Michelle Bachman vs. Christopher Mims on $2 gas – they are both wrong

August 19, 2011

Michelle Bachman made news this week when she pledged that US gasoline prices will drop below $2 if she is elected president.  Bachman did not give any details on how she plans to accomplish this, but it probably centers on maximizing existing US fossil fuel resources in both conventional and unconventional reserves.  This would mean opening the Arctic National Wildlife Refuge and the Outer Continental Shelf to exploration and re-opening the Gulf of Mexico for new production, as well as clearing regulatory hurdles for increased coal and shale oil production.

Christopher Mims, writing for the rabidly anti-oil Grist, correctly assumes that Bachman is talking about shale oil (although he is incorrectly reductionist in believing this is all she is talking about).  Mims is also correct that shale oil has been the Next Big Thing in fossil fuels for decades, always available but never economically feasible to extract.  He is wrong, however, in his belief that shale oil will always be out of economic reach.  The fact of the matter is that the technologies that have led to the shale gas revolution – especially horizontal drilling – have been profitably turned to shale oil, and numerous shale fields are already producing oil.  The Bakken field has been instrumental in the economic boom of North Dakota, and other plays like Eagle Ford and Permian Basin are having similar impact.  Mims’ entire analysis of the feasibility of shale oil is out of date.

That, however, does not make Bachman’s “$2 per gallon” assertion correct.  It is still more expensive to produce oil from shale formations than it is to pump conventional oil, and it is not at all clear whether $2 gas can support it, without subsidies (which, if Bachman is to be consistent with the broader Tea Party philosophy, she cannot endorse).  Also, the currently exploited shale oil reserves are the “low hanging fruit” of the kerogen tree.  These plays are terrific for local economies, but they do not represent the kind of massive reserves that would be game-changing.  The game changer is the Eocene Green River Formation in Utah and Colorado, which contains an estimated 1.3 trillion barrels of oil, most of the estimated shale reserves in the US.  If – and that is a big if – this formation can be fully developed, then yes, we would see a collapse in oil prices and probably an era of sub $2 gasoline.  However, this formation has unique factors, not the least of which are ecological and environmental – it is an area of immense scenic beauty that will prove politically difficult to despoil for petroleum.

If Bachman thinks that she, or any president, can simply ignore the concerns of organized and opposing political factions, then she is deluded.   A grand bargain will have to be worked out if the US is to maximize its shale resources.  I believe that this will have to include some form of a carbon tax .   You cannot just wish your opponents away in a democratic republic.  You have to give something to get something.   If the oil crowd wants shale, they have to give something to the environmental crowd.   If the Greens want taxes on carbon emissions, they have to give something to the development crowd.  Quid pro quo, everybody wins.  But, until that happens, there is no $2 gas on the horizon.


  1. […] […]

  2. […] on over 3000 acres of oil shale land in Utah’s Uintah Basin.  As I have noted several times (most recently just last week), the Uinta Basin is the site of the massive Eocene Green River Shale formation – potentially […]

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