March 20, 1992
The Texas House of Representatives
Committee on Energy
The Honorable Mr. Robert Earley, Chairman
P.O. Box 2910
Austin, Texas 787-2910
Dear Mr. Chairman:
A single mediocre 200,000 barrel TEXAS oil well drilled, completed, produced and depleted within a ten year period is estimated to generate and place at least $3,374,600.00 into circulation within the State of Texas or a total of $5,180,000.00 within the U.S.A. (Exhibit #2). A single TEXAS gas well producing energy at an oil equivalent basis causes $1,982,000.00 to enter circulation within the State of Texas or a total of $2,979,000.00 within the U.S.A. (Exhibit #3). Using a Ripple Effect Factor of ten, it becomes apparent that a single oil or gas well of modest reserves creates an amazing source of funds from which a County, State or Country can exact operating expenses – TAXES.
By contrast, a unit of energy – a barrel of oil, an MCF of gas – that is simply purchased from a foreign source serves only to deplete a State or Country of its wealth. Simply stated, 200,000 barrels of oil explored for, drilled and produced within this Country is worth from $5,000,000.00 to $50,000,000.00 in real and circulatory value, while imported energy represents a $4,000,000.00 drain in to a Country’s wealth.
The sales point used for comparison between domestic and foreign is the refinery gate for oil and posted wellhead prices for gas. The back up data and definitions used, Exhibits #1 through 3, are attached. Obviously I would be available to discuss these revelations.
As Chairman of our Texas Committee on Energy, this dissertation my be “old hat” or like carrying “Coal to New Castle”, but in any case it is being offered as an aid to you in your continuing effort to raise the level of awareness among our State Legislators as to the true value of our State’s producible Fossil Fuel resources. Once that awareness of value has been appreciated and an understanding of the extraordinarily negative effect imported energy has on our State, I will feel confident their abilities to manage the energy wealth of Texas shall become one of their top priorities.
I enjoyed your visit to our P.I.C. noon meeting, March 11, 1992 here in Corpus Christi and feel that perhaps we can make a difference.
We can probably live with $50.00 oil and $5.00 gas once the costs of exploring, drilling, completing and operating get back in line, but without the incentives listed above our efforts as independents may be doomed and the ability of the Majors to provide our energy needs will be severely curtailed.
Naturally the Chairman of the Energy Committee completely ignored Joe’s letter as will most of those in the new Administration, but we can’t throw in the towel. We fought hard to retain these valuable concessions and we are ready to do it again.
Daniel A. Pedrotti