Friday, June 15, 2007

Am I The Last to Know?!

Today's "retreat" session included a 2 hour presentation by an economist (and not just any economist, or someone important like our new Federal Chairman, but one from Kansas City, from whence we all flew...spouses were invited to this special session). Woo-hoo! The excitement in the room was palpable as we settled into our seats to listen to what he had to say.

But in all fairness, the guy was full of good information and knows a lot about a lot of things, one of them being oil. I jotted down a few things he said (I haven't confirmed any of these, so feel free to do your own investigative journalism). I was the only one in the room taking notes. Economists are great at predicting the past and seeing things in reality and wondering if they will work in theory. Not that I have anything against them. Just sayin.

Anyway, did you know?

That the largest oil reserves in the world are in Canada? The only problem there is that the reserves are in solid form and cost more to extract, but with oil prices as high as they are and going higher, it now becomes very profitable to start extracting it.

That we have only tapped into about 10% of the known oil reserves in the world but about 60% of the easy to get to (i.e. cheap) reserves?

That 60% of the oil consumed in the U.S. comes from sources outside the Middle East? Approximately 60% comes from U.S. sources, Canada, Mexico and Venezuela.

That Canada could provide 80% of the U.S. demand for the next 100 years??

So, if Iraq is all about the oil, then why aren't we going to war in Canada instead?

Other things jotted down in my notes (in the "job search" category):

The average age of skilled machinists in this country is 63 and about 70% of them will be retiring shortly. This leaves a huge skilled labor shortage in the manufacturing industry (and we wonder why more manufacturing jobs are being outsourced to other countries).

The transportation industry is experiencing a massive shortage of truck drivers and Kansas City is the natural hub of this industry. Teamsters are commanding six-figure salaries. I think I could drive a truck, but I'm not sure about joining the Teamsters yet. This calls for a little more soul searching.

Walmart is building (or planning to build) a mile-long building for its new distribution center near Kansas City. I already know how to drive a forklift but it was a long time ago.



At 8:12 PM, June 15, 2007, Blogger Eric said...

I don't believe the "Canada has the largest oil reserves" line. I still think Saudi Arabia has that distinction.

And as far as those tar sands becoming economically recoverable, I don't buy that either. People tend to neglect the cost side of the equation when looking at oil and gas economics, and while prices are indeed at near-record highs (factoring in inflation), operating and equipment costs have risen proportionately as well. The profit margins just aren't as significant as many people probably imagine. (Not that anyone in the oil bidness is complaining, mind you, but prices don't rise indefinitely in a vacuum.)

And as far as importing our oil from non-Middle East countries, surely the speaker didn't intend to imply that we should take comfort in our energy dependence resting in the likes of Hugo Chavez or whoever's in charge of that morass otherwise known as Mexico?

Other than those nit-picky details, well, yeah, those things are pretty well known down here in the oilpatch. ;-)

At 7:42 AM, June 16, 2007, Blogger DarkoV said...

Did the economist mention that China is way heavy into coal (besides its own reserves) and natural gas? It is the largest land owner now in Australia, where it's buying up coal mines and land with proven natural gas reserves to feed the mighty (an inefficient, since the labor costs are still so low) economic engine.

Shrimp on the barby may soon be Peking Duck on the grill.

At 10:41 PM, June 16, 2007, Blogger Gwynne said...

Eric, I do have to wonder about the guy's street cred...afterall, he is an economist. These guys make meteorologists look good! But he specifically said that Canada's reserves exceeded Saudi Arabia's when you look purely at the numbers and not at how easy it is to get to (he went on to say that in Saudi, you can literally drill your own because it's sometimes only 10 feet under the earth's surface. He also went on at length about the cost of getting the oil out of the tar sands and how until recently, it was not cost effective. While it is still not profitable at today's oil prices, he predicts that the costs of extraction will not keep pace with the price per barrel...which points to Darko's comment...the extraction process relies heavily on natural gas. Which means we better be nice to the Chinese, I guess. Surprising he did not mention the Chinese in his talk. Or Peking Duck. But I think he covered pert near everything else. ;-)

And no, he did not imply that we should be at all comfortable relying on the likes of fact, quite the opposite. ;-)

At 9:56 AM, June 17, 2007, Anonymous mis_nomer said...

What curious facts. Maybe I should consider moving to Canada, or maybe riding my bicycle more.


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