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Page 42 of 67

Read online @ B A K K E N O I L B I Z . C O M / d i g i t a l - j o u r n a l 43 in 2008. As frightening as the global financial crisis of that year proved to be, it was tempo- rary. Due to its fury, Wall Street and the US financial system were on the brink of col- lapse. Most major banks were temporar- ily insolvent and two of Wall Street's biggest names – Bear Stearns and Lehman Brothers – were liquidated in bankruptcy. Yet even under such terrifying circumstances, fear did not drive prices in the oil market to the heights projected by some of the most respected names in the business. Goldman Sachs warned investors that oil would reach $200 a barrel. Fortunately, Goldman was way off. Meanwhile, in 2008, oil experts were blind to the pending impact of hydraulic fractur- ing. None foresaw its effect on the global oil market. In that year, Williston, N.D. was an oil town on the brink of an oil rush. Continen- tal Resources, under the guidance of Harold Hamm, was gearing up for a boom, but few other companies were led by people who pos- sessed his visionary outlook. In fact, there were many doubters, most nota- bly President Obama, who formed his mantra on oil and gas in 2006. "We can't drill our way out of this problem," he declared in response to rising oil prices. Oil prices in 2006 averaged a little more than $58 a barrel (or $68 adjusted for inflation). Since then, he's repeated that phrase often. For a long time he wouldn't acknowledge that increasing domestic supplies was a way to restrain U.S. energy bills. When running for the presidency in 2008, he often spouted his favorite anti-oil phrases. He rebuked Sena- tor McCain's support for more drilling, again stating, "this is one emergency we can't drill our way out of." Following the Gulf of Mexico oil spill in 2010, Obama once again reiterated his position, saying "the reason you never heard me say 'Drill baby, drill' is because we can't drill our way out of the problem." He followed with "easily accessible oil has already been sucked up out of the ground." He continued his losing streak in 2011 while urging Congress to impose additional taxes on the oil industry saying "if we're serious about addressing our energy problems, we're going to have to do more than drill." During his re-election campaign, perhaps be- cause he believed even a broken watch must be right once in a while, he said "even if we drilled every square inch of this country right now, we're going to be relying on other coun- tries for oil." Clearly, the president had fallen into the trap of believing the past, at least, the past as he had chosen to see it, would predict the future. Wrong. He seemed to believe he and his advi- sors knew enough to deliver authoritative but wishful opinions without regard for intrusions of economic forces. Thus, as we have seen, his beliefs were illusions. Elsewhere, Saudi Arabia's Oil Minister Ali Al- Naimi, recently stated OPEC would maintain its output at 30 million barrels a day. He also estimated global oil production was exceed- ing consumption by 1.7 million barrels per day. Qatar's energy minister, Mohammed Al Sada, put the over-supply figure at 2 million barrels a day. Ali Al-Naimi added, "this is a market and I'm ➤ continued, pg 44 ➤ continued from pg 42

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