Wednesday, April 9, 2008
Q: Do you think we should drill Florida's oil to ease our addiction to Middle Eastern oil? – A.H.
A: While Alaska gets all the press (see below), we know there is oil under Florida.
Drillers found oil in my home state in 1943. The Sunniland trend in South Florida has produced about 110 million barrels so far. And the Big Cypress National Preserve produces about 730,000 barrels of oil per year.
That's not the only park hiding oil reserves.
If you've visited the Everglades National Park at Shark River, you drove down the old drill road. I've seen the logs from those wells. There's plenty of oil, it was just too sour to make any money in those days. These days, with oil above $107, it's a different story...
I firmly believe oil is vital to our quality of life. I also believe oil will change the way millions of people in China and India live. So we're going to compete with more players for the oil supply soon.
However, the amount of oil under Florida is ridiculously small. The U.S. Geologic Survey reports around 370 million barrels of oil potential in Florida. That's enough oil to supply our needs for about 30 minutes or so. There's probably more oil under the continental shelf of the Gulf of Mexico, off Florida's coast. That oil could reduce our imports... by a fraction of a percent.
On the other hand, Florida exploits it tourism industry quite well. Florida has no state income tax. It generates revenues from sales and hotel taxes. And as one St. Petersburg Times columnist declared, "Florida and its beach-dependent tourist industry welcome nearby drilling – and the potential pollution of oil spills – about as much as an anthrax attack."
A horizon full of oilrigs and potential spills just wouldn't sit well with beachgoers and fishermen.
So from a "best use" standpoint, I think Florida's tourism wins the argument. While we'd use up Florida's oil rather quickly, the state can mine its sunshine and sandy shores indefinitely.
Q: I've heard we have enough oil in Alaska to fill our needs. In all your research, do you find that to be true or not? – E.A.
A: Alaska holds a lot more oil than Florida...
The U.S. Geological Survey's best estimate is about 20 billion barrels in place between the National Petroleum Reserve and the Alaska National Wildlife Reserve. Of course, only about half of that could be recovered with current technology... But let's be optimists and say we could recover 12 billion barrels.
The U.S. imports about 10 million barrels of oil per day. That means, every year, we need 3.6 billion barrels of oil. If we could pump it as we wanted, Alaska's oil would only cover our imports for three or four years before it was exhausted.
I'm happy leaving that oil up there for a real energy crunch.
On the other hand, the U.S. sits next to an absolutely enormous oil supply... it's in an area most investors haven't yet heard about. You can read the full story here.
Iron ore continues as the momentum trade du jour... Cleveland-Cliffs at new all-time high, up 43% in 2008.
Independent energy producers soar... Devon Energy, Stone Energy, Ultra Petroleum, Plains Exploration, Cabot, Contango, Sabine Royalty, Whiting Petroleum, and Forest Oil at new highs.The state of infrastructure... engineering and construction giant Shaw Group reports earnings today.