There's a new game being played in the media.

From what I understand, the rules are easy. Simply pick somebody (other than yourself, of course) to blame for oil prices. Then, you can watch as the blame is bounced around. Unfortunately, there's no way to win the game since the blame goes back and forth repeatedly.

Let's start with OPEC. After all, they do control a significant amount of global oil production. According to them, the speculators are responsible for running the price of oil up.

In the words of the Qatari Minister, "There is no shortage."

That seems to be the daily mantra at OPEC.

They even expect oil prices to reach as high as $170 a barrel in 2008. Anyone else remember when they were comfortable last year when oil prices were an astounding $60 a barrel? Things are so good, Libya is considering a cut in production.

Shell's chief exec, Jeroen Van der Veer, came out swinging lately, saying that speculators aren't to blame. He's finally starting to realize that cheap oil oil is getting scarce, so producers are forced to go farther and deeper than ever before.

But again, there are no clear winners.

Speculators obviously have their part in the price of oil. The amount they play, however, would invite a week-long argument. It's also true that supplies are extremely tight. The fact is that global production has plateaued while demand continues to increase.

You can see where this is leading us, right?

But just because there's a global crunch in the oil markets does not make every oil investment a safe one.

In fact, the last time I was this concerned over one of my reader's investments, it was a few weeks ago. Back then, I was asked a simple question on how I felt about the Colorado Oil Shales.

Several of you were getting excited over the idea that drilling for oil in the Arctic National Wildlife Refuge was inevitable. Normally, I would be the first person to get back the idea of new domestic production.

This time was a bit different.

Drilling ANWR for Oil

In 2006, Alaska's north slope pumped out an average of 724,000 barrels per day. After taking a quick look at the numbers from the Energy Information Administration (EIA), that means production there has dropped about 24% since 2002.

As you probably know, drilling for oil in ANWR isn't allowed. In fact, the Congressional block on drilling ANWR has been renewed every year since it was first enacted in 1982.

Last month, the EIA completed a service report entitled Analysis of Crude Oil Production in the Arctic National Wildlife Refuge.

Remember, we're talking about a good deal of oil. The United States Geological Survey estimated that between 5 and 16 billion barrels of oil can be recovered from ANWR's coastal plain.

Don't let the big numbers grab all your attention, because it's not the total reserves we're interested in, but rather the production rates. Even if we take the EIA's high estimate case, oil production peaks in 2028 at 1.45 million barrels per day.

Let's think about that for a second...

Pretend that everyone opposed to drilling in ANWR suddenly had a change of heart tonight and Congress lifts the ban tomorrow morning. The problem is that the area would still take nearly a decade to develop. That means we wouldn't see production until at least 2018!

There's a few other problems to consider, too.

That extra million barrels per day may not have as much of an impact as you think. U.S. oil production has been falling for the last three decades while our consumption levels have gone through the roof.

ANWR: Too Little Too Late?

Okay, so ANWR may not be our peak oil savior. The good news is that ANWR production would be able to slightly decrease the amount of oil we import. Also consider that we imported about 13.4 million barrels per day last year (5.9 million b/d coming directly from OPEC).

Are we going to eventually open up ANWR to oil producers drillers within the next few years?

Absolutely.

Will production have a significant impact?

Not likely, but every little bit helps.

Until next time,

Keith Kohl

P.S. I know I sound rather skeptical about ANWR drilling. It's true. I also know I'm not alone, either. Furthermore, I know that most of my readers have been profiting from better opportunities for years. And to be honest, it wouldn't be fair if I didn't give you the same chance as my other Energy and Capital readers. If you're interested in finding out more about some of these booming oil plays, I'd recommend checking out the $20 Trillion Report.

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If you really think 5-16 billion barrels times 130 dollars a barrel going to opec doesn't matter!You must be kidding youself, remember only about half of all oil is used as a fuel.

Your article was exactly correct. Exactly. Now double the reserve figure (actually 20 billion barrels) and you could write the same article about our offshore drilling imperative.

Same results. Same outcome.

Dear Keith, We laymen are sort of clueless. However . . . Big oil initially said: 1.Price is up because of Middle East tensions.
2. Nigerian rebels. 3.Khadaffi hates America. 4. Refinery fire in
Texas. 5. Refinery fire in Arizona.
6.We have a shortage of refineries.
7. Destruction of Iraqi oil fields.
and there are ten more. The Saudi Oil minister offered to build a refinery for us. Why are we sending money to the Saudis? Why do we not exchange grain for oil? Ever eat oil? Why is natural gas costing more when it is sooo plentiful? Time to invade Wall Street. They are taking 'our' resources. Nationalize.

The fact is that oil from ANWR is being sold on the world market. Tankers pass oil coming from the Middle East on its way to buyers outside of the US. They admit it, but say they are not cutting our supply with this practice. RUBBISH! That oil is replaced with oil from somewhere else. How does that help us? I'm not for nationalizing the companies but we should nationalize the oil. Our oil must stay here.

It sounds to me like the author (KK) doesn't have any better solutions than the man on the street.

We are all at loose ends, but know that we must become self sufficient and not at the mercy of foreign lands.

What to do? Everything, start building those windmills in mass production. Once we have viable protection (which has been breached many times in the past)for nuclear production, check France's set up.

Read Paul Harvey's article:Sweden and Norway have solved the problem of hydrogen production and storage at the stations for filling cars. It is available there in tablet form for your "gas" tanks with modest improvising, and it is cheap. etc etc etc What happened to American ingenuity. As John Kennedy said. Ask not what your country can do for you, ask what you can do for your country. Kick out the lobbyist and congress with them, for a start!

I remember that the Trans Alaska Pipeline System delivered 3 million barrels/day when first fully operatonal. Keith says .725 million.
I find Keith somewhat less than pro American at times.
Dick ><>
P.S. As an engineer, I was glad to have my calculator handy to solve the "Verify" qualifier.
DC><>

oil is dying the tides are shifting evolution is happening we will have paradise solar is the answer get with the programm give up fear and loathing love your neighboring animals stop trying to win we have all we need

44 horsemen10

If we cannot get some relief in less that 10 years, then we deserve what we get- or don't get, as the case may be. I heard the Predident of Shevron quote 3 years as a reasonable time just 2 days ago; thqat is a lot more reasonable to me. We went to the Moon in less than 10 years; be morose on your own time.

I have been an interested observer of the world class Alaskan energy resources since settling in Fairbanks in 1958. In 1965-66 I gave every other member of the Alaska Legislature Robert Engler's "The Politics of Oil".
I conceived, designed, drafted and was deeply involved in the successful achievement of the Alaska Native Claims Settlement Act. I had an Impossible Dream, Alaska Natives owning and managing business corporations (some now grossing over a billion dollars a year), doing business throughout the world, land, sea, and air. Unique among aborigines, it has come to pass, although in 1971 I did not envision Outer Space. Google "ASRC Aerospace".
Prudhoe Bay resulted in the Trans Alaska Pipeline, capable of carrying 2 million barrels a day, and, in fact, carrying at peak close to that. For many decades whenever it is suggested drilling ANWR, using less land than Dulles Airport in ANWR, which is about the size of Montana, it is said this would despoil ANWR, and, anyway, if drilled, oil would not start flowing for ten years. Yet over ten years, at 365 million barrels a year, 3.65 billion barrels would have been added to domestic supply. I estimate Alaska would have safely added more than 10 billion barrels of domestic production. Instead we despoil the ground and water of foreign countries and, to pay for foreign oil, we transfer our money to foreign reserves and sell our assets to Sovereign Wealth Funds. Eventually they will make an offer we cannot refuse. (The Sovereign Wealth Funds of Norway and Alaska will not join in the extortion.) However the experts in Congress tell us such domestic production from ANWR would lower prices only by pennies, while the same amount imported should reduce prices by nearly a dollar, or even more. I don't understand their math. Can you explain?

We know that drilling in Alaska Wildlife Region is somewhat risky for the animals, however, adequate precautions can be taken to insure the preservation and safety for all the animals.
We are talking after drilling the possibility of a ten year wait for production to reach the consumer. Crude will probably be at $200. a barrel by then at the steady demands continued growth. So waiting 10 years will give the US more crude to assist in the fulfilling some of the demand. But if we don't drill it will be a great deal longer before we see any relief. Let's face the truth with our eyes open for a change. We need the fuel, the fuel is available in the ANW Region. We need more production in this country, what by God are we waiting for?? Is the Congress, and the Senate more concerned about the welfare of animals then they are their own citizens and voters? Our representatives in the Government had better get their priorities straight and their ducks in a row,they need to worry about America and her families way before the preservation of the wildlife in that region. I too do not want to see the animals/wildlife endangered, but I also don't want to see the American way of life destroyed, resulting in human life loss, starvation, and homes lost as a result of the Economy Crisis. When I know we can do something to rectify the misery. We need the crude to survive until other sources of alternate power can be produced in adequate quanities to meet most of the demand. All the lip service without action is senseless, and only provokes more anger from an already angry society.The American people already feel they have been abandoned by the Government who are only thinking of their special interest groups and not the voters who put them in office. The Congress and the Senate must get off their high horses and take whatever action NEEDED to begin drilling in ANWR as fast as humanly possible. Don't make excuses take action and make it happen NOW! Start today and get the ball rolling in the right direction. The political leaders we have in place right now can be removed during the next election, and the voters should make notice of who supported our efforts more than their own personal endeavors. Keep track of your Senators and Congressmen/women and see if we have received some of our NEEDS.