Analysts: US's Chances To Head Off Current Oil Crisis Were Ignored, Blocked

New York Times:

Just three years ago, with oil trading at a seemingly frothy $66 a barrel, David J. O'Reilly made what many experts considered a risky bet. Outmaneuvering Chinese bidders and ignoring critics who said he overpaid, Mr. O'Reilly, the chief executive of Chevron, forked over $18 billion to buy Unocal, a giant whose riches date back to oil fields made famous in the film "There Will Be Blood."

For Chevron, the deal proved to be a movie-worthy gusher, helping its profits to soar. And while he has warned about tightening energy supplies for years and looks prescient for buying Unocal, even Mr. O'Reilly says that he still can't get his head around current oil prices, which closed above $145 a barrel on Thursday, a record.

Read the whole story: New York Times

Comments

[Bettysdad]

The article states that the European gas average is now 44 mpg, soon to go to 48.

Guess what? Those numbers are achieved with a huge number of engines produced by GM and Ford. Both have wholly owned subsidiaries around the world producing much higher efficiency engines.

American car companies are making cars that people want with 50% higher mpg. They're making them in Europe and Australia. They have the technology. They only question is will they spend the money to build the engines America needs

[jdfast]

Does this tell you anything about the auto companies and their lobbying in congress. They could have done this years ago, but they didn't and whined to congress not to increase the mileage requirements. Congress "bought and paid for" sat on their thumbs and you see what we got now.

[KillTheMessenger]

Pssst... I don't want to disturb your sweet dreams, but the cars they make in Europe are not the cars people want. They are the cars that fall within government specifications. If you brought any of those cars over to the US, they would rust on the lot. People would perceive them as small, under powered toys.

That these cars sell in Europe, anyway, is simply for one reason: you can buy a small car or no car at all. There is slim pickings for the average European at $8+/gallon.

[separatingwheatfromchaff]

Reading this story and hearing politicians say they made a mistake and now they're all for raising CAFE numbers is depressing.Either they are dumb as a rock or they've been getting huge amounts of cash or influence from the automobile industry,the oil industry or their various related business cohorts.I don't believe they're dumb,I fully understand where all that cash comes from when election season starts and so do most Americans.If anyone thinks corporations distribute all that cash to both sides of the aisle because of their benevolent nature and their interest in being patriotic and helping our country, here is the truth.They are only benevolent if by some strange cosmic force their motives for pushing for certain legislation happens to intersect with the needs of the country(which is extremely rare),or they're looking at another run for office or personal financial gain for themselves or their cronies.This isn't true of all politicians,but a majority is all that's needed to turn our government into a cesspool of corruption.

[jdfast]

"Deep Throat" wasn't wrong when he told Woodward and Bernstien to follow the money was he. Its great to get elected to a job that pays 125K a year and leave 6 or 8 years later as a multi millionaire. Only in America do we have the best congress that money can buy.

[almoguy]

From the article:

"The American auto industry has sold the cars people wanted," he says. "You"re going to blame the auto industry for that or the American consumer? He likes it sitting in his driveway, he likes it big, he likes it safe."

The auto industry certainly IS to blame for what the consumer "wants." The marketing of the "huge vehicle" was the very successful campaign by the auto industry playing on the fact that Americans lives are boring as hell. You were not buying a car; you were buying the promise of adventure! Hummer dealers have fake mountains on their lots; suburban guys were shown in commercials walking out their front doors and skydiving to their SUV to go to work (cubicle anyone?) The auto industry punched the collective buttons of "rugged individualism" and sold us a lie.

Responsible action means lower profits. Ah capitalism!!!!

[arvay]

Sorry, not to forgive the car companies for their part in this, but there's no way to absolve consumers for their bad choices. A democracy depends on an educated electorate, and than encompasses self-education.

Part of that education is the budget thumping consumers are experiencing now that oil and gasoline prices have rocketed. If they have any sense, they'll rase their voice against the Iran war-talk, which is helping to drive up prices. If the US and Israel ARE stupid enough to attack, the current situation will look like a bargain. People need to pry themselves away from their TVs and write to their representatives, who need to be told not only to squelch the idiotic war talk but to have the government finance alternate, renewable energy sources.

[almoguy]

I fully agree with you arvay. But it is the age old : "there is a sucker born every minute" mentality of tweaking the stupidity of the populous by the marketing industry is their stock and trade. If the general population think that they can laid by buying a certain product they will buy it... and industry knows this. The concept of ethics is sorely lacking in corporate America. Avarice always trumps altruism in business.

[joebaggadonuts]

They are little different from the Tobacco guys.

[watchingthings]

Tobacco "exhaust kills" and car "exhaust kills". They are both killers.......

[biwee]

I remember the Carter presidency. If the USA had taken Carter's warnings about energy seriously, we would not be in this disaster now. Instead we elect a President Bush who has an IQ of less than 75, and is a lying coward to boot. The weird thing about a democracy is that you get what you vote for (Ohio massive voter fraud in 2004 excepted).

[DallasMike]

How do you go from Carter to GW Bush?
You are just like all the other lefties, you make a comment about a subject and then you can't end it without blaming Bush.
What about the 1st Bush and "slick Willie Clinton" they could have done something also.

[ccpostman]

Your 100% right.

Don't forget that a**hole Ronald Reagan who tore down the solar panels that Carter put up on the White House. Why? Because he hated Carter. What a good reason!

He was a real winner, and set the bar for all the re-pucks that came down the greasy corporate oil pipe!

[HumeSkeptic]

http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html

The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017. Total domestic production of crude oil from 2012 through 2030 in the OCS access case is projected to be 1.6 percent higher than in the reference case, and 3 percent higher in 2030 alone, at 5.6 million barrels per day. For the lower 48 OCS, annual crude oil production in 2030 is projected to be 7 percent higher"2.4 million barrels per day in the OCS access case compared with 2.2 million barrels per day in the reference case (Figure 20). Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.
------------------

Look at the charts in that link. If we drill everywhere, we'll have 7% more oil in 2030, and none before 2017. And, as indicated above, no impact on price.

With Califiornia saying no, and East Coast reluctant, we are talking mainly the Gulf Coast. So, cut that 7% number down in half or less, to less than 3.5%.

Combine that with the risks of oil spills in a hurricane-prone region.

That's all that drilling will do.

[KillTheMessenger]

"That's all that drilling will do."

Not at all. The drilling will make a few dozen people richer by billions. It will make a few hundred people richer by millions.

Your technical analysis is completely correct. But your insight in why they want to drill completely ignores the political and economic facts. While there is absolutely no money in drilling for the little guy, it will make some of the people behind the spin rich beyond imagination.

[joebaggadonuts]

Iran is pretending to deal. Maybe the oil price will come down for awhile to "prove" that we don't have to worry any more. Heh.

[sleeperd]

The real travesty is that both the worldwide crises we face - food prices and oil prices - are a direct result of liberal democrats and their enviro-whacko buddies.

The food crises is a direct result of the ethanol mandates championed by guess who??? We are burning up our food supply thanks to these green weenie nitwits and their slack-jawed puppets in the democratic party.

These same idiots have prevented every attempt to drill in this country for the past 30 years and in the process have turned trillions of our dollars over to Islamo sheiks in the middle east. They have stopped every effort to build refineries while they propose to SUE OPEC for not producing enough oil.

Every idiot in this country that is pushing for Obama should have their head examined. They will push this country - and the world - into a catastrophe worse than the great depression.

[luvobama]

Sorry pal. Your buddies have done more damage to our country on too many levels to name. Follow the money. That is who is to blame. Not people who don't want our natural resources threatened in order to prolong the inevitable. If I remember correctly, it's your friend Booosh who has been photographed holding hands with "Islamo sheiks" Again, follow the money. It's easy.

[NTO08]

I love it when neocons try to blame "liberals" for energy problems...the problem has been the ones who have been in power for 71/2 years.

[Paul]

We import something like 2/3 of all the oil we use. How is drilling in the US going to make a dent in that?

Here is what's gonna happen: it will become too expenmsive to own and operate a car.

Why should I have to send GM $400/mo, the insurance company $100/mo and Exxon $300/mo just to get to work and buy groceries?

Mass transit is what we need. A barrel not burned is a barrel not bought from the middle east. Time to change transportation paradigms - cars are economically obsolete.

[leduck]

it's not
except in someones dreams

[joebaggadonuts]

Hold that thought. The guys running GM, Exxon and the insurance scan companies are going to be pissed off, eh?

[research]

LOL 7 years of complete fascistic totalitarian control by the BushCo GOP and this isthe best you can do?

Boy, those liberal democrats are SO POWERFUL they dominate even in a BushCo Republican congress, supreme court and congress! I guess the rethugs are wimps.

[OneVoiceInACrowd]

Check your facts man.

[HumeSkeptic]

Drilling in the U.S. would have no effect on oil price. High food price is largely due to high gasoline and diesel price.

Certain amount of drilling is fine, as long as it doesn't further damage the environment. Already, we must pay a huge price for past mistakes.

Put down some numbers and examine the facts, rather than mindlessly reciting what Hannity and Limbaugh pumped into your empty skull.

BTW, here is Bush logic on oil for you:

1. "We are addicted to oil"
2. "We need to drill more for oil"

Is this not like Limbaugh buying a lot more OxyContin to overcome his addiction? Funny. Isn't it?

[Redrover666]

paragraph:

1. Tough to say when liberals have blocked it for 30 years. You're right about food prices.

2. You haven't been around long enough to have any real clue how far we've come.

3. Americans are examining the facts, every time they pump fuel or buy groceries. Then ask themselves how Democrats figure we oughtn't to drill for more oil with the lesson of the last thirty years starring us in the face.

Must be nice to be urban and middle class, sport. Drop by a food pantry and tell the folks there your little theories on energy and see if you don't get thrown out on your ass.

[aurora57]

It's interesting that the focus is just on gas prices and the impact on transportation. At least I can use some discretion in my driving habits to lessen the impact of gasoline prices.

My bigger concern is how to handle heating my home. I have fewer options when it comes to reducing the amount of heating oil I use to heat my mid-Atlantic home.

The heating season is only 90 days away and I am not hearing anything about what plans are in place to ensure homeowners can keep their families warm this winter. I think this could be disasterous for families that are living on the margins. And it will have a huge negative impact on the non-energy economy when the vast majority of homeowners are forced cut discretional spending to pay for heat in addition to gasoline for transportation.

I am more interested in what the presidential candidates have to say about home heating this winter than a cut in the gas tax this summer.

[mouselion]

If you have south-facing walls to your domicile, believe it not, passive will either completely heat your dwelling -- or do much of it. It requires chambers which trap heat and which can be vented into your home. Might be in conjunction to your original heat source. Make friends with some engineers, or a tleast some carpenters, it really works! Don't listen to nay-sayers! May take some time and right location to get it going, but it's what you should do.

[aurora57]

Thanks. Maybe I just haven't been sensitive to passive as an option; or maybe that it is not promoted.

[KillTheMessenger]

Passive solar heating is overrated and can not be successfully applied exclusively to the majority of residential buildings. But a combination of insulation, passive and active measures can bring the heating and cooling cost for most buildings in the US down by a factor of three or more. Co-generation can supply heat to residential buildings while it optimizes the efficiency of power plants and we can use wind and solar electricity to supply heat to homes across the country with geothermal heat pumps.

[mouselion]

Maybe, just maybe, some a ya' people might just realize:

There's been some of us trying to convince the rest o' ya' for a long time.

You didn't listen. Now that it's too late (because of intentional actions by Cheney & Co. intentionally driving in the economic nails..., and you choosing to be asleep) -- do you begin to see why we're so pissed, whilst you drive around and act so self-righteous and still pretend we're not saying what we said all along?!!

Guess what? No lifeline is there! Sorry. We tried for you. You didn't listen. It's too late.

[RTIII]

I have a 50 year old Karmann ghia that gets 42 mpg on a good day and 27 around town and does 90 MPH. I've got a younger one that also has disk brakes and gets 34 mpg and great acceleration - plenty enough for the traffic here in the San Francisco Bay Area. (The Karmann Ghia is also a lot safer than others of its era due to its unibody, all crumple-zone construction. It's on par with 1980s vehicles, or even early '90s with regard to crash safety.)

If my FIFTY year old car beats the FUTURE CAFE standards, what the hell is wrong with this picture?

The recent change to the CAFE standard is to be welcomed but it's nothing to BRAG about.

Give us EUROPEAN technology TODAY!

RIGHT people?!

[Y2KCockroach]

I am certain that if Americans all drove Karmann Ghias we would not be at war today. I am also certain that it would be a very weird world that we would be living in, but at least we would not be at war....................(can you imagine Dick Cheney or GWB driving a Karmann Ghia?). I thought that those cars were goofy when they were made, but I would kill to be able to drive one (here in Seattle) now.

[mouselion]

The last Kharman Ghia in the U.S. that *I've* seen.

[rivrgrrl]

Exactly.

[mouselion]

The last Kharman Ghia in the U.S. was parked up against a snowdrift on Basalt Mountain in CO in 1992. It didn't even run. So, why is that? You tell me the story, I'm willing to hear.

[KillTheMessenger]

"If my FIFTY year old car beats the FUTURE CAFE standards, what the hell is wrong with this picture?"

Absolutely nothing. The car weighs 2000lbs (907kg) and has a 57hp engine. It's a more aerodynamic version of a Beetle. Since it is heavier than a Beetle, it accelerates a little slower. 0-60mph in 21s.

A Toyota Yaris weighs 2014lbs (915kgs) and has a 70hp engine. 0-60mph in 14.2s.

Guess what you could do with the consumption of a Yaris if you were allowed a design which accelerates 0-60mph in 21s! 60mpg is probably within physical and engineering limits. Just put in a 45hp engine and a six gear transmission.

The only problem is, if a Yaris took 21s to get up to speed it would never leave the sales lot.

[dezzertguy]

Much talk of consumption but not production. There is no physical reason for oil prices today. Oil supplies are abundant and technology to refine oil is there. From the production side, the reason si purely political as politicans have failed to plan and allow production to meet demand. CAFE standards are nice but would they also not take years to come into effect? Polticans cannot manage the post office muchs less our energy policies and heave forbid our heath care system. This whole epsiode is a good example of how government should not be intrusted with our economy. Carl Levin is a good example of how his need for local votes outweights the great good of the country, sinces Dem's believe in CAFE not production. The people need to shout for more production and let CAFE and other things come later, let's just get going and do something.

[rh654]

There are oil resources in the Gulf of Mexico that are available TODAY for the oil companies to start drilling - why have they not done so?

There are about 68 million acres available (onshore and offshore) that oil companies already have under lease that are not being drilled - these are sites that they could put an oil rig on tomorrow and start drilling.

So - the supply is available and could be drilled tomorrow - so why are they not drilling today?

[dezzertguy]

Just because you a lease exists it does not mean it is economically doable. The government can spend billions on nothing, but companies have to report to shareholders and make more reasoned decisions.

[leduck]

oil companys aren't stupid
which is why you are not a CEO of texan, or exxon-mobil

there are things that are required to find oil
1. source rock (shale) with 3% - 8% organic
2. this source rock must have passed throught he oil window at some point
3. must have reserve rock (sandstone, limestone or dolomite)
4. this reserve rock must be plenty porous and permeable
5. and must have a good oil cap (that doesn't leak -- non-porous)

if any one of these preconditions are not met, then drilling in that location is a waste of time money and energy
but by all means, drill here drill now
you will never get an oil company to do it
so i guess the government will have to

[RTIII]

You are WAY behind the times, buddy - hang'en in the desert too long I guess.

Supplies Are abundant, I'll grant you that.

However, NO, it would not take years to increase cafe standards. I'd give them ONE year to match Europe. If they can't, they suffer for a year until they can. Just you watch how fast it could happen. In short, GM and the others would just license from Chrysler/Mercedes, etc, and get it done post-haste. Hell, the order to take a year is at least a year away, so we're really talking two - plenty of time.

If our CAFE standard was 40 mpg NOW, we wouldn't be having this problem - the whole world would enjoy lower numbers because our demand would be low.

In case you haven't noticed, the post office has come a long way from the '70s, where you live, apparently. The post office is a very well run, efficient machine, a good example of what can happen. What your attitude reflects is the Republican-think "Government can't work, here, we'll prove it!" Well, if you go in with the attitude it can't work, you'll implement a self-fulfilling prophecy.

We are in a different era now. We've proven government CAN work. We have "thirty years in the future CAFE standards" technology already implemented on large scale in Europe. And the let it come later crap is what we did since the time of REAGAN, back when you were still paying attention, perhaps.
.

[dezzertguy]

I do believe in US being able to produce and run circles around Europe but I do no t believe in government control, i.e. USSR. The post office may have come a long way but i doubt it is a symbol of progress to be copied. What we see from this crisis is that politicans will not put the country above their own perceived good. Senator Levin is a good example. CAFE standards suffer because his own special interests said no. Government was not created to provide goods and services. Our individualism is the source of thought and growth. Government, like in this crisis, impedes growth and better living.

[leduck]

supplies are not abundant

[Charley2u]

There is no energy crisis

There is no need for politicians to trotting out elaborate and unintelligible energy policy papers.

There is no need for the country to hand over money to pork barrel projects to "develop" exotic energy technologies.

There is no need to embark on a crash program to bring nuclear power plants online.

There is no need to begin drilling in some of the most ecologically sensitive areas of our nation.

There are just two gangs in Washington, as usual, hoping to keep the most people miserable for the longest time in order to make all the above look reasonable.

http://pogoprinciple.wordpress.com/

[leduck]

there is an entropy crises

[KillTheMessenger]

Entropy crisis? For sure not. Please calculate the total entropy flow we receive from the sun. It's a single line calculation.

What there is, though, is an education crisis. Most people have no clue about the basics of what they are talking about. The above rant is a good example of a rampant use of catch phrases which are absolutely meaningless in a real analysis of the problem. There are no such things as "exotic energy technologies". It's either proper engineering and science or it is SciFi. We know the proper engineering solutions for decades. We are simply not willing to pay for them because they are more expensive than burning hydrocarbons and coal is.

[vippy]

Cafe Standards are dictated by the government. The most recent energy policy the DEMS had put forward and no one noticed is that they call for 35 mpgs by 2020. Most people did not even read about it and the DEMS, especially Ted Kennedy bragged about it. Brag about what, we need 45 mpgs by
2009, that would be progress. Why is it that a VW GTI Diesel in Germany gets 66 mpgs while our same model here gets only 41 mpgs. Is that what they call "American Specifications?"

[RTIII]

RIGHT ON THE MONEY.

We should mandate EUROPEAN standards here with ONE YEAR to do it. It WOULD happen because the technology is already there. GM could just license the technology from Chrysler/Mercedes if necessary - it's virtually an overnight thing, or, at least, it SHOULD be. The Dems who drag their feet on this are culpable. Perhaps the next congress will GET IT that we mean business NOW.

lets hope anyway.

[mouselion]

35 mpg is 35 years ago. JFC.

[KillTheMessenger]

You can buy a 45mpg car if you want to. I know I have. Nobody in the government will stop you from exceeding the CAFE standards. So where is the problem? If a family of four wants to waste their hard earned money on an SUV, I say, let them.

[mouselion]

NYT: "American Energy Policy, Asleep at the Spigot"
Tom Friedman: "Calls For Green Revolution"

Ya' think? What cutting edge revelations!

[balance]

From the beginning of 2007, demand has increased less than 3%, and prices rose more than 200%+.
While supplies have been tight, there was still enough inventory on hand. OPEC claims there are no oil shortages. While I don't trust OPEC, I don't trust the counter-BS of Oil-Bull speculators.

What is the government doing about commodities index speculators?
Another poster, Erdgeist, has astutely pointed out the May 8th testimony of Michael Masters.

"In the popular press the explanation given most often for rising oil prices is the
increased demand for oil from China. According to the DOE, annual Chinese demand
for petroleum has increased over the last five years from 1.88 billion barrels to 2.8 billion
barrels, an increase of 920 million barrels.8 Over the same five-year period, Index
Speculatorsʼ demand for petroleum futures has increased by 848 million barrels.9 The
increase in demand from Index Speculators is almost equal to the increase in demand
from China!"

That said, better environmental standards would have prepared us better than the BS coming from right-wing oil interests and the hubris of auto-execs.

If we ratified Kyoto, then perhaps the rapid rise in oil prices (exacerbated by speculation, & other less savory factors), would have been blunted.

If higher CAFE standards were adopted (and not so harshly resisted by the US auto industry), then US automakers would have been pushed in the right direction before being shocked by 4$/gal gas.

[Durango]

Why did my 1983 small station wagon get 37 mpg (42 in the mountains) and almost none of the fuel efficient cars today come even close?

Why after 25 years has the technology for fuel efficiency gotten worse?

[vippy]

Guess why, because 4 years ago the US Government offered anyone a tax write off
if they bought a vehicle over 5,000 lbs. Imagine that. Now why would you think they did that? And why don't congress address the future's market now, the ICE, because as
you saw on TV how rich they got off these high oil speculations. Yet we look towards
everything else, blaming the Saudis, OPEC, wanting to drill for more oil, etc. yet we
only have to look at our own front door - our trusted congressmen!

[bikerdude]

AND these automakers wouldn't be turning belly up like they are now. Wrong strategy, wront tactics, wrong products...they all should be in the boosh administration...

[philinmedford]

One thing we could try....

How about we all go on strike for a week. A week is the shortest amount of time, anything less wouldn't work.

Don't buy gas for a week. Talk to your neighbors, take turns driving each other to work. Carpool for everything. Don't make unnecessary trips anywhere. Walk to some places.

Probably gas isn't high enough to talk to your neighbors though.

[mouselion]

Better idea: buy a bike and turn your car into a solar oven. Don't buy a new one until they are not linked to oil, coal or nuke.

[Viper]

I will suggest that very realistic idea to people who have a 20 Mile drive in the snow and rain to work as soon as I get out of the nut house.

Regards

[bikerdude]

This idea has never worked in the USA, ever...

[philinmedford]

Well the one day boycott wouldn't work, thats a given.

It would only work if people were so angry that they started pulling together.

That's why it hasn't worked, nobody would pull together.

We pulled together in the sixties.

I know, I know, I'm an old radical, and nobody is radical anymore. Xbox is much more interesting.

[vippy]

I was thinking we all should be on strike for a whole week not even going to work. Just striking!
Now that would send a message. I don't think anything else would work.

[KillTheMessenger]

You go ahead. I am watching your back. And then let us know how impressed the planet's geology was by your strike. ...Snicker...