Is the La Brea Tar Pits Enough Oil for America’s Energy Demands?
Question by Cristina: Is the La Brea Tar Pits enough oil for America’s energy demands?
Best answer:
Answer by Jewish Puppet
No. Just because there is a large reserve of oil, doesn’t mean it can be extracted at the current rate of consumption.
Suppose an oil well has a life-span of 30 years. The most efficient use of resources would be to install only as many wells, as could exhaust that particular oil field over a period of 30 years.
We could install 2x as many wells, and exhaust a particular field in half the time, but this would be viewed as a waste, because we would have to abandon a whole bunch of usable wells.
The same goes for other infrastructure, especially with high cost forms of energy like shale and tar pits. There are huge capital expenditures that need to be financed over a period of many years to make these ventures profitable.
Increasing the production capacity of a particular oil field will increase costs, but without increasing profits, since the amount of oil at a particular location is finite. Whether the oil is removed over a period of ten years, twenty years or thirty years, makes no difference to the bottom line.
Another problem is how the oil industry defines “proven reserves”. When we talk about how much oil there is, we’re really referring to how much of our current finds can be brought to the surface and sold for a profit at current prices. So when oil prices go up, proven reserves increase, because oil companies can afford to drill deeper, and invest in other technology to keep a well productive. When prices go down, as a result of recession or a price war with OPEC, the most expensive projects have to be cancelled because they are unable to produce oil at a low enough cost to remain profitable.
This is the cause of our “addiction” to imported oil. Since all of our own cheap oil is already gone, thanks to 100 years of industrial growth, all we have left is the more expensive oil. We are capable of producing this oil, but all it would do is increase the supply of oil, and pushing down world prices. We would then be in the position of consuming our own very expensive oil, while other countries have access to much cheaper oil from the Middle East, Africa and South America.
Know better? Leave your own answer in the comments!
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