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Originally Posted by
DetroitDad
As President Obama rolled out new plans to allegedly cut costly oil dependence this week, he continued to perpetuate the "big lie" that
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"America holds about 2 percent of the world’s proven oil reserves" [source:
White House transcript of the President's remarks].
The CNN article you linked to further distorts what the President actually said, conveniently muddying the waters by characterizing him as having said "America only possesses 2% of the world's known oil reserves".
Catch the difference? Most people don't even know or care about the definition of "proven oil reserves". But if you are using the President's remarks in this post to further your own agenda, you better be ready and able to defend him.
The fact is that there are two different definitions of "proven oil reserves" and that "known oil reserves" is meaningless by comparison.
In most oil-producing countries around the world, "proven oil reserves" equals the amount of commercially recoverable oil estimated to be in the ground as calculated by the oil industry and totaled up by the government. However, in the USA, "proven oil reserves" is not an industry calculation, it's a legal term that has been defined by the Securities and Exchange Commission:Proved reserves. The quantities of hydrocarbons estimated with reasonable certainty to be commercially recoverable from known accumulations under current economic conditions, operating methods, and government regulations. Current economic conditions include prices and costs prevailing at the time of the estimate. Estimates of proved reserves do not include reserves appreciation.
Unlike all other countries, the USA starts with the oil industry's estimate of our commercially recoverable petroleum [[~164 billion barrels) and reduces it not only for "current economic conditions" but also for those reserves that are located in areas that are currently off-limits to production because of government regulations, resulting in the United States' narrowly-defined proven reserves of ~19 billion barrels of petroleum. When following the same methodology used elsewhere for measuring "proved reserves", the United States currently possesses ~15% of the world's proven reserves. [source].
Note that because of our limiting definition of "proved reserves", every time the price of oil rises, our "proved reserves" rise, too; likewise when the price falls. Furthermore, as the price rises, the oil producers have a financial incentive to search for and find additional reserves. Finally, because of politically-driven government regulations coming out of Washington DC, much of our proven reserves are off-limits to drilling and therefore not counted.
So not only is our President perpetuating the lie about our share of the currently proven world-wide oil reserves, in his speech he attempted to use it in an apples-to-oranges comparison:
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"We consume about 25 percent of the world’s oil. We only have 2 percent of the reserves."
If he wants to talk about our share of annual world-wide consumption, honesty requires that he compare it to our share of annual world-wide production, which is ~10% [source].
Therefore, if the President really wanted to level with the American people, he would have said "Each year we consume about 25 percent of the world’s oil while only producing 10% of it. We currently only have about 15 percent of the world-wide reserves."
But that doesn't sound dire enough to justify massive Federal Government interventions in the energy sector, does it?