The Not-So-Great Energy Debate
To drill or not to drill -- that is the question. More precisely, that's the question that has set the terms of the debate on whether to lift the ban on oil exploration in the Outer Continental Shelf (OCS) and ANWR. It's also exactly the question the oil companies and their political proxies want us to debate. The fact that those of us who'd like to protect the ban have accommodated them is extremely unfortunate because it's the wrong question.
You see, big oil et al are not really the "drill" team; it's just a land grab, orchestrated while they still have friends in very high places. And it won't do a damn thing to the price of gas at the pump, certainly not in your aged granny's lifetime, and probably not in yours either.
If the oil companies wanted to drill for new oil, they could easily do so right now on the millions of acres of land currently available to them for leasing. As Joseph Romm, editor of the Climate Progress blog pointed out to me, there are thought to be 34 billion barrels of undiscovered oil under lands currently open to drilling, multiple times the amount that might be under the OCS or ANWR.
While big oil demonstrably has no pressing urge to drill, they very much want to lock down access to more leasable lands. What with those crazy leaders running around Russia and South America nationalizing the energy sector, and crazier environmentalists running around this country supporting bans and moratoria, the share of land in which American Big Oil Inc can poke holes is shrinking. And they'd like to close the deal before Bush/Cheney leave the building.
Isn't this just rhetoric? Even if they really plan to take their time about it, if at some point down the road they try to find more oil, what's wrong with the "drill" mantra? And why should those of us on the other side of the debate stress the "lease" point?
Because our only hope of turning this debate around, and it's a thin reed, is to convince the public that lifting the moratorium today would not affect prices at the pump tomorrow (or probably ever, according the EIA--see the blog link above). We can't get them to change their rhetoric from "drill, drill, drill," as Larry Kudlow regales me with regularly, to "lease, lease, lease." But we want to do everything we can to educate the public such that when big oil says "drill," we all hear "lease."
The reason this is so critical is because our only hope of winning this debate may lie in helping people to unconnect the dots between lifting the moratorium and the price of gas. Yes, it's hard to convince folks that drilling today won't lower prices tomorrow. But how about NOT drilling today? Because that's what we're talking about here.
The stakes are very high. Sources on Capitol Hill tell me that the only thing holding the line on the bans right now is Pelosi's ability to block the vote. With the R's pressing this as their sole issue, and the majority of the public solidly in the "lift the ban" camp, she may not be able to control this one, and sources tell me if it comes to a vote, the ban is toast, certainly on the OCS and maybe ANWR too.
If that does occur, our best move may be to go for something like the "gang of 10" compromise. That's a bipartisan group of 10 Senators who propose a limited expansion of OCS leasing with a quid pro quo that both repeals a big tax break from big oil and makes them finally pay royalties they've been avoiding for drilling on public lands.
I'd go further and also hit 'em with a windfall profits tax. ExxonMobil alone cleared almost $12 billion in profits last quarter. Just because they, their lobbyists, and their political puppet troop have bamboozled the public into believing that they'll be spared from $4 a gallon gas, we're supposed to hand them the keys to the OCS and ANWR? If that's where this is headed, then I'd like to see some pretty juicy quids for any quos.
Things could change if the price falls back this month while the Congress is back in their districts, but the more likely scenario is that these pols get an earful about energy prices and come back insisting on a vote.
At that point, the only thing protecting the ban is the spine of the Democrats. Most of them have been holding the line, bless 'em, but the line will break unless public sentiment changes enough to create a lot more support for the keeping the ban intact.
Perhaps there's a rich philanthropist somewhere who cares enough about the planet to sink some serious bucks into a massive information campaign to convince the public that A) these guys don't really want to drill, they just want the leases, and B) even if they did, drilling won't bring down the price today, tomorrow, next week, or next year. Maybe next decade by a few cents...maybe not.
I know. You're thinking: silly man, you still think facts matter. Guilty as charged. I can't help it. And there's got to be a more of us? Right? Hello? Anyone out there...?
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you know what, let them drill. Im against it, but im realizing that we need to use it as leverage, just like Mccain dared Obama to go overseas and when he did and hit a home run, they had no leverage on it. they looked horrible with it. So lets vote and let the rep. get their way, then when by nov gas prices havent come down, slam them over and over and over again on prices and why they arent coming down. Use their political ploy against them. Thats what they would do.
I'm as much for protecting the environment as anyone else of my generation, but that's not even my problem with this particular issue. As I wrote at www.notmym
Opec will never reduce oil prices because they do not control the prices. The world bank and IMF does. Drilling is not the answer, alternative energy sources are. We can get quicker results from that than the length of time it would take to drill new wells. Wake up America, you are buying into rhertoric from big corporate oil interests. They have you scared at a time we ought to be getting tough and say, no more!!! Watch Rev. Lindsey Williams video if you want a wake up call. He was a Chaplain in Prudhoe Bay and privy to the 'Big' guys plans.
I believe you have it right. This debate about whether or not "WE" should drill in ANWR is a smokescreen. "WE", or even the US Government, would not be drilling and we wouldn't get the oil anyway. They want to give it to Exxon so they can sell it to China.
The saddest part: this is the debate they want us to be having - whether or not to drill. Because nobody is talking about getting off of fossil fuels. We can send probes to Mars, put up satelites and even shoot them down, or put a man on the moon, but we're not allowed to get away from the internal combustion engine.
While we poor dummies are salivating over the prospect of benevolent oil companies drilling for more oil other countries are putting into operation alternative energy sources to provide increasing non-polluting renewable energy. Government funded research by MIT at Los Alamos developed the first Hot Dry Rock geothermal plant to power steam driven turbo generators
I agree with the posters comments that the major intention of oil companies is to obtain new leases.
However, I think this argument is being framed in the completely wrong way by both sides. Trying to justify this on crude price or even gasoline price impact is silly (for both sides - positive impact for the right, negligble impact for the left). For one thing, the market is so volatile, that it is impossible to measure or project the real impact.
The argument should be about clear trade-offs. Allowing more leasing will do several things. It will generate government revenue through lease payments, and through mineral royalties. It will create jobs for blue collar workers, white collar workers (engineers, geologists), and government regulators (MMS). All of these benefits should be relatively quantifiable.
The argument should be about the benefits of these economic stimuli weighed against the potential negative impact of oil spills on the environment and on the positive economic impact of tourism. The possibility of negative impact is the opportunity cost of the job and revenue creation additional leasing will bring.
I for one, support more leasing. I think the environmental impact can be managed in such a way as to have no detrimental effect on tourist economies or on marine wildlife. This is based on my personal experience working in the Gulf of Mexico.
Very nice post. In Texas, offshore drilling has provided huge amounts of revenue to the state, and many highly paid blue collar jobs, and we still have more species of birds on the Texas coast than anywhere else in the US, as well as habitat for other endangered species such as Kemp's Ridley Turtles.
I would add that all the oceans on earth are connected. Almost all other countries that have offshore minerals are drilling for them, and many of those countries don't have the environmental regulations that we have. I would rather pay for oil/gas from American wells, employing American workers, under American regulations, paying lease bonuses and royalties to the American government.
The number of wells drilled per year for both oil and for gas have both doubled since 2000. The bottom line is that we have been drilling more for the last seven years. "Drill Here and Drill Now" has been complete failure as a national energy policy. Oil is approaching $150 per barrel and gasoline is approaching $4.50 per gallon.
This link to has the Dept. of Energies Drilling Statistics:
http://www
Oil wells from 7,300 in 2000 to 13,800 in 2007.
Gas wells from 15,600 in 2000 to 31,000 in 2007
With increased drilling for both gas and oil with record completion rates, gas and oil prices have still continued to increase.
Doubling the number of wells drilled does not double oil production. The flow rate from producing wells is in decline following the first year or so. More drilling is needed just to keep up. Since 2000 the daily rate for rigs, boats and other services in the oilfield have doubled. Some operations in deep water cost over one million dollars a day. That's if you can find a rig. Or a boat. Or steel for tubing and pipelines. Everything the industry needs is in short supply, particularly qualified people.
I recognize the necessity of weaning the country off of oil but cutting back drilling before alternate energy sources are in place is economic suicide.
georgiaR said:
"I strongly disagree that prices wouldn't go down ***if we started drilling**
Lifting the oil ban does not force the oil companies to drill, it just gives them more land for future use (i.e. money in the bank). Think about it, why would any oil company want to reduce oil prices? U.S. oil companies have been getting rich off OPEC's restrictive production policies. It's very simple economics, reduce production to maximize profits. OPEC does for U.S. oil, what U.S. oil can't legally do for itself. Lifting the off shore drilling ban, is not going to change this convenient and comfortable little arrangement.
"Lifting the oil ban does not force the oil companies to drill, it just gives them more land for future use"
It doesn't "give" them more land--they have to pay our government to lease it. Whether they wind up drilling the field or not, they still have to pay the US to lease it. It's revenue for the government either way. Additionally, if they drill and produce a well, they have to pay royalties to the government (usually).
Unfortunately many, if not most, Americans today don't give a sh*t about the environment. They also don't give a sh*t about the corruption in government caused by influence peddlers in the oil industry. I guess we deserve what we get, but should the rest of the world also have to pay?
The "rest of the world" is drilling their own minerals as fast as they can, and many big producers, like Nigeria, do NOT have the environmental regulations that we do.
We should be talking about solving our energy problems, not focusing on offshore drilling.
Even if offshore drilling were wildly successful, it would not produce enough oil to offset the rising global demand, and therefore, also wouldn’t have a noticeable effect on gas prices at the pump. It would marginally reduce the amount of oil we import from foreign sources, but we could find other ways to do this even more effectively.
We should be talking instead about how to develop a national energy policy to address reducing our dependence on any type of fossil fuels, improving energy efficiency, exploring renewable energy sources, etc. Focusing on offshore drilling is an irresponsible red herring from the real debate we should be having about how to solve our energy problems.
"Focusing on offshore drilling is an irresponsible red herring."
Yes, we should be discussing the national electric grid that Al Gore mentioned.
More drilling solves an energy problem like a new credit card solves a spending problem.
Americans overwhelmingly support drilling despite the FACTS that are admitted to even by Republican backers of drilling. Drilling won't get us any more oil in the forseeable future, and even if and when they start pulling oil out of these new leases the price cut at the pump would be next to nothing. Amazing.
This call for new drilling leases is nothing more than a gift from Bush/Cheney and the rest of the Republicans, including McCain, to big oil.
Why aren't Americans demanding that big oil start drilling on leases they already hold to give us this instant relief at the pump that so many Americans blindly believe in?
What is really ironic is how many of the same people who are buying into this "new leases for big oil will solve our problems" mantra are the same people who sneer at Obama supporters for believing in "empty promises".
That idea that new leases for big oil is "doing something for average Americans" is the biggest , emptiest promise of all.
Wise up, Americans.
Your argument that oil companies should drill on leases already in place is an attempt to distract from the issue. It should not be used as an argument against additional leasing.
Leases from the Federal government are established with 5 or 10 year development timelines. If a company does not make an effort to establish production in that time the lease is relinquished. I believe the same holds true on land with most agreements between private landowners and oil companies.
Oil companies work diligently to bring resources on leases to market. In fact oil field economics for all the major companies are driven by "first oil", the first drop out of the ground. Basically, the companies value today's money more than money down the road, so they are driven to produce from leases as fast as possible.
The notion that oil companies are somehow hording 68 million acres in an effort to raise prices is fairly laughable. If 70% of our oil is imported, a little undeveloped land should not really have an effect.
It is important for the viability of the industry for a steady flow of new development opportunities to arise. Opportunities take years to progress through the system; from appraisal, to engineering, to execution. More opportunity also opens up the market for a lot of the smaller producers, lowering entry cost, and fueling investment and job creation.
Yeah, we're out here - trouble is, way too many of our countrymen brainwashed by the system.
It is so f'ing ridiculous - we are going to once again take the word and allow ourselves to be "led" by THE VERY SAME IDIOTS THAT LED US INTO OUR CURRENT PREDICAMENT. How stupid is that?
Thank God for Nancy Pelosi! That's all I can say. She is one unappreciated politician who has spine and integrity. I am mystified as to why the Obama campaign is not doing more to lay out their case to the American people. In the first place there are 8 years of extraordinary mismanagement and incompetence to draw upon. Why aren't they explaining to the American public that there is a direct connection to the ridiculous concept of laissez faire supply side economics and the current mess America finds itself in.
Yes, I watch Kudlow & Company quite often and I find the debates not only childish (all that screaming) but totally ridiculous. More often than not the totally dogmatic partisan convictions of Larry Kudlow and his
fawning pals make no sense what so ever.
In any event, I do agree with you the "drill drill drill" issue is all about a greedy grab for more oil leases than to give consumers relief at the pumps. But I disagree totally with the concept of taxing the oil companies on their windfall profits. Yes, remove the subsidies, by all means but this windfall tax thing is silliness of the first order.
richardgordon,
I don't agree with you about Pelosi. I haven't seen this spine that you speak of. Where is it and in what way has she or Harry Reid actually shown it? The cause of the problems we are facing presently are shared equally by the Republicans and the Democrats. The Republicans because they actively induced them and the Democrats because they are wussy enablers. That is why I am an unaffiliated Independent. I believe America in order to survive is seriously in need of more political parties. I mean serious ones and not useless ones like the Libertarians or the Green Party types or any of the other mediocre and scary fringe ones. Once there was a party called the Populist party which existed for a short time until the Democrats sabotaged them. That was when the Democratic Party was a carbon copy of the present day Republican Party. Full of Southerners who secretly hated the U.S. Government and all it stood for. Now we have a Republican party full of reconstructed Southern Democrats who still hate the U.S. Government and spend all of their active awake time doing their best to destroy it.
I strongly disagree that prices wouldn't go down if we started drilling. The middle eastern countries would see that we were finally doing something about becoming energy independent and lower their prices. Also if Bill Clinton had drilled 10 years ago maybe we wouldn't be in this mess now. So we need to start now so we are not still talking about this in 10 years again.
You are mistaken.
OPEC knows full well that the relatively slight increase in oil supply that these leases might someday give the U.S. wouldn't even come close to making us "energy independent" AND they could easily adjust output/supply to offset our increase, thereby holding the price steady.
The new leases are pie in the sky promises which will do NOTHING except make some ignorant people feel better about the government "doing something".
Georgia...
If we had started using alternate energy sources as Jimmy Carter suggested 30 years ago, we wouldn't care what the price of oil is, wouldn't have to make up lies to invade sovereign nations for their oil, wouldn't have to worry about oil spills that Exxon won't pay to clean up (Valdez anyone?) and would have a much cleaner environment.
I wouldn't be so sure. Solar probably would have taken off a lot faster if it had not been pushed so hard in its infancy. It's important for technology to have time to develop. Nuclear is the same way in many respects. It was proliferated in the US before engineering to be completely safe, which resulted in a setback for the industry.
I'm not saying that we wouldn't be better off if we would have gone along Carter's suggested path. It just may have been more costly than you would realize in hindsight. For example, a diffferent strategic direction for the US in the 1980's may have had an impact on the dissolution of the USSR or it could have just as easily resulted in world peace. Who knows?
Since America has only 3% of the world's oil reserves -- yet we consume 25% of the oil produced in the world -- how can more drilling offer any real relief? The math refutes the assertion that more drilling would address our energy problems -- either currently or in the future. Our society has become a greedy monster that wastes far too much oil, and our growing ostentatious demand for gas-guzzling SUVs and trucks only served to exacerbate the problem.
Perhaps you should have posed the hypothetical,"If past American leadership -- Democratic and Republican -- had had the foresight to implement strict and innovative policies that would have resulted in the conservation of energy, weaning us off of our dependence upon foreign oil, then maybe we wouldn't be in this mess now."
The oli companies have hundreds of thousands of acres under leases that they are not currently drilling on. Land with oil under it. They are not drilling on it. What makes you think they will drill if we lease them more land. It looks to me like an obvious land grab. Get the leases tied up and then just sit on them till they want to drill, probably when oil sells for more.
As to your comment on Bill Clinton drilling. Why should he have drilled, he is not an oil company, he doesn't refine oil, he doesn't sell oil. When he was president oil companies got leases for federal land to drill on, but they havent drilled there. How is this his fault.? Should he have started an oil company?
We are in this mess because despite having oil leases on hundreds of thousand acres of federal land, the oil companies refuse to drill. We are in this mess now because the oil companies CHOSE to raise prices. They were not raising prices to offset the price of oil. If they were just responging to that their profits would have remained constant. They will not even agree to sell the oil in the US if they drill for it. Makes sense to me, they can make more money selling it overseas. Gas is even more expensive there.
Here is some fascinating news on alternative energy just announced by a researcher at MIT.
By mimicking the action of photosynthesis in green plants, he has developed a simple and inexpensive process that will separate hydrogen and oxygen from water. This could rapidly lead the way to large scale use of fuel cell technology. SEE LINK BELOW.
http://web
This may be the Holy Grail for the alternative energy movement. Imagine the end of the economic stranglehold of big oil on our world and the elimination of man made sources of global warming and pollution.
As word of this discovery spreads, don't be surprised to see the price of oil and gas plummet.
So spread the news.
IF it works and on a large enough scale. Not all of these "alternate" energy methods will pan out. One question I want answered is how much water will be required to meet all of our house and automotive needs. With fresh water sources being squeezed for a growing population and increased food production, will there be an adequate supply for hydrogen? Can we use sea water? Or will that damage the oceans' ecosystem?
Who knows, in 20 years we may need an excess profits tax on the greedy hydrogen companies.
From what I understand of it, using hydrogen as in a fuel cell creates water.
What happens is you take water, split it into oxygen and hydrogen, relase the oxygen into the enviroment and stuff the hydrogen into a fuel cell. Then later on down the road you join the hydrogen to some oxygen and create water and some heat.
"...don't be surprised to see the price of oil and gas plummet."
Don't be surprised when this technology is bought and then buried by big oil, or declared a threat to national security.
The article suggests storing hydrogen in your basement. Thanks, but I prefer batteries or capacitors. We already have houses boats and pipelines exploding from natural gas and propane use - imagine if everyone with a solar panel is producing hydrogen in his/her basement!!!
While certainly a good thing, there are still issues with anodes and cathodes of fuel cells. They require platinum and until a mass-market replacement for platinum is found, fuel cells will be longing.
That said, I think they've got one of the *odes figured out, so we ARE on our way.
AlieNation,
The only problem I see in all of this is that the Oil companies are already doing their best to buy up all that technology so that they will still control it. This is why we are seeing so little of their present profits being spent on new drilling. They want to ensure that if and when these other technologies do make headway that they will still control the pulse and profit. They will do as GM and Firestone did to the Trolley car systems back in the thirties and forties. They got rid of them by buying them up, and destroying them, with the goal being to addict us to cars.
First, oil companies are criticized for not investing in alternate energy sources. Then they're criticized if they do. Most oil companies are now in the business of energy. If there is any money to be made in using sunlight to make hydrogen, they will definitely promote it.
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