How much oil does U.S. have? That depends; who wants to know?

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A file photo of an oil pump in North Dakota's Bakken region.

Mark Reilly

Managing Editor- Minneapolis / St. Paul Business Journal

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Energy companies offer much bigger estimates for U.S. oil reserves when they're talking to the public than they do to federal regulators, leading to wildly different outlooks for the nation's energy future.

Bloomberg reports on the discrepancies, and they're big ones. Chesapeake Energy's publicized estimates of 13.4 billion barrels of oil from shale drilling, for example, compares to just 2.7 billion barrels of reserves in filings to the Securities and Exchange Commission. Marathon Oil estimates its reserves at 4.3 billion barrels or 787 barrels, depending on who it's talking to.

Why the different numbers? The SEC has much tighter rules on estimates for financial reports. It requires "reasonable certainty" that the promised oil and gas will be extracted from current wells or ones drilled in the next five years. But the SEC doesn't police investor presentations, or projections given to lawmakers who decide on whether to allow oil exports.

Critics say that oil companies are setting themselves up for lawsuits if their higher estimates don't turn out, but officials counter that investors know the risks.

Whatever the future of U.S. oil, there is a lot of stuff on the market right now, and it's helping lower the overall price of gas. Average prices are down 50 cents per gallon since April. Bloomberg also has a story on that, noting that it equates to "free money" for consumers just as the holiday season starts.

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Mark Reilly manages daily and weekly coverage at the Business Journal newsroom.