Ohio Gov. John Kasich’s recent claim that a single energy company could recover $1 trillion worth of oil and gas from the state’s shale is an exorbitant overestimate.
At current oil prices, that figure represents more than four times U.S. oil production last year. Viewed another way, every drop of oil produced in America for the next four years will be worth roughly $800 billion, based on current prices and production rates.
I think he’s way off base. My best estimate is he’s probably wrong by a couple of zeroes.
U.S. crude oil production in 2011 was 2.078 billion barrels. At roughly $100 a barrel, that’s $200 billion worth of oil.
The revenue potential of newly accessible deposits of oil, natural gas and natural gas liquids under the state is important because Kasich is pursuing an increase in a state tax that large-volume oil and gas producers pay on what they extract. Proceeds from the tax would fund modest statewide income tax relief.