period occurred early this decade with the addition of Canadian oil sands reserves. Currently, the U.S. benefits from these reserves from our northern neighbor, but proposed government policies (such as a low-carbon fuel standard[15] or legislation enacting a cap-and-trade policy on greenhouse gas emissions[16]) could endanger this source of proved reserves, allowing other countries without such policies to benefit instead.

U.S. Oil Resources

Proved oil reserves are a subset of the oil resource base, which includes estimated quantities of both discovered and undiscovered oil that have the potential of being classified as reserves in the future. These oil resources may be difficult to produce with current technology or their access may be limited by government policy. Thus, new technologies and better government oil recovery policies, as well as “risk mitigation” incentives, could help industry convert the higher-cost, undeveloped domestic oil resources into economically feasible reserves. Access to additional offshore, Alaskan, and public-land resources could be accelerated rather than stalled, as under the current Administration.[17]

The U.S. Department of Energy estimates that light and heavy oil resources in the United States total 1,124 billion barrels, with 40% believed to be recoverable.[18] In addition, the U.S. has a world-leading 2,118 billion barrels of in-place oil shale,[19] of which 800 billion barrels is estimated to be recoverable.[20] Other estimates have the recoverable shale oil number even higher, at approximately 1.38 trillion barrels.[21] That’s five times the oil reserves in Saudi Arabia.

Oil shale is found largely in Utah, Colorado, and Wyoming, and the best sources are believed to be on public lands. Oil producers need to have access to these resources in order to demonstrate that they can produce shale oil at current prices with technologies they believe will work. However, access is currently being stalled by the owner of the public lands, the federal government. [22]

The Denver Post carried an article that addressed this issue:[23]

Colorado is sitting on a bounty of oil shale that could make energy cheaper in America and free it from the whims of Middle Eastern oil barons. Unfortunately, it looks like oil companies can’t do the work necessary to extract the fuel because of political roadblocks. And this attitude seems to go all the way to the top. Interior Secretary Ken Salazar, one of Colorado’s two U.S. senators until he joined the Obama administration this year, tossed the latest obstacle into the path to progress in February when he canceled leases for oil-shale development in Colorado, Utah and Wyoming. Salazar’s backward thinking is typical of the politicians who embrace environmental hysteria. They seem to despise fossil fuels and want to stop Americans from using them.

Price Stabilization Policy Formulation

Analysts, such as Merrill and Schizer, who advocate policies that would stabilize transportation fuels, know that they need to make their fee formulation easy to implement and as free of administrative burden as possible. That is why they advocate having the IRS handle the fee: that agency collects the Federal taxes on gasoline. They also advocate that the fee should be based on the price of crude oil, since that is the largest component of the price of transportation fuels and is determined by global forces of supply and demand, making it less amenable to manipulation by domestic producers, refiners, and retailers. But one pitfall in their plan is that the price of the petroleum product does not always follow the price of crude oil, as can be seen by the following chart for gasoline.

The price of gasoline is based on four price components: crude oil, Federal and State taxes, refining operations and profits, and distribution and marketing.[24] In 2008, crude oil represented 69 percent of the gasoline price while the refining component represented only 7 percent. That was not typical of the past 9 years, however, when the refining component represented an average of 15 percent. Generally, there are certain times of the year when the refining component spikes gasoline prices. One example is in the spring, when refiners switch from winter grade gasoline to summer blends. This switch takes place the end of April and in May, causing the price of gasoline to spike, as seen in the chart for the years 2006 and 2007. Another phenomenon that affects the refining component is weather, and in the fall of 2005 the price of gasoline increased because many of the Gulf of Mexico refineries were shut in, owing to hurricane Katrina.

Another factor to note is that a price stabilization policy could in fact inflict a higher fee on petroleum transportation fuels than a likely cap-and-trade policy would provide. For example, if the price stabilization policy had been in effect in 2008, the world oil price increase would have resulted in a fee of about $2.50 per gallon, while according to EIA’s analysis of H.R. 2454, the American Clean Energy and Security Act of 2009, the “tax” on gasoline would have been closer to 35 cents per gallon.[25] Also, as we saw in 2008, the higher prices for petroleum-based transportation fuels had a secondary impact on consumer spending, increasing food prices and other products requiring transportation to move them to market.

The question remains whether a price stabilization policy or a gasoline tax will have the desired affects of limiting greenhouse gas emissions and increasing national security by reducing oil imports. To evaluate these issues, we’ll examine three oil price scenarios that the Energy Information Administration’s Annual Energy Outlook 2010 forecasts using different prices of crude oil.[26] The cases are the reference case, the high oil-price case, and the low oil-price case. They are depicted in the graph below:

In the reference case, the crude oil price rises gradually, until by 2035 it reaches $133 per barrel (in 2008 dollars), about $60 per barrel more than the current price. In the low price case, the crude oil price decreases to $51 per barrel during the next several years and remains there through 2035, the end of the forecast period. In the high price case, the crude oil price increases to $209 per barrel (in 2008 dollars) by 2035. Both the high price case and the reference case could very well represent a price stabilization scenario since the price of crude oil never falls and steadily rises.

The following graph depicts the carbon dioxide emissions, the largest component of greenhouse gases, in the 3 scenarios. Note that in each of the three cases, U.S. carbon dioxide emissions increase over time and by 2035 range from 2.5 percent to 12.5 percent higher than they were in 2007.

Another way to look at this issue is with the European experience in mind. Since World War II, European countries have had a hefty tax on gasoline to encourage the use of more efficient transportation fuels. Over the past 25 years, carbon dioxide emissions in Europe have ranged between 4,300 and 4,750 million metric tons, and in 2008 they were 5.5 percent higher than in 1983.[27]

The next graph depicts the net petroleum import share for each of the three price cases. The imported amount varies with the demand for liquid fuels, which is dependent on the price of crude oil, and which in 2035 varies by less than 4 million barrels per day across the three cases: 20.8 million barrels per day in the high price case and 24.5 million barrels per day in the low price case.

The petroleum import share also varies with the amount of ethanol production, which is mandated by the Energy Independence and Security Act of 2007 (EISA2007). That Act mandates the production of 36 billion gallons of biofuels, such as ethanol, by 2022.[28] It also requires the sale of flex-fuel vehicles that can burn E85, a blend of 85 percent ethanol and 15 percent gasoline—a much higher percentage of ethanol than the 10 percent blend that conventional gasoline vehicles can safely use without causing damage to the vehicle.

A further factor is the stricter mandates for Corporate Average Fuel Economy. EISA2007 requires the fuel efficiency of the combined fleet of all new passenger cars and light trucks sold in the U.S. in model year 2020 to be equal to or exceed 35 miles per gallon, 34 percent higher than the current fleet average of 26.4 miles per gallon.[29] In none of the three cases are petroleum imports at a level that is independent from foreign oil, and in fact, in none of the cases is the U.S. independent of petroleum imports from non-North American countries. In the high price case, where petroleum imports are the least, the higher oil prices increase the penetration of biofuels and the use of flex fuel vehicles.

World Implications

The Energy Information Administration provides forecasts of the next 18 months in their Short-Term Energy Outlook.[30] The next chart shows world demand for petroleum and the annual change in demand for the United States, China, and the rest of the world from 2003 through 2011. In 2008 and 2009, U.S. demand for petroleum declined. However, China’s petroleum demand increased in both 2008 and in 2009, even though the U.S. and the rest of the world’s demand decreased in 2009, and its demand is expected to continue to increase. Thus, any reduction in U.S. petroleum consumption will be made up by China or other countries.

As can be seen from the next chart, China’s domestic oil production is fairly flat, but its oil consumption is increasing at a fast pace, making its reliance on oil imports grow. The growth in oil consumption is primarily to provide for its expanding transportation sector. From 1996 to 2006, growth in the combined length of China’s highways averaged 11.3 percent per year. With this level of highway construction, China is on track to exceed the United States in total highways in the next decade.[31]

Infrastructure projects in China account for 15 percent of China’s gross domestic product, which grew by 8.7 percent in 2009, when the economies of the United States and Europe did not grow at all. Besides highway construction, their inventory projects include almost 100 new airports, some in isolated cities, and dozens of subways.[32]

In 2006, China became the world’s second-largest vehicle market, after the United States, and in 2009, it has overtaken the U.S market in vehicle sales.[33] New passenger car sales rose 55 percent in February of this year from a year earlier, following a 116 percent increase in January, aided by the extension of government incentives to boost purchases of smaller vehicles and spur rural demand for cars.[34]

In 2007, China produced nearly 8.9 million motor vehicles, an increase of 22 percent over production in 2006. The country is now the third largest vehicle producer in the world, after Japan and the United States. According the Energy information Administration, China’s passenger transportation use per capita is projected to triple by 2030.[35]

China is not endowed with a lot of oil resources. Its oil reserves totaled 16 billion barrels in January 2009.[36] As a result, China has spent nearly $200 billion on oil deals during the past few years, joining with more than 19 countries —including Russia, Turkmenistan, Kuwait, Yemen, Libya, Angola, Venezuela and Brazil[37]— and paying for exploration, production, infrastructure construction, as well as “loans for energy” deals.[38] Recently, China’s Sinopec International Petroleum Exploration and Production Company agreed to buy, for $4.65 billion, the 9 percent interest that ConocoPhillips holds in Syncrude,[39] a Canadian business involved in the production of oil sands (an asphalt-like heavy oil). .It is even pursuing buying leases in U.S. waters, in the Gulf of Mexico.[40]

During the first quarter of this year, China set records with huge year-over-year increases in oil demand.  In February, China’s oil demand rose 19.4 percent over a year earlier, the second fastest rise on record.  China is the world’s second largest oil user (second to the United States).[41] China’s oil imports were up 13.8 percent in March over February, reaching 4.95 million barrels per day, according to preliminary data from China’s General Administration of Customs.[42] In part, these large oil increases are fueling China’s passenger car fleet.

China’s economic and energy profile can be summarized as follows:[43]

• Between 2000 and 2008, China’s real gross domestic product averaged 10 percent per year. While its economic growth in 2008 and in the first half of 2009 is less than this average rate, its $586 billion economic stimulus package is expected to stimulate more normal growth in the second half of 2009 and in 2010.
• China is the world’s most populous country and the second largest energy consumer behind the United States.  Rising oil demand and imports have made China a significant factor in world oil markets.
• China is the world’s second-largest consumer of oil behind the United States, and the third-largest net importer of oil after the U.S. and Japan.
• China’s largest oil fields are mature and production has peaked, leading companies to focus on developing largely untapped reserves in the western interior provinces and offshore fields.
• In 2006, 93 percent of China’s energy consumption was from fossil fuels. (See figure below.)

China is the largest producer and consumer of coal in the world, with 70 percent of its demand for energy coming from coal. In the late 1980s, China surpassed the U.S. in coal consumption and the Energy Information Administration expects China’s coal consumption to be 4.5 times that of the U.S. by 2035.[44] Many of China’s large coal reserves have yet to be developed. 

• China’s electricity generation is dominated by fossil fuel sources, particularly coal. In 2007, coal-fired generators produced 80 percent of China’s electricity and the Energy Information Administration predicts that, by 2035, coal-fired generators will produce 74 percent of its electricity, with mainly wind and nuclear power making up the difference in coal’s lower share.[45] (See figure below.)

Because of China’s large population, high economic growth rate, and large consumption of fossil fuels, it is the world’s largest emitter of carbon dioxide, which is the largest component of greenhouse gas emissions. China surpassed the United States in emissions of carbon dioxide in 2006 and is expected to emit over twice as much carbon dioxide than the United States in 2035.

Since 2002, the average annual increase in China’s carbon dioxide emissions has been over 550 million metric tons.[46] In 2009, U.S. carbon dioxide emissions from transportation uses were 1,851 million metric tons.[47] Thus, if China continues its high level of economic growth and its use of fossil fuels as forecast, in just over 3 years, its increase in carbon dioxide emissions will equal the total carbon dioxide emitted from the U.S. transportation sector. Small, incremental changes in U.S. transportation emissions will not have an effect on overall global greenhouse gas concentrations.

And while China has professed that it will meet renewable generation goals, it will not partake in meeting targets for greenhouse gas reductions that will hurt its projected economic growth and its future status as a major world power.[48] Instead, China is willing to make reductions in greenhouse gas intensity (greenhouse gas emissions per unit of GDP), a measure proposed by the U.S. almost a decade ago, that allows for both economic growth and lower emissions per unit of GDP from improved efficiency and technology.[49]

Conclusion

Concerns about traffic congestion, greenhouse gas emissions, and the use of foreign oil are valid concerns, but increasing the price of oil does not do a good job of addressing those concerns. Policies that artificially raise the price of petroleum-based transportation fuels will have the desired effects of limiting usage and reducing demand. But even with the price of crude oil at a $200 per barrel (in 2008 dollars) the U.S. will still increase its carbon dioxide emissions and will still be dependent on non-North American sources of imported oil. Reductions of petroleum demand in the United States will just make crude more available for other countries to use, with little progress in reducing global carbon dioxide emissions.

The U.S. has transitioned to other sources of energy in the past without the need for government policies. The picture below from a 1910 Midwestern town depicts the transition from horse and buggy transportation to the horseless carriage. The smoke from the early autos was felt to be far less polluting than the horse excrement and carcasses on the street. Early autos were noisy and belched smoke, but they kept the streets clean of tons of waste and dead bodies of thousands of horses.[50] Now, of course, technology has improved automobile engines so that they are more powerful, efficient, and cleaner than those of the past, supporting our thirst for increased transportation, better mobility, and a higher quality of life—all at reduced emissions of criteria pollutants. The “ultimate resource” of human ingenuity has indeed improved the economic and environmental characteristics of petroleum.

[2] Thomas Merrill and David Schizer, “Advancing Energy Policy Goals in an Economic Downturn: A Proposed
Petroleum Fuel Price Stabilization Plan”, November, 2009.

[3] Ronald Bailey, “Peak Oil Panic”,  May 2006, http://reason.com/archives/2006/05/05/peak-oil-panic

[4] William M. Brown, “The Outlook for Future Petroleum Supplies,” in Julian Simon and Herman Kahn, eds., The Resourceful Earth (Malden, MA: Blackwell, 1984), p. 362.

[5] www.foreignaffairs.com

[6] www.foreignpolicy.com

[7] “Worldwide Look at Reserves and Production,” Oil and Gas Journal, Vol. 106, No. 48, December 22, 2008, pp. 23-24.

[8] Since the Middle East has had a high concentration of global oil reserves for decades, its reserve level is not an indicator of market share.

[9] A large portion of Canadian reserves are oil sands, which cannot be produced at the same rate as conventional oil, so the 178 billion barrels of Canadian reserves are not functionally equivalent to 178 billion barrels of conventional oil.

[10] Companies whose stocks are publicly traded on U.S. stock markets are required to report their holdings of domestic and international proved reserves to the SEC.

[11] Institute for Energy Research, August 26, 2008, www.instituteforenergyresearch.org/2008/08/26/has-oil-reached-its-peak/

[12] Energy Information Administration, Annual Energy Review 2008, Table 11.10, http://www.eia.doe.gov/emeu/aer/pdf/pages/sec11_21.pdf

[13] In 2007, the U.S. demand for petroleum was 20.68 million barrels per day or 7.548 billion barrels per year, approximately one-fourth of the world total. See Energy Information Administration, Annual Energy Review 2008, Table 5.1, www.eia.doe.gov/emeu/aer/petro.html

[14] The increase in Middle Eastern oil reserves in the late-1980s is somewhat controversial and has been questioned by some to be, in part, paper increases.

[15] A Low Carbon Fuel Standard reduces the carbon intensity of transportation fuels by requiring that the mix of fuels sold reaches pre-specified targets of carbon reduction. Since oil sands yield heavier crude, more energy is required for producing and refining it, thus giving that crude a higher carbon intensity than conventional crude.

[16] H.R. 2454 is a cap-and-trade proposal that the House of Representatives has passed to reduce future levels of greenhouse gas emissions. It requires that lower targets for emissions be met by manufacturers and other producers, either by reducing emissions themselves or by purchasing emissions permits from producers that can economically reduce their emissions at lower cost. The American Power Act is the Senate’s version of H.R. 2454 that proposes a cap and trade regime on electric utilities and later (in 2016) on industrial sources, and taxes gasoline consumption.

[17] Greenwire, “Oil and Gas: Industry knocks Obama admin claims on Utah leases,” November 20, 2009, www.eenews.net/Greenwire/2009/11/20/archive/9?terms=salazar;  and Land Letter, “Oil and Gas: Interior agencies showing marked shift in leasing policies”, November 19, 2009, www.eenews.net/Landletter/2009/22/19/archive/3?terms=salazar ; Greenwire, Offshore Drilling: Lift shallow-water moratorium, Landrieu tells Obama admin, May 20, 2010, http://www.eenews.net/Greenwire/2010/05/20/archive/6?terms=offshore+oil+moratorium,  the Washington Post, “Obama presses for action on energy bill”, June 16, 2010, http://www.washingtonpost.com/wp-dyn/content/article/2010/06/15/AR2010061505595.html?sub=AR , and the Wall Street Journal, Crude Politics, The drilling experts speak out on the Obama deepwater moratorium, June 17, 2010, http://online.wsj.com/article/SB10001424052748704198004575311033371466938.html?mod=WSJ_Opinion_LEADTop

[18] U.S. Department of energy, Office of Fossil energy, “Undeveloped Domestic Oil Resources: The Foundation for Increasing  Oil Production and a Viable Domestic Oil Industry,” February 2006, http://www.fossil.energy.gov/programs/oilgas/publications/eor_co2/Undeveloped_Oil_Document.pdf

[19] The U.S. Geological Survey recently updated its assessment of the Piceance Basin in western Colorado and found it to have oil shale resources that are 50% higher than the previous estimate of 1 trillion barrels. That resource update would increase the total U.S. shale oil resources to 2.6 trillion barrels. See http://www.usgs.gov/newsroom/article.asp?ID=2182

[20] Strategic Unconventional Fuels Integrated Program Plan, February 2007, http://www.unconventionalfuels.org/publications/reports/executiveSummary.pdf

[21] The Congressional Research Service, October 20, 2009, http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=01feb68b-ef57-4748-8f5c-d88c0e7d6bd5

[22] E&E Publishing, “Oil and Gas: Industry chafes over Interior’s revised oil shale leases,” October 29, 2009, www.eenews.net/Landletter/2009/10/29/archive/1?terms=oil+shale

[23] The Denver Post, “Oil shale opponents aren’t just evil—they’re just wrong,”’ November 23, 2009, http://www.denverpost.com/commented/ci_13846941?source=commented-

[24] Energy Information Administration, “Factors Affecting Gasoline Prices,” http://tonto.eia.doe.gov/energyexplained/index.cfm?page=gasoline_factors_affecting_prices

[25] Energy Information Administration, “Energy market and Economic Impacts of H.R. 2454, the American Clean Energy and Security Act of 2009,” August 4, 2009, www.eia.doe.gov/oiaf/servicerpt/hr2454/index.html

[26] Energy Information Administration, Annual Energy Outlook 2010, www.eia.doe.gov/oiaf/aeo/index.html

[27] Energy Information Administration, http://tonto.eia.doe.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=90&pid=44&aid=8

[28] Energy Information Administration, Annual Energy Outlook 2010, http://www.eia.doe.gov/oiaf/aeo/leg_reg.html

[29] Ibid.

[30] Energy Information Administration, Short-Term Energy Outlook,  June 2010, www.eia.doe.gov/emeu/steo/pub/contents.html

[31] The Washington Post, China may have dug a financial hole, June 18, 2010, http://www.washingtonpost.com/wp-dyn/content/article/2010/06/17/AR2010061705794.html

[32] Ibid.

[33] “China’s Car Sales Down in October—To 80 Percent Growth”, November 7, 2009, http://www.thetruthaboutcars.com/china%E2%80%99s-car-sales-down-in-october-%E2%80%93-to-80-percent-growth/

[34] Reuters, China oil demand rise second fastest, inventories drag, March 22, 2010, http://in.reuters.com/article/oilRpt/idINTOE62L01Z20100322?sp=true

[35] Energy Information Administration, International Energy Outlook 2009,  http://www.eia.doe.gov/oiaf/ieo/index.html

[36] “Worldwide Look at Reserves and Production,” Oil and Gas Journal, Vol. 106, No. 48 (December 22, 2008), pp. 23-24.

[37] For example, Venezuela signed a deal with China under which the latter would invest $16 billion over three years. The deal could raise oil output by several hundred thousand barrels a day. http://www.eenews.net/Greenwire/2009/09/18/. China National Petroleum Corp. received a $30 billion low-interest loan from a state-run bank to finance overseas acquisitions, Beijing’s latest bid to secure mineral resources to fuel the country’s burgeoning economy. http://www.eenews.net/Greenwire/2009/09/09/. CNOOC and Sinopec have agreed to buy a 20 percent stake in an oil field off the coast of Angola for $1.3 billion, the latest in a series of Chinese acquisitions of overseas energy and mining assets. http://www.eenews.net/Greenwire/2009/07/20/

[38] Politico, To compete with China, U.S. must tap natural gas, April 13, 2010, http://www.politico.com/news/stories/0410/35689.html#ixzz0kyYru8gb

[39] Reuters, China bags oil sands stake, not finished yet, April 13, 2010, http://www.reuters.com/article/idUSTRE63C17X20100413 and www.conocophillips.com

[40]David Pierson, “China’s push for oil in the Gulf of Mexico puts U.S. in awkward spot,” Los Angeles  Times, http://www.latimes.com/business/la-fi-china-oil22-2009oct22,0,2776603.story?track=rss.

[41] Reuters, China oil demand rise second fastest, inventories drag, March 22, 2010, http://in.reuters.com/article/oilRpt/idINTOE62L01Z20100322?sp=true

[42] Reuters, Oil falls as demand, inventories weigh, April 12, 2010, http://www.reuters.com/article/idUSTRE6142V820100412

[43] Energy Information Administration, Country Analysis Brief on China, www.eia.doe.gov/emeu/cabs/China/Background.html

[44] Energy Information Administration, International Energy Outlook 2010,  Table A7, http://www.eia.doe.gov/oiaf/ieo/pdf/ieorefcase.pdf

[45]Energy Information Administration, International Energy Outlook 2010, Appendix H, http://www.eia.doe.gov/oiaf/ieo/pdf/ieoecg.pdf

[46] Energy Information Administration, Annual Energy Review 2008, Table 11.19, http://www.eia.doe.gov/emeu/aer/pdf/pages/sec11_39.pdf, and International Energy Outlook 2010

[47] Energy Information Administration, U.S. Carbon Dioxide Emissions in 2009: A Retrospective Review, May 5, 2010, http://www.eia.doe.gov/oiaf/environment/emissions/carbon/index.html

[48] Institute for Energy Research,  Lost in Translation,   http://www.instituteforenergyresearch.org/2009/07/28/lost-in-translation/.

[49]http://online.wsj.com/article/SB125409730711245037.html

[50] Robert L. Bradley, Jr. and Richard W. Fulmer, Energy: The Master Resource (Kendall/Hunt Publishing Company, 2004), page 49.

“This moratorium, wisely overturned, was never about safety – it was about politics, and politics at its worst. And while the Obama Administration has chosen, once again, to be directed by anti-energy special interests and appeal this decision, today’s ruling is at least a step in the right direction.

“The Administration’s decision to appeal this order means that today’s ruling will amount to little more than a morale boost to the hardworking men and women along the Gulf Coast who received pink slips as a result of this politically motivated drilling moratorium.”

Following are selected excerpts of Judge Feldman’s opinion:

If some drilling equipment parts are flawed, is it rational to say all are? Are all airplanes a danger because one was? All oil tankers like Exxon Valdez? All trains? All mines? That sort of thinking seems heavy handed, and rather overbearing. (pg. 19)

Nonetheless, the Secretary’s determination that a six-month moratorium on issuance of new permits and on drilling by the thirty-three rigs is necessary does not seem to be fact-specific and refuses to take into measure the safety records of those others in the Gulf. There is no evidence presented indicating that the Secretary balanced the concern for environmental safety with the policy of making leases available for development. There is no suggestion that the Secretary considered any alternatives… (pgs. 19-20)

An invalid agency decision to suspend drilling of wells in depths of over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region, and the critical present-day aspect of the availability of domestic energy in this country. (pg. 22)

More on the deepwater drilling ban:

• Gulf Oil Spill Moratorium Decision: Hornbeck v. Salazar CA 10-1663
• Deepwater-Gate: Administration Modifies “Peer-Reviewed” Report After it was Reviewed by Scientists
• IER Press Release: Mr. President, Focus on Capping, Containing and Cleaning Up the Oil – Not Politics

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Washington, DC – In the days following the Gulf oil spill, President Obama requested that the Secretary of the Interior conduct a 30-day review of the offshore drilling program in the United States and issue a report with recommendations. This report was to be “peer reviewed” by a team of seven engineers recommended by the National Academy of Engineering.

The team of engineers reviewed, approved and signed off on a version of the 30-day review that was presented to them by the Administration. However, after they signed their names to this document, a significant change was made – a change that led to the 6-month suspension of deepwater exploratory drilling. Click HERE and HERE to view the section of the report that was changed after the scientists signed off on the report.

William LaJuenesse, a reporter with the Fox News Channel filed this report earlier today on this very topic:

Click HERE to watch this report
June 11, 2010
3 minutes 5 seconds

What They’re Saying About Deepwater-Gate:

“The eight panel members said they disagree with the moratorium on all exploratory drilling.” In justifying its broad moratorium on deepwater drilling, the Obama administration emphasized that the measure was recommended by an Interior Department report prepared in consultation with scientists and industry experts.The May 27 report to President Barack Obama said the experts “peer reviewed” its recommendations, including the six-month moratorium and 22 safety measures. But eight of the 15 members of the review panel are charging that the administration misrepresented their position by suggesting they supported a blanket moratorium that they actually oppose. Their criticism, and the administration’s response, are evidence that the six-month stoppage is based on politics rather than on science. (New Orleans Times-Picayune, 6.11.10)

“The seven experts explained that the report draft they had reviewed did not include a six-month drilling moratorium. That was added only after they signed off.” The Obama Administration is under political pressure to reverse its ill-considered deep water drilling moratorium, and the latest blowback comes from seven angry experts from the National Academy of Engineering who say their views were distorted to justify the ban. In the wake of the oil spill, President Obama asked Interior Secretary Ken Salazar to produce a report on new drilling safety recommendations. Then on May 27 Mr. Obama announced a six-month deep water drilling ban, justifying it on the basis of Mr. Salazar’s report, a top recommendation of which was the moratorium. To lend an air of technical authority, the report noted: “The recommendations contained in this report have been peer-reviewed by seven experts identified by the National Academy of Engineering.” That would be false, sir. (Wall Street Journal, 6.10.10)

“A blanket moratorium is not the answer. It will not measurably reduce risk further and it will have a lasting impact on the nation’s economy…” Members of a panel of experts brought in to advise the Obama administration on how to address offshore drilling safety after the Deepwater Horizon disaster now say Interior Secretary Ken Salazar falsely implied they supported a six-month drilling moratorium they actually oppose. Salazar’s May 27 report to President Barack Obama said a panel of seven experts “peer reviewed” his recommendations, which included a six-month moratorium on all ongoing drilling in waters deeper than 500 feet. That prohibition took effect a few days later, but the angry panel members and some others who contributed to the Salazar report said they had reviewed only an earlier version of the secretary’s report that suggested a six-month moratorium only on new drilling, and then only in waters deeper than 1,000 feet. (New Orleans Times-Picayune, 6.9.10)

“[T]he experts say they never agreed to the administration’s six-month moratorium on exploratory drilling on the outer continental shelf…” A group of technical experts who advised the Obama administration on how to bolster the safety of offshore drilling operations say they oppose the administration’s moratorium on deepwater drilling. Halting the work risks “harming thousand of workers” who “were and are active responsibly and are providing a product the nation demands,” they said. The eight experts – all longtime petroleum engineers, some affiliated with major universities – are listed in a report published by the Interior Department last month as having “peer reviewed” Interior Secretary Ken Salazar’s recommendations on improving the safety of drilling on the outer continental shelf in the wake of the April 20 oil rig explosion in the Gulf of Mexico. The experts said the language about the moratorium did not appear in the draft they had reviewed. (Wall Street Journal, 6.9.10)

Eight of 15 experts named in a May 27 Interior Department report on drilling safety sent a letter to Landrieu, Sen. David Vitter, R-La., and Louisiana Gov. Bobby Jindal insisting they did not endorse the document’s recommendation for a ban on drilling. The scientists said that recommendation was added after they reviewed the report. The experts, including Robert Bea of the University of California at Berkeley and Martin Chenevert with the University of Texas, said Salazar was using their names to justify political decisions. “We broadly agree with the detailed recommendations in the report and compliment the Department of Interior for its efforts,” the group said. “However, we do not agree with the six-month blanket moratorium on floating drilling.” (Houston Chronicle, 6.9.10)

“…Interior Secretary Ken Salazar falsely implied they supported a six-month drilling moratorium they actually oppose.” Salazar’s May 27 report to President Barack Obama said a panel of seven experts “peer reviewed” his recommendations, which included a six-month moratorium on all ongoing drilling in waters deeper than 500 feet. That prohibition took effect a few days later, but the angry panel members and some others who contributed to the Salazar report said they had only reviewed an earlier version of the Interior secretary’s report… “We broadly agree with the detailed recommendations in the report and compliment the Department of Interior for its efforts,” a joint letter from the panelists to various politicians says. “However, we do not agree with the six-month blanket moratorium on floating drilling. A moratorium was added after the final review and was never agreed to by the contributors.” An Interior Department spokeswoman agreed that the experts had not given their blessing for a moratorium, and said the department did not mean to leave the impression they had. (New Orleans Times-Picayune, 6.8.10)

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