In the classic film comedy "Trading Places," the plot point around which the satisfying conclusion revolves is the release of the Department of Food and Agriculture's confidential report on the effects of cold winter weather on the orange crop in Florida.

In real life, I've always suspected these Wall Street commodities traders would not have been as clueless as were those in the film as to what the report's conclusion would be. They would have already conducted private analyses and had a pretty good idea of what it would say.

But it is undeniably true that the release of a report from a U.S. government agency carries a lot of weight, even if it simply confirms what industry insiders have known well in advance.

All of this brings us to a discussion of last week's report that the U.S. Energy Information Administration is substantially downgrading its forecast of recoverable oil reserves in California's Monterey Shale formation. It cut its estimate by a staggering 96 percent, and now says there are about 600 million barrels of recoverable oil, down from its earlier estimate of 13.7 billion barrels.

This report has set off a spasm of reaction from various interest groups. But in fact it reveals nothing that those in the oil industry and observers who have been closely following the story of a potential California oil boom didn't already know.


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Despite its best efforts at trying various drilling technologies, the industry has been unable to come up with a way to extract oil reserves trapped in a complex geologic formation deep beneath the surface of the Central Coast and much of the southern Central Valley.

Those billions of barrels of oil are still down there. It's just that they can't be extracted, not with today's technology, not at today's oil prices.

Those in the industry had always been cautious about reading too much into the EIA's initial estimate, even as economic-development cheerleaders were touting it as a signal of an impending gusher of riches and oil-drilling opponents were warning that an environmentally damaging era of fracking was about to be ushered into the Golden State.

Petroleum geologists never shared either the glee or the dread.

At a legislative hearing last June, environmental consultant Robert Collier, who had just attended a petroleum conference in Bakersfield, reported that geologists appeared to be at wits' end trying to unlock the secret of how to exploit Monterey Shale resources.

"The oil companies are at the edge of what is known," he said. "They're all pushing the boundaries."

More than a year ago, Tupper Hull, spokesman for the Western States Petroleum Association, told me that while industry officials were hopeful of tapping into new oil resources they were not counting their hydrocarbons before they surfaced.

"The question in California is whether the geology is compatible with large-scale production from the Monterey," Hull told me then. It remained an open question, he said, whether "the technological puzzle can be worked out."

The new government report confirms that the puzzle has not been solved.

So what does that mean for those outside the industry?

Not surprisingly, opponents of hydraulic fracturing and other well-stimulation techniques reacted to the report by citing it as evidence to bolster their position.

Here's part of what Sierra Club California Director Kathryn Phillips said in a statement last week:

"This underscores how little anyone really knows and understands about the formations and the extreme extraction methods that the oil industry is currently using -- intensely -- in California to exploit that formation. It highlights that we need a time out on these extreme methods, like fracking, to assess what's really going on. We need a moratorium."

Here's part of a statement from Next Generation, the organization co-founded by venture capitalist Tom Steyer, perhaps the nation's leading proponent of weaning America off fossil fuels:

The report "sends a clear a message: California should continue to focus its efforts on leading the world in the use of technologies that reduce oil dependence, improve air quality and help our citizens save money."

In reality, the government estimate only underscores what many already realized.

The same economic and energy-security opportunities exist; the technological challenges of extracting the oil remain; the environmental concerns about air and water pollution that could be worsened by new drilling techniques are unchanged.

All the pro-and-con arguments that applied to Monterey shale exploration apply still.

Extreme reaction to a government report may make good comedy, but it should be avoided in the sober consideration of public policy.