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While the U.S. has turned its attention to getting this fiscal crisis sorted out, the utterly worthless Senate Majority Leader has used this opportunity to try and slip in a ban on shale oil exploration and mining by attaching to one of the bills about to pass through Congress.
Our fiscal problems are multi-fold. Clearly one of the problems is the exploding cost of energy. Our largest reserve of oil is in an estimated 2 trillion barrels of recoverable oil from oil shale. That is more oil than Saudi Arabia has reserves. Harry Reid is now trying to make sure America never has the chance to touch it.
The left is bound and determined to take power and remake America in accordance with their highly unrealistic, utopian paradigm. They do not care if they have to destroy Middle America in the process. As we see today, people like Harry Reid, Chris Dodd and Barney Frank who created this subprime mess and defended it against all attempts at reform, will, when the excrement hits the fan, blame the resulting perfect shit storm on the right. They are clear and present danger to our way of life. They are craven, hypocritical, and beyond shameless.
Tarring and feathering is too mild a response to all of this.
Showing posts with label OCS. Show all posts
Showing posts with label OCS. Show all posts
Thursday, September 25, 2008
Bastard
Wednesday, September 24, 2008
Round 1 Is In The Books, Score - America 1, Democrats 0
Democrats have conceded the drilling issue for the moment and will allow the Congressionally imposed moratorium on OCS drilling to expire on October 1. This does not mean that drilling will commence immense as there are still numerous other issues, including fed and state issuing of permits, royalty sharing agreements, the inevitable lawsuits, etc. That said, the Democrat strategy is to concede the issue for the moment to defuse it for the election. Their hope is to win in the next election and reimpose the restrictions then. This is only round 1, and while it is a victory of sorts for America, there is a long way to go before the insane Democratic refusal to allow exploitation of our resources is finally defeated.
Thursday, September 4, 2008
The Opposition Research
Palin said last night, "Our opponents say, again and again, that drilling will not solve all of America's energy problems - as if we all didn't know that already. But the fact that drilling won't solve every problem is no excuse to do nothing at all." The Obama camp notes that Palin said once before that we can drill our way out of the current mess. "Asked by Invester’s Business Daily "Some politicians and presidential candidates say we can't drill our way out of our energy problem and that drilling in ANWR will have no effect. What's your best guess of the impact on prices?" Palin responded, "I beg to disagree with any candidate who would say we can't drill our way out of our problem or that more supply won't ultimately affect prices. Of course it will affect prices. Energy being a global market, it's impossible to venture a guess on (specific) prices." [Investor’s Business Daily, 7/11/08]" To give you an idea of how weak this opposition research is, that is the lead point. Actually, I am pretty sure she pushed alternatives and we know she is responsible for a natural gas pipeline. Regardless, while this may be a got’cha, the bottom line is anyone who believes we are not courting disaster by failing to start exploiting all of our resources and doing so now, in addition to pushing alternatives, is either grossly misguided or moves in the same circles as the leftist elite. The cost of energy goes directly to the economic health of Middle America, and while $4 a gallon for gas is fine by Obama, it is putting the absolute screws to the majority of Americans. If the left wants to make that their lead, let's have at it. What's gone unmentioned is that the Palin signed into law a dramatic reform of the state's education financing system that equalizes aid to rural and urban districts, while significantly increasing funding for special needs students. From the publication Education Week: Gov. Sarah Palin and state lawmakers have gone ahead with an overhaul of Alaska’s school funding system that supporters predict will provide much-needed financial help to rural schools and those serving students with disabilities. So the Netroots and CNN allege that Palin cut special needs funding by 62 percent, by crediting her with the budget proposed by a political opponent. And the truth is that rather than a 62 percent cut, she's actually increasing special needs funding by 175 percent. If this opposition research and the talking points are looking a bit thin, wait, it gets thinner. Sierra Club Director Carl Pope Said "No One is Closer to the Oil Industry Than Governor Palin." "No one is closer to the oil industry than Governor Palin," said Carl Pope, executive director of the Sierra Club in comments reflecting the views of a cross section of environmental activists. They cite her eagerness to embrace expanded offshore oil development, her lawsuit against further protection of polar bears so as not to hinder oil drilling in Alaska's ice-filled waters and her ardent support to allow oil companies into the Alaska wildlife refuge. [Associated Press, August 30, 2008] . . . Well, there you go. If the Sierra Club Director says it, that’s good enough for an Obama talking point.
In response to Sarah Palin's speech last night, the Obama camp has downloaded its opposition research, which is vastly more spin than substance. Indeed, some of the attacks on Palin are ridiculous - from an alleged flip flop on her positions on energy to a claim that she has taken money from babies and cripples. If this is the best they've got, there is trouble in the left's utopian world.
You can find the entire list here. Its lengthy and a lot of it is spinning out of control. For example:
Another attack is to claim Gov. Palin kicks babies and steals crutches from Tiny Tim. The Obama Camp give a laundry list of funding for "crucial education, health care and senior" programs that Gov. Palin "opposed." The reality is that all the things that they list were on the budget of the outgoing Governor. Yes, she tossed that. The Weekly Standard tells the whole story:
The plan, enacted in the recently concluded session of the legislature, is based on recommendations issued by a legislative task force last year. It will phase in a greater flow of money to districts outside of Anchorage, Alaska’s largest city, over the next five years.
Advocates for rural and remote schools have lobbied for years for more funding, in particular noting the higher fuel, transportation, and other costs associated with providing education in communities scattered across the vast state.
A second part of the measure raises spending for students with special needs to $73,840 in fiscal 2011, from the current $26,900 per student in fiscal 2008, according to the Alaska Department of Education and Early Development (emphasis added).
One of the major acts that Mayor Palin undertook in Wasilla was to propose the building of a $14 million sports center to be funded through a half percent sales tax increase. The ultimate decision makers on this were the citizens themselves in the penultimate form of democracy - a referendum. Yet the Obama Camp would have you believe that because the people of Wasilla decided that this would be a good idea, this amounts to Mayor Palin being a hypocrite on taxes and spending. As they write it, she massively increased the long term debt of the town and imposed a draconian tax increase.
Other swipes get even more remote. One of her appointees had, five years previously, been a lobbyist. At times, she had rubbed elbows with some of the same Alaska Republicans she later attacked. One Republican wished her ethics reform bill had been stronger. She actually reached across the aisle to get that passed. And of course troopergate gets mentioned prominently – without any of the context explained.
I do not have enough information to evaluate some of their charges – that she in fact has asked for quite a bit of pork as a Mayor. I do note the curious wording of the charge that Alaska has been seeking pork while she is the Governor. No kidding. Gov. Palin has no input into what Alaska’s Congressional delegation, the worst porkers in Congress, ask for on behalf of Alaska.
The last real laugher that I’ll include here is a charge that "Palin is Close to the Oil Industry." Now, as Governor, Sarah Palin is famous for tearing up the sweetheart deals that the oil industry had negotiated with the corrupt Republicans she had bounced from office. So one wonders how the Obama Camp can possibly justify this accusation:
I think the left is in trouble. In the absence of substance, they are obviously aiming to baffle us with bull patties about Sarah Palin from now til November. They have 90% of the media waiting to assist. We will see the outcome.
Wednesday, August 13, 2008
The Gang Of Ten & The Road To Energy Hell
The Gang of Ten are a group of five Democrat and five Republican Senators who have come together around a plan for energy in America. They are obviously well intentioned. They are equally as obviously very misguided.
When evaluating energy plans within America today, there are certain criteria we can all look for at this point:
1. Does it open up the coast of the U.S. to exploration and exploitation? There are an estimated 115,000,000,000 barrels of oil on the OCS off both coasts.
2. Does it open up ANWR? There are an estimated 10,000,000,000 barrels of oil in ANWR.
3. Does it open up oil shale to exploration and exploitation? Our potential oil shale reserves dwarf the oil reserves of Saudi Arabia. It is estimated that we have between 800,000,000,000 – 2,000,000,000,000 barrels of oil tied up in domestic oil shale.
4. Does it allow us to exploit our natural gas reserves and to use these reserves appropriately. Our natural gas reserves are incredibly vast, with the two problems being the inability to exploit them within the continental U.S. and the inability to use them easily as a substitute for oil and gas.
5. Does it address the insane regulatory environment that, by allowing private law suits brought before hand-picked judges, adds years and millions to hundreds of millions to the cost of exploiting our resources.
6. Does it provide a strategy and plan for the development of alternative fuels via both funding for R&D and competitions? Dircected research is great, but I am so bitten by biased and politicized science at this point that I wonder if simple competitions aren't a better way to go.
7. Does the plan stop the subsidies for ethanol and end this insane push towards using arable land for the production of fuel rather than food? We have self-created a food crisis throughout the world by diverting food to fuel. Costs of food are skyrocketing and jungles are being deforested to set up Palm Oil plantations. Government subsidies and mandates for bio-fuel needs to end.
With the above in mind, Sen. Bob Corker and the "gang of 10" senators are pursuing a bipartisan comprimise that looks more like a road to hell paved with good intentions than a road that will lead to a reasonable energy posture for the U.S.
An outline of his plan from his official website is here. It provides for limited oil leasing off a portion of several states. It does not open up ANWR. It does not provide for oil shale exploration and development. It does nothing to alleviate the insane regulatory environment.
The plan does push for more nuclear development, but seems to address the economic side from the standpoint of subsidies, not reducing costs by reviewing the regulatory burden that has kept new plants from being built for the past several decades. According to recent estimates discussed in the WSJ, the cost of new nuclear plants may now be such as to make them cost prohibitive. Nuclear energy that, because of start up costs, produces energy at two to three times more per killowat hour than an oil or coal plant produces energy is not going to be viable.
The plan pushes for "flex fuel" vehicles, but someone needs to define "flex fuel" for me. If Sen. Corker has ethanol in mind - or any other biofuel that is going to take arable land out of the food production cycle - it is completely insane.
I do not know T. Boone Pickens plan for wind energy is viable, as I discuss in detail here. But the Pickens plan for exploitation and use of our natural gas resouces sounds promising indeed, including for use in place of gas as vehicle fuel. If this is part of Sen. Corker's definition of "flex fuel," then perhaps that portion of the bi-partisan plan at least makes some sense. If not, then no. Emphatically no.
Sen. Corker apparently called Instapundint and claimed that the new bill will open up the entire coast line to seismic exploration. That is not apparent from the plan description in the link from Sen. Corker's site. Regardless, allowing exploration is not enough and shouldn't even be on the table. We've explored ANWR, yet the billions of barrels of oil there still sit in the ground. Allowing exploration only is like saying to a starving person that they can go ahead and smell the food, just don't eat. Any viable plan must allow for exploration and exploitation, period.
This attempt at compromise apprears very weak indeed. As the old expression goes, the road to hell is paved with good intentions. The collary to that is that the side of the road is apparently littered with useful idiots.
Tuesday, August 5, 2008
Part III: Why Exploit Our Domestic Oil Resources
Oil Shale – 800,000,000,000 – 2,000,000,000,000 barrels of oil How fast any of these assets could be brought on line is an issue. In some places, such as off the coast of California where drilling was halted three decades ago but some of the rigging is still in place, I have seen an estimate of one year though I can’t find the link now. As to ANWR, given that the drilling site has already been fully explored, most estimates show production becoming available in one to three years from start of drilling. The estimates of yield are 1,000,000 barrels of oil per day. As to the others, there still has to be exploration and ten years is probably a reasonable estimate. All of this assumes that drilling, even if approved, is not sidetracked by over-regulation and by private lawsuits brought under the EPA and ESA - all of which is discussed in Part II, above. Explanation: Methodology: Retail gasoline prices are the result of literally hundreds of factors including crude oil supply, global demand, refinery capacity, regulation, taxes, weather, the value of the dollar, etc. Therefore it is impossible to say with certainty what one individual action will do to the overall price. However, based on what we know about the impact of crude oil supply and prices it is possible to develop some potential ranges of impact on gasoline prices for certain policy changes. For example, using the methodology employed by Speaker Pelosi and House Democrats that suspending shipments into the Strategic Petroleum Reserve (between 40-77,000 barrels of oil a day) would reduce gas prices by at least 5 cents, bringing ANWR online (at least one million barrels of oil a day) could impact gasoline prices by between 70 cents and $1.60. On the Democratic side, there are two sets of figures to look at. The first comes from Charles Schumer. On the floor of the Senate, he stated a month ago that an increase in world supply of 1,000,000 barrels per day would immediately drop the price of oil by fifty cents. That was part of his call to somehow force Saudi Arabia to begin pumping an extra million barrels of oil per day. The second set of figures also comes from Senator Shumer. Apparently it is only if that oil is produced in Saudi Arabia would it impact the price of gas under the well worn rules of supply and demand. A million barrels of additional production from domestic sources would, according to Senator Schumer and essentially all of his Democratic colleagues, have nominal, if any impact on gas prices.
How does $300 a barrel oil in a decade strike you? That is the prediction of T. Boone Pickens, the billionaire octogenarian oil man, unless things change. His prior prognostications on the oil market have proven accurate over the years.
It does not take a PhD in economics to recognize that supply and demand is at the heart of the rising cost of oil – although if you wish to rely on an economist Thomas Sowell would be a good one to consult. [As an aside, the exchange rate of the dollar adds between 15% to 20% to the cost of a barrel of oil today over the exchange rate in 2000, but that is beyond the scope of this post.]. Because supply has stagnated while demand has risen, we are getting hit from two sides. One, the base price of oil is going to continuously rise with rising demand. Further, demand looks to trend ever upward for the forseeable future. Two, because the market is tight with demand at or exceeding supply, it will remain volatile, subject to high fluctuations, if there is any significant threat to supply, whether it be a threat from God, Gaia or man.
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Note: This is the third in a series of posts looking at our energy alternatives.
Part I – The Economics of Alternative Energy - an examination of the viability and cost effectiveness of wind, solar, geo-thermal, bio-mass, bio-fuel, and nuclear.
Part II - Oil & The Hostile Domestic Regulatory Environment - a look at the regulatory scheme put in place since 1970 that prohibits or otherwise limits our ability to exploit our domestic oil and natural gas.
As to demand, it has exploded. The rise in demand has varied from country to country, but worldwide it increased 15% in the 1990’s and has already increased 10% from 2000 to 2005. Much of that comes from China which is now importing about 4 million barrels of oil per day. That is 60% of its oil supplies and over four times the oil it was importing just 8 years ago. India’s figures, though lower, are growing at a similar percentage rate. And these economies are just starting to expand. World wide demand is going to grow.
Supply was able to roughly match demand through 2004. World oil production stagnated in 2005 and has not kept pace with this explosion in demand since. Thus, we get what some cynically call the Pelosi premium as markets adjusted post-2005 to the new supply and demand equation:
(From Freep via Gateway Pundit)
New sources of oil need to be found, but as the major oil fields play out, these are expected to be more expensive to exploit. That said, they do exist to be exploited, particularly in the U.S. where we are sitting on possibly trillions of barrels of reserves between ANWR, coastal sites and oil shale.
So what is our supply and what effect would that have on demand and the price of gas at the pump?
Estimates of recoverable oil from our domestic resources currently off-limits to exploration or drilling include the following:
Continental Shelf (East & West Coast) – 115,000,000,000 barrels of oil
ANWR – 10,000,000,000 barrels of oil
What would this increase in supply mean to oil and gas prices?
Using Republican figures, this would at least bring the cost of gas down to about $2.00 per gallon. Here was the basis for their assessment.
Here is the explanation of the above chart from Congressman Roy Blunt:
Someone is being less than honest with America. And given that two thirds of voters now favor expanded domestic drilling, I’d say the jury has reached a verdict on who is telling the truth.
Eventually, and the sooner the better, we need to move off of oil. The writing is on the wall, and unlike the 70’s and 80’s when the impetus to find cost effective alternative energy was overcome by the Saudis flooding the markets with cheap oil, I can’t see this one going away. The Saudis are producing near capacity already and demand is going to continue to rise. Even fully exploiting our own resources is only going to buy us time to develop alternatives. But, as I explained in detail in Part I linked above, alternative energy simply is not yet developed to the point that they can be substituted for oil and gas. Thus, not exploiting our oil resources in the absence of viable and cost effective alternatives is a recipe for economic disaster. While Obama may welcome high gas prices, Middle America is just beginning to suffer and our economic figures will eventually begin to show the pain.
Part II: Oil & The Hostile Domestic Regulatory Environment
. . . [I]n the United States, access to our own oil and gas resources has been limited for the last 30 years, prohibiting companies such as Shell from exploring and developing resources for the benefit of the American people. Read the entire post. Mr. Hofmeister went on to add that the Democratic controlled Congress had also recently placed exploration of oil shale in Utah and Wyoming off limits. Projected reserves of oil shale range to a high of two trillion barrels of recoverable oil. 2.1 Issues Likely to Limit Access 2.1.1 Coastal Zone Management Act Consistency Provisions 2.2 Issues Likely to Produce Delays 2.2.1 CBM-Produced Water Management 2.3 Issues Likely to Increase Costs 2.3.1 Cooling-Water Intake Structures You can follow the link above and read through the discussion in that 130+ page report of how we have over-regulated ourselves out of the energy market irrespective of the moratoriums. But even if an oil company is able to jump through the above hoops, there are the private lawsuits brought under the EPA and ESA that can add years and millions of dollars to any particular attempt at drilling. Democrats gleefully demonize oil companies, outlaw offshore drilling and, in Hillary Clinton's case, vow to expropriate profits. In that kind of climate, why the surprise that Halliburton is moving to Dubai? Read the entire editorial. Though this one concerned Hillary’s plan to attack profits, Obama’s plan is no different.
Nothing could be more fundamental to our economy and our way of life than energy. Costs of transportation and energy effect every aspect of our life and the cost of virtually every good and service in the U.S.. We are on the leading edge of a crisis in energy that could severely damage our economy over the next decade. Our problem is three fold, rising world demand, stagnant world supply that is exponentially compounded by the regulatory and legal burdens to exploiting our own rescources, and the anti-capitalist mentality of the Democratic left.
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This is Part II of what is planned to be a series of four posts on our energy alternatives.
Part I - The Economics of Alternative Energy
Part III - Why Exploit Our Domestic Oil Resources
Every day 85 million barrels of oil are produced around the world. Twenty-one million of those are used here in the United States. Of that, over 70% is imported. That has grown from 20% in the 1970’s. This is both an existential issue for both economics and our national security.
What has changed from the 1970’s is a series of laws that have created two layers of limitation to directly and indirectly stopped the exploitation of our oil resources. These laws were passed when the costs of oil were nominal in comparison to today. And they were taken in response to the problems then associated with energy production. The coastal drilling moratoriums grew out of oil spills off California in the 1960’s. Beyond the moratorium’s, Carter’s populist war on oil companies set them up as the greedy demons causing high prices. Three Mile Island coming on the heels of the film The China Syndrome shut down production of new nuclear plants. Add into this toxic mix the turn towards socialism and narcissism since the 1960’s that has fostered an increasingly radical environmentalism and you end up with the situation in which we find ourselves in today.
This was the testimony of John Hofmeister before Congress several weeks ago describing the laws that directly prevent exploitation of our resources:
. . . According to the Department of the Interior, 62 percent of all on-shore federal lands are off limits to oil and gas developments, with restrictions applying to 92 percent of all federal lands. We have an outer continental shelf moratorium on the Atlantic Ocean, an outer continental shelf moratorium on the Pacific Ocean, an outer continental shelf moratorium on the eastern Gulf of Mexico, congressional bans on on-shore oil and gas activities in specific areas of the Rockies and Alaska, and even a congressional ban on doing an analysis of the resource potential for oil and gas in the Atlantic, Pacific and eastern Gulf of Mexico.
As to the moratoriums on drilling along the outer continental shelf, they were both Presidential and Congressional. President Bush recently removed the Presidential moratorium. The Congressional moratorium is slated to expire October 1, 2008. How the Democrats will treat that is an open question given the proximity to the election. That said, if they treat off shore exploration and drilling as they recently treated oil shale, then we can expect an attempt to reinstate the moratorium.
Then there are those laws and regulations that indirectly inhibit the exploitation of our resources prohibitive. You can get a feel for the tremendous legal and regulatory burden from this study by Argonne National Laboratory assessing the environmental regulatory burden on natural gas. It all applies equally to burdens on domestic oil production. Here is a quick run down of the Table of Contents of Chapter 2 of the study:
2.1.2 Endangered Species Act
2.1.3 Forest Service Restrictions
2.1.4 Outdated BLM Land Use Plans
2.1.5 Lease Stipulations
2.1.6 Monument Designations
2.1.7 OCS Moratoria — Atlantic Ocean
2.1.8 OCS Moratoria — Eastern Gulf of Mexico
2.1.9 OCS Moratoria — West Coast
2.1.10 Permit Restrictions
2.1.11 Bans on Great Lakes Drilling
2.1.12 Roadless Rule
2.1.13 Wilderness Areas
2.1.14 Ocean Policy
2.2.2 Drilling Permits
2.2.3 Essential Fish Habitat
2.2.4 Fracturing Operations
2.2.5 Nationwide Permits
2.2.6 NEPA Integration and Lawsuits
2.2.7 Pipeline Certification
2.2.8 Pipeline Safety
2.2.9 Wetlands Mitigation
2.3.2 Electronic Reporting and Record-Keeping Requirements
2.3.3 Lack of Incentives to Go beyond Compliance
2.3.4 Louisiana E&P Waste Disposal Regulations
2.3.5 Maximum Achievable Control Technology
2.3.6 Mercury Discharge Regulations
2.3.7 NOx Prevention of Significant Deterioration Increment Consumption
2.3.8 Noise Regulations
2.3.9 Nonroad Diesel Rule
2.3.10 Ocean Discharge Criteria
2.3.11 Particulate Matter Regulations
2.3.12 Pipeline Gathering Line Definition
2.3.13 Regional Haze Rule
2.3.14 Spill Prevention Control and Countermeasures
2.3.15 Standards for Decommissioning or Closing Wells
2.3.16 Storm Water Construction Permits
2.3.17 TMDL Regulations Targeting Oil and Gas Wells
These private law suits are truly insidious as they circumvent our democratic process and allow very limited special interest groups to hold a veto over an issue at the center of our economy. One need only look to the recent fiasco regarding polar bears and the ramifications of the decision to list polar bears under the ESA to get a feel for how this works. Let there be no doubt that the push to get polar bears listed was aimed in large part at stopping oil drilling in the arctic. Bottom line, if we are going to exploit our resources, not only does Congress have to lift the moratoriums and reduce the regulatory load, but we need a change to the EPA and ESA. We need to take governmental decisions out of the hands of special interest groups and unelected judges explicitly chosen by these groups to hear their law suits.
The sum of the regulatory burden and the hostile attitude towards our domestic oil companies was thoroughly discussed in a March article written in Investor’s Business Daily. It was written in the wake of the then recent announcement by Haliburton to move their headquarters to the Dubai:
Halliburton's pullout from its Houston headquarters Monday for a new home in the Middle East drew umbrage from the very Democrats who've had the oil-services company in their gun sights for years.
Clinton led the charge, hinting at more punishment ahead. 'I think it raises a lot of very big concerns, and we're going to be looking into it in Washington,' she warned.
One of industry's most innovative firms, Halliburton provides the operative brawn to transform the discoveries of oil exploration into fuel ready for pipeline transport all the way to the gas station. It holds 4,700 patents.
The only thing Democrats see in this showplace of U.S. innovation is a criminal conspiracy. But then, leftists have built a whole culture around hating Halliburton. Their Amazon-listed books hawk conspiracy theories about how Halliburton supposedly runs the U.S. or the world or both.
'Tantamount to fleeing the scene of a crime,' huffed the Huffington Post, claiming Halliburton's move was to avoid taxes and slip investigations. The company, of course, denies this — credibly, we might add, considering its remaining base in Houston.
The reality is, Halliburton's pullout is the result of Democrats doing everything possible to give the company reasons to leave. Yet they don't seem to have a clue that that's what's happening.
Clinton says she is 'troubled by the continued outsourcing of jobs and . . . eager to find out how the tax code can be strengthened to encourage American companies to invest here rather than abroad.'
Invest in what? Democrats have effectively taken away every opportunity that might keep Halliburton in the states. They've blue-penciled all but a small portion of the Gulf of Mexico for offshore drilling. They also have made the Alaska National Wildlife Refuge off-limits and now want that ban permanent.
Add to that Clinton's threat to confiscate the profits of companies such as Exxon, profits now being used to develop the very energy that fuels the electricity in her microphone. The result is a climate so hostile that the only way oil concerns can produce oil is by moving.
It's not just Halliburton. Exxon last week announced 32 new projects for 2006-09. Only three are based in the U.S., and just one is in the Gulf of Mexico.
Another project is in Canada, and the rest are overseas, where no Hillary-like hatred of oil companies exists.
Nine projects are in Western Europe, eight in sub-Saharan Africa, six in the Middle East, three in Central Asia and two in Southeast Asia. Given the size and scope of Exxon, this amounts to a proxy road map of where world opportunities lie for developing energy. In short, they're not here.
That's why this move by Halliburton represents a loss for the U.S. Companies aren't people. They can't be unpatriotic, as the Democrats charge, because their substance is to represent the decisions inherent in the use of capital.
Right now, Halliburton's move reflects the fact that opportunities in energy development lie outside the U.S. Unless Democrats change the hostile business climate they've created, Halliburton's move is a warning of more like this to come.
Sunday, June 8, 2008
McCain, Dems, Oil & The American Economy
Oil prices made their biggest single-day surge on Friday, soaring $11 to $138.54 on the NYME. That followed a $5.50 increase the day before, taking oil futures more than 13 percent higher in just two days. The price is being driven by world supply that has stalled at production of 85 million barrels of oil a day since 2005 while demand has skyrocketed since then with the growing economies of India and China. As to supply, the U.S. is sitting on or next to the largest energy reserves in the world, yet we do not exploit them primarily because Democrats are wedded to the radical environmental lobby. It is a lobby whose overriding motivation seems to be to punish America for its consumption of energy and a lobby that sees economic development as an evil to be halted. Who can forget Barack Obama’s answer to our energy problem – to lower our standard of living until it is acceptable to some unnamed foreign cabal. Congressman Roy Blunt put together these data to highlight the differences between House Republicans and House Democrats on energy policy: ANWR Exploration - House Republicans: 91% Supported House Democrats: 86% Opposed Read the entire post. But now this on McCain from Reuters: Republican U.S. presidential candidate John McCain said on Wednesday he would support incentives to encourage states to develop potential oil fields but would not try to force them to exploit potential resources, especially in environmentally sensitive areas. Read the entire article. McCain is in la la land on this. While not mentioned above, his stand on establishing new nuclear plants is laudable. Beyond that, his emphasis on keeping areas pristine irrespective of the pain the majority of Americans are feeling shows he is as completely out of touch as the people he is running against. Not to mention that in an election year heavily favoring Democrats, that is simply ludicrous. And while I find it hard to fault McCain for his devotion to federalism on most issues, this is not one of them. States should not be the arbiters of a national energy policy. Congress has the authority to legislate this under the commerce clause and they should do so. And in the interests of not wanting to trigger a bout of Tourette’s, we won’t mention cap and trade. Someone needs to give McCain a dose of reality – and perhaps introduce him to Rep. Blunt.
John McCain's postition are better, though insufficiently so. His position on the development of nuclear plants is good. Yet his stand against drilling in ANWR is ludicrous and his position on drilling elsewhere, that he would leave it to individual decisions by states, is far too weak under the current circumstance.
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To the extent there is a silver lining in this skyrocketing of oil prices, its that Americans are in fact consuming less fuel and that demand is subsiding. According to Charles Krauthammer, Americans are driving 4% less than we used to and auto manufacturers have found their SUV’s are about as unpopular today as Bush at a KOS convention. Yet it would seem that the dark clouds far outweigh the silver lining.
The cost of energy is going to bite the U.S. economy and bite hard. As the NYT reported yesterday, businesses are largely eating the costs to the degree that they can, at the moment, but that will play itself out over time, probably sooner rather than later. And virtually everything in our economy and the world economy is effected by the price of fuel. Coupled with - and in large part contributing to - the skyrocketing cost of food, it is hard to imagine a more regressive circumstance in terms of squeezing the poor and the middle class.
Indeed, in the Krauthammer article linked above, he speaks approvingly of high oil prices and notes he has long suggested artificially raising gas prices in the U.S. through tax as a means to curb consumption. He cites approvingly to Britain, which has taxed its gasoline to insanity. But the U.S. is not Britain. Britain is a small country. The U.S. is huge and the average daily distances traveled by Americans are simply beyond the comprehension of most Brits. While $10 a gallon gas in Britain today is a major problem, in America, it would be utter disaster.
This does not have to occur. While the Democrats are busy trying to repeal the laws of supply and demand, while they are embracing unproven and cost inefficient alternative energy sources, and while China is drilling some 70 miles off the Florida coast while we cannot, the reality is that we have sufficiently vast energy resources in America to be energy independent. Just authorizing the exploration of these resources would probably tamp down the speculation that is contributing, perhaps significantly, to the cost of oil today.
Somebody desperately needs to get a handle on McCain and talk some sense into him. His positions are simply far too weak to take advantage of what should be the single winning domestic issue for Republicans in November. As Powerline pointed out the other day:
Coal-to-Liquid - House Republicans: 97% SupportedHouse Democrats: 78% Opposed
Oil Shale Exploration - House Republicans: 90% SupportedHouse Democrats: 86% Opposed
Outer Continental Shelf (OCS) Exploration - House Republicans: 81% SupportedHouse Democrats: 83% Opposed
Refinery Increased Capacity - House Republicans: 97% SupportedHouse Democrats: 96% Opposed
SUMMARY
91% of House Republicans have historically voted to increase the production of American-made oil and gas.
86% of House Democrats have historically voted against increasing the production of American-made oil and gas.
"I do believe that we should drill for it," he said when discussing oil exploration at a town hall meeting in Rochester, Michigan. "But I am a federalist and I believe in the rights of states to make those decisions."
He said he believed the U.S. government could do more to encourage states to develop their resources. "I think we can offer more incentives to states like California and Florida and more of a larger share of revenues and taxes from oil they may exploit," McCain added. "But I can't tell people in California what to do with their coast."
"I can't say we must drill in the most pristine environments," he added.
. . . New offshore energy exploration is now allowed only off the coasts of Texas, Louisiana, Mississippi and Alabama, and in some Alaskan waters. A presidential order bans offshore drilling everywhere else.
That is not likely to change after the U.S. election in November. If elected, Democratic presidential candidates Hillary Clinton and Barack Obama would likely extend the offshore moratorium, which is set to expire in June 2012.
McCain has favored a more flexible approach, giving the states more say on whether they want drilling off their shores.
McCain spokesman Brian Rogers has said McCain "supports the aim of the moratorium to protect ecologically sensitive areas but believes there are some (offshore) areas that can and should be developed for their energy potential."
Senate Republicans introduced legislation recently that would attempt to boost domestic oil production by allowing governors to petition to have the moratorium on offshore drilling lifted for their states and would give states a greater share of royalties.
All three of the candidates oppose opening the spigot to the huge oil reserves that are in the Arctic National Wildlife Refuge. The Alaska refuge is the main target of oil industry, which is eager to tap its possible 16 billion barrels of crude. . . .
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