America — The Next Saudi Arabia?

… now THAT’s Too Crazy To Ignore.

Here’s the headline from the Wall Street Journal op-ed piece:

“How North Dakota Became Saudi Arabia”

It’s about the huge oil find in North Dakota and Montana known as the Bakken Formation, which conspiracy types claimed was being deliberately suppressed by government regulations.

This article implies the same thing — that President Obama’s fixation on green technology is suppressing oil production in this massive oil deposit.

For the record — I think drillers should be free to go for oil and gas anywhere it can be safely produced, and if it has the support of the people who live there. I also think it’s ridiculous to shut down drilling because a few birds die (assuming the dead bird claim in the article is true.)

But to imply that this is like Saudi Arabia?

With the right set of national energy policies, the United States could be “completely energy independent by the end of the decade. We can be the Saudi Arabia of oil and natural gas in the 21st century.”

Nowhere does this article mention the cost of drilling in the Bakken Formation. It’s apparently around $75 a barrel, since when the world price of oil dropped blow that, Continental Resources stopped drilling — not because of government regulations, but because it would lose money at the lower price.

What makes Saudi Arabia Saudi Arabia is not just the quantity of oil, but how cheap it is: the same barrel that costs at least $75 to get out of the ground in North Dakota costs as little as $4 in Saudi Arabia.

Which means if the Saudis want to, they can shut down the Bakken project overnight.

Another untold part of the Bakken story is the massive amount of natural gas Continental is simply burning off — because it’s cheaper to waste it.

Should the government discourage oil production in favor of green energy? No.

But the advantage of a solar or wind facility is that once it’s built, the energy itself is free, and the cost should drop over time.

Finds like Bakken will assure a steady supply of oil — but it will always be expensive oil.