This is a posting on a recycled email that someone keeps sending to fire up Americans about the fact we’re not drilling oil on our own lands.  Although some of the information in the email is correct, its conclusion and its call to action are wrong.  Again, I don’t know if the writer of this missive is a crazy right-winger or a devious left-winger trying to make the right-wingers look even nuttier.

LAS VEGAS, NV (March 26, 2009) – One of my good buddies is Mike Maddux, former Major League Pitcher and currently the pitching coach for the Texas Rangers.

Mike’s one of those inquisitive guys who will occasionally forward me an email with the subject line: Is this true?

His latest is about the oil reserves we have in the Western United States.  It reads:

The U. S. Geological Service issued a report in April (’08) that only scientists and oil men knew was coming, but man was it big.  It was a revised report (hadn’t been updated since ‘95) on how much oil was in this area of the western 2/3 of North Dakota; western South Dakota; and extreme eastern Montana …. check THIS out:

The Bakken is the largest domestic oil discovery since Alaska ’s Prudhoe Bay, and has the potential to eliminate all American dependence on foreign oil. The Energy Information Administration (EIA) estimates it at 503 billion barrels. Even if just 10% of the oil is recoverable… at $107 a barrel, we’re looking at a resource base worth more than $5.3 trillion.

What the email is talking about is shale oil.  And yes, the Rockies and the areas throughout those states are loaded with rock that could fill our tanks with enough gasoline for the next century.  In short, we could force the Saudis, Kuwaitis, Iranians, and Iraqis to pound sand.

There’s one problem.  The technology to turn that rock into oil is way too expensive.  From all the experts I spoke to, we would need gasoline to be over $5 a gallon before shale oil would be worth it.  Even last year’s gas price spike was not enough to force a wave of investment into shale oil technology.

There’s only two ways gasoline will reach $5 a gallon. 

First, we enact a large gas tax.  That would curb our consumption of foreign oil.  And the tax revenues could fund research to find cheaper ways to extract shale oil.  However, it’s more likely the Obama Administration will look at alternatives like solar and wind – not strip mining western lands.

The second way: the Saudis become suicidal.  There is no way Saudi Arabia which controls most of OPEC will allow the price of oil to get so out-of-hand to force consumers to stop filling up.  The Saudis know what they’re doing.  They have us … over a barrel.

Read Bob Baer’s book, Sleeping with the Devil: How America Sold its Soul for Saudi Crude.  Baer is a former CIA operative who points out the history of Saudi Arabia and our deals with them back in the 1970s – thanks to Richard Nixon – that put us on a path of oil addiction and kept the Saudis wealthy, and according to Baer, corrupt.

Trust me, the Saudis will never allow shale oil to beat them.  And we won’t allow it either.  We need Saudi Arabia to be a buffer in the Middle East between the Arabs and the Israelis.  Hey, blame Nixon; he started it.

Talk of shale oil always increases with the price of gas.  In fact, last year I saw a number of proposals from companies and entrepreneurs looking for investors to fund some new shale oil technology.  One of them talked about heating the rocks first.  Needless to say, those discussions ended when gas dropped below $2 a gallon.

Gas prices are expected to rise again at the end of this year.  If the economy pulls out of its nose-dive, then the increase at the pump is a fore-gone conclusion.  And so will the increased number of emails about shale oil.

Thanks, Mike.