Two days ago, I was informed by several readers that all our oil supply troubles were over. Apparently they became a little too excited after reading about Occidental Petroleum's "huge discovery." Admittedly, I should have seen this coming once the news reached my desk.
I know exactly what happened. These guys saw the headline, "California's Largest Oil Discovery in 35 years," and jumped right to making conclusions. It's true that the potential 250 million barrels of oil equivalent comes out to about one-tenth of the state's on-shore reserves.
But when you put the numbers into perspective, please don't be afraid to laugh right along with me. I'd like to reiterate a point my colleague, Chris Nelder, has continually tried to impress upon you: It's all about the flow rates.
For the sake of more enjoyment, let's look at the impossible for a second. Assuming that Occidental Petroleum defies logic and is able to produce all 250 million barrels in a single day. Taking our current demand into account, we've managed to free ourselves of foreign oil imports for a mere twelve days.
Within two weeks, we'd be right back where we started. So much for the greatest discovery in over three decades.
Now, I don't mean to rain on Occidental's parade. They're having enough trouble without people crushing their production fantasies.
The discovery certainly won't save California's production from sliding further down the backside of the peak oil curve. California's oil production is nearly half of what it was twenty years ago. And to think they're still our third-largest producing state in the U.S. Of course, there's also the overlooked fact that two-thirds of this new source is natural gas!
Personally, I just don't understand how this discovery is so excitable. I guess a few million barrels sounds better than nothing nowadays.
That is, until people start looking in the right places. On Monday, I'm going to show you something you can really get excited about. And after recent events, there's a good chance this oil play just got even better.
P.S. I understand some of you might not want to wait until Monday to check out our latest report about this new discovery. To be honest, I can't blame you, so I'll give you that opportunity right now. Just click here to read it for yourself.