The Truth About Offshore Drilling
Dean Baker of Truthout recently published a wonderful article about McCain's plan for oil drilling off the Florida coast.
Baker makes three very important points about this plan.
First, there is simply not enough oil there to make any kind of difference in terms of the energy crisis: "The Energy Information Agency (EIA) projects that if we go the drilling route, we could hit peak production of 200,000 barrels a day by 2030." This is a trivial quantity, amounting to about 0.2% of the world's production at that time, and about 1% of the U.S. consumption right now. It would increase domestic production by less than 3%. So offshore drilling would do nothing at all to reduce the price of oil or to "reduce dependency on foreign oil," to invoke everyone's favorite slogan.
Second, Baker makes the point that the media has severely distorted the debate between McCain and Obama:
"The media have portrayed the disagreement between Senators Obama and McCain as to whether to allow drilling in the currently protected offshore areas as a question of values. Senator Obama values the environment, while Senator McCain wants to bring down energy prices and promote economic growth."
This portrayal of the debate is a complete misrepresentation, since "McCain's plan will have no measurable impact on the price of oil or on economic growth. In other words, Senator McCain is willing to jeopardize the environment in these protected areas for nothing."
Finally, Baker makes this telling point, that there are easy-to-execute conservation measures that would do far more to reduce the oil crunch:
"There are alternatives to drilling for oil in environmentally sensitive areas that can produce real results. Conservation is the most obvious.... Suppose we raised average fuel efficiency to 40 MPG by 2030; this would save us more than 5 million barrels of oil per day, 25 times as much as we would get from Senator McCain's offshore drilling. Since many cars sold today already get more than 40 MPG, this is hardly an unrealistic target. Wherever we set our targets, the simple arithmetic shows that it is far easier to have an impact on oil markets through conservation than drilling in environmentally sensitive areas."
Baker did not, however, ask this question: Why would McCain advocate such a plan, instead of the straightforward conservation measures that are much better?
There are two answers to this question.
First, though McCain's plan for off shore drilling will not ease the energy crisis, it is a dandy piece of patronage for the oil industry. Halliburton and other oil service companies will get huge contracts to drill there, while the big distributors (Exxon and the gang) will be able to make very nice profits from extracting and selling the 200,000 barrels per day. (Profits from this amount of oil could easily exceed three billion dollars per year). The fact that taxpayers will foot the bill for government support of the project (including guarding the platforms, protecting them from weather, etc) and then pay the environmental price of its impact is of no never mind to McCain, since he can depend on the media to portray these expenses as the price we pay for alleviating the oil crisis.
Second, McCain does not want to impose 40 mpg on auto manufacturers because this would cut into their profitability by forcing them to develop hybrid and alternate fuel automobiles. These are expensive and problematic projects that the manufacturers know would cut into their already fragile profits. McCain, for his part, does not want to make the already struggling auto manufactuers "take one for the team." The same goes for all the other conservation measures (like cogeneration, which would reduce manufacturing profits, or insulation, which would reduce housing contractor profits).
The big point is this. During the energy crisis, Washington is conducting "politics as usual": exploiting public alarm to enact destructive policies that are profitable to a key corporate clients, and avoiding constructive policies that would probably reduce the profits of key corporate clients.
And let's keep this in mind. Though Obama has demurred on the off shore drilling scam, he has signed on to many others, including subsidizing shale oil extraction that could take down the Rocky Mountains, while remaining totally silent on key conservation measures.
What can we learn from all this? One lesson is that policies relating to the big problems facing our country turn out to be deeply entangled with the loyalty of government officials to the short term profits of the biggest corporations. Another lesson is that government officials can depend on the media to help them "justify" their service to industries by concealing the real impact of their policies.
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Ok, here's the solution to the conservative BS. We allow drilling in ANY environment. Period. But, the oil company drilling is TOTALLY responsible for any and all environmental damage cost. No going to court to dispute damages, or responsibility, just write the check please. And if they lack the funds, then the company is sold, and should this not be sufficient, the company officers and the stockholders, in proportion to their stake in the company, become financially liable. Now, guess what the chance that they stockholders would allow the board to truly risk their money, instead of the public's? I would be willing to bet that should this become the primary environmental law, the environmental degradation of the US would stop immediately, how about it folks? Let's see if we can truly effect change...
If I had the capital to put up I'd take on your terms hands down. The really isn't that much if any environmental degradation due to current deepwater and land drilling.
Yes there is a net carbon increase with construction and transportation offshore and into the Artic. I'd even buy carbon credits to offset this if you wanted.
Yes, there are small spills. I'll contribute a portion of revenue to coastal restoration and endangered and marine species protection.
Preventing major spills is simply a matter of spending money on engineering and maintenance. Again, I'll spend the money. Just give me the revenue from the oil production.
You can bet I'll beat the average return on the stock market. I'll even put a portion of revenue aside in escrow in case there is some environmental impact.
Oil companies already are responsible for any damage to the environment that they create. Exxon had a legitimate right, and an obligation to its shareholders, to fight all lawsuits brought against it due to the Exxon Valdez spill by private citizens and companies. They paid all the fines the government levied on them, and paid for the cleanup.
Also, the royalties collected by the department of the interior from oil leases pay for the entire national park system, and programs such as endangered species protection.
Here's the problem and the problem is us. The first thing we need to do is realize continuing to burn oil is our three way doom. Nothing but more global warming, more wars, and more economic hardship lays down that road. Once we realize that on a large enough level we can either convince our politicians or elect new ones to push for alternatives to oil.
One such alternative source that never gets mentioned is hemp. That could be our stop gap measure between oil and other forms of renewable energy. Because personally I don't think we got another decade let alone 30 years to do something about this and we've already wasted the past 40 years when it was clear oil was running out.
What would really help the economy? Begin raising the tax on gasoline, use it to increase regional public transportation. Make bus fares $0.10. We'd stop needing foreign oil very quickly. Bus systems and trains are filling to capacity because car and air travel are getting to be too expensive.
One unrecognized possibility is that with far fewer cars on the road, computerized control systems on public transportation are more practical (less traffic to contend with). Therefore we could more easily afford fleets of buses that would be idle most of the time but instantly available if needed. We already have the starting point with automobile navigation systems.
Exactly.
We also have cell phones with GPS. You could stand on a street corner, dial up a wenbsite with your cell phone, key in your destination and a central computer could dispatch the nearest bus to pick you up.
Owning even an average car costs about $10K/year. If we had a state of the art mass transit system we would not even need to own a car.
Here's a link to the House of Representatives Committee on Natural Resources report on "Big Oil Stockpiles Supplies and Pockets Profits":
http://res
Thanks for posting this.
ANYBODY that has passed up this link needs to do a U-turn.
It's all in there.
Renewed drilling off the California coat is not about oil, it nwever has been. It's about defeating the loathed and despised tree huggers. The modern environmental movement was born form the 1969 Santa Barbara oil spil. Protecting our pristine coastline is still where the environmentalists are their strongest. If they cn defeat the enviros at the heart of their defense then the movent is dead as dead can be. It's still all about politics and defeating the liberals.
When the Court cut the Exxon money penalties they told us the oil companies come first. We have 5 American oil companies getting no bid invites to deal with the Iraqi oil people. When they start pumping who will guard the American oil company works. The American soldiers ?
No. They gave their lives for Iraqi freedom from a tyrant not to protect oil wells and pumping stations. Do we want America to pay for their protection when they already have us over the barrel with 5 dollar a gallon gas at home ? I don't think the Iraqi people want Blackwater to remain there either but unless the Iraqi army stands up there is no other choice. And Blackwater should be paid by the oil companies, as would the Iraqi army guards.. Will that oil get shipped tp American refineries for our use or sold to the highest bidder in Asia or Europe ?
There is no such thing as a dependence on foreign oil anymore than there is an addiction to heroin from one particular poppy field.
There is only dependence on oil.
How about this... we allow off-shore drilling, but that oil belongs to us (the people). We can hire contractors to drill and refine it, but it is our oil. The gov't can sell it back to us for half the price the oil companies would, and we can use whatever profits to fund alternative energy programs. Deal?
No the oil companies will take the oil and sell it to China for a profit, have us pay for the exploration and production as well... I believe they did this before when we had a fuel crisis..
I agree, curocat ~ you cannot trust our oil companies ... even in times of crisis.
K
There is no easy answer to this; but what Pres. Bush wants to do, to relieve the current crisis, is to lift a necessary moratorium on oil exploration. It's a bad plan; because (as Obama has argued), it could take several years for exploration to achieve any desired results & this won't solve our short term problems. In addition, we still must continue to find alternative energy sources (v. important) instead of further crippling our environment, our coastlines, with offshore drilling.
K
That's a good idea, but let's alter it a little: we allow off-shore drilling, but that oil belongs to you guys (you and your friends that want to come up the funds for the project). You can hire contractors to drill and refine it, but it is your oil. You can sell it for any price and you use all the profits for anything you want (including alternative energy). You can voluntarily associate in a collective, call it a corporation, buy stock (of course everyone pays whatever they, but only gets one stock), and elect a board to make all decisions. Just leave the rest of us out of it.
You're basically describing what an oil company is. Guess what, Exxon, Chevron, BP, Shell, etc. are all publicly traded and publicly owned companies. If you have a bank account, a 401k, a mutual fund, or a pension I guarantee that you indirectly own a portion of one of those companies if not all of them and that you benefit from their stock performance.
Also, why would you hire a contractor to produce the oil then give it to the government to sell it back to you?
I think any new land that is opened for drilling should have its royalties and leasing payments tied to increasing subsidies for alternative energy programs. That's a great revenue neutral way to lower the investment hurdles for alternative energy programs.
Andjust exactly how are you going to find it? Who is going to come up with the prospects and risk the money to drill?
"Second, McCain does not want to impose 40 mpg on auto manufacturers because this would cut into their profitability by forcing them to develop hybrid and alternate fuel automobiles.
What a ridiculous statement. General motors and others have already been putting money into R&D in the alternatives; for example, the electric car was put on the market in the early 1980's. As many of us know, the program issued two year leases on the cars, and when the period expired, took the cars back and made a rubble pile of them. And as I recall, the first Honda's and Toyota's routinely got 40 mpg or better. This is not about technology, it was corporate decisions to push the profitable SUV market.
They had/have the technology to put out high mileage cars, and chose not to. Meanwhile, they are not making even fragile profits, and there are unsold Hummers stretching out to the horizon (pun not intended.) The author also assumes that hybrid/alternate fuel vehicles are not profitable. Tell that to the Prius, which is back ordered, mainly because they cannot get batteries fast enough.
Did anyone else see that Mercedes Benz will stop making gasoline powered vehicles, I think it was by 2014?
If only an American automaker had that kind of vision.
"It would increase domestic production by less than 3%."
Why? the oil companies are already drilling as fast as they can or want to.
actually they are NOT... that was the point of the recent Dem bill in the House to encourage the oil companies to drill in places they ALREADY have licenses to do so... that they aren't now... get it?
The fact that the sheepish Dems proposed something, does not add any new information.
The have land to drill, therefore they are drilling as fast as they can, or want to. That's all the logical possibilities.
This is political BS in the dem talking points, we have access to 15% of the OCS and we have drilled the heck out of it.
They've already got 68/28 million acres leased to them to drill on, with far more oil than the protected areas could provide. This "debate" is a sham, a political ruse. Why doesn't this post point out the obvious - they've already got all the oil they could ever want to drill for? They just don't want to. There's no reason to give them more land until they use up what they haven't even started on.
That is a false statement from someone who knows nothing about the process and repeats talking points.
#1 they have that much land to explore, you still need to get permission to drill and then to actually extract the contents
#2 do you have a link you could show me that shows that the land currently leased is a viable business option to even drill on ? example: if it costs them $500 million to drill there at a cost of $750 million they aren't going to do it.
1) They have actually got the permission, and HAVE explored but capped!
2) they leased it, they explored it, they know that they've got around 13 billion barrels there, they simply chose to count it as company assets.
What pure unadulterated BS.
The oil companies PAY for the leases. If they thought they were worthless, why not let them go?
No they haven't even explored those ares, That's what the OIL companies said.
Here's the Joke:
http://gop
This is supposed to be the GOP counter argument, but they admit:
" production can require years of mapping, testing,"
Duh, the oil companies haven't even bothered to apply for permits to drill exploratory holes. The Oil companies HAVE NOW IDEA how much oil they have in these 68M acres.
But they sure would like 3M more acres please.
This link will give you a little more info:
http://res
This is simply crisis fear tactics to get what has been denied for decades.
Tighter average mileage guidelines would save multiples more oil over the next 20 years than drilling banned areas ever would.
Supporters of the drill ploy miss the point that part of the package is government support for drilling, so we get to pick up the tab as well.
Doesn't any part of the excessive profits indicate that prices were raised higher than they need to be? I don't know about the ones that buy into the sham but it pisses me off that oil companies are allowed to get away with artificially raising prices to the degree that it is bringing this country to it's knees in a ploy to get the public's attention. The government has the ability and responsibility to regulate prices because it has such a dramatic effect on our economy. We could drop prices tomorrow that would be on the grounds that this is a national emergency.
We could also make sense by refusing to pay for drilling, why should we? We are talking about one of the most profitable businesses on earth, why should we pay part of the expenses of making money? Very few businesses enjoy this built in profit factor. How about if the government pays a few hundred thousand of my expenses involved in my business? This is ludicrous and warrants heavy regulation and price rollbacks, not further giveaways.
"Doesn't any part of the excessive profits indicate that prices were raised higher than they need to be?" What's excessive and who determines what prices need to be? If you think the oil prices come out of thin air, why have oil companies stopped raising prices? Altruism?
If oil companies (or gas retailers) could sell oil at $100/gallon and make a bigger profit than they currently make, they would. Business prices aren't usually set by what someone thinks is fair. Their set by what individuals are willing to pay and by what businesses are willing to take.
We could also make sense by refusing to pay for drilling, why should we? We are talking about one of the most profitable businesses on earth, why should we pay part of the expenses of making money? WHATare you talking about? Who pays part of the expenses? You don't have a clue what you are talking about, do you?
"they've already got all the oil they could ever want to drill for" Are you making this up or are you really that clueless? The rig count is at a 22 year high- we are drlg everything we can as fast as we can. We need access to large impactive reserves so geniuses like you who don't know what they are talking about can gripe about the high price of gasoline.
And since there is NOTHING AT ALL to prevent Exxon and the rest from selling "our oil" overseas, this is nothing more than a way to prop up oil company profits.
The simple fact is that without price controls and some form of price management outside the oil companies, there is nothing we can do to lower prices since, to a large part they are being driven by overseas consumption (and the Bush mal-adminstratuon's trashing of the US dollar and economy) it is NOT POSSIBLE to affect the price of gas here.
The only thing we can do is develop alternatives. Rather than spend billions of dollars in corporate welfare to Exxon, let's sopend those billions developing alternatives.
They've already got 68/28 million acres that they're not drilling on. Why doesn't anyone point this out? They've got all the oil they could ever want to drill for, but the truth is, they don't want to. They don't need to drill in the protected lands until they exhaust the existing supply. There shouldn't even be a debate. There's nothing to debate. There's plenty of oil on lands already leased to these companies. All they have to do is get off their asses and do it. But they don't want to. They'd have to spend some of those tax breaks they got.
Why does everyone ignore the most important fact about this fraudulent "debate?"
By the way, a lot more additional oil will be coming out of Iraq in the next few years, more than we could ever produce here, and a lot sooner. Nobody mentions this either.
Why doesn't the media point these facts out so the American people are informed, and so we can get on with real energy policy, instead of ever more handouts for the oil companies?
Back in the day when a barrel of oil was cheap, it was more cost effective to buy it in the ME and let THEM have all the pollution. Ever notice the color of the air? All the greenhouse gasses? Then along comes Gramm and his ilk with deregulation. Things have been going south ever since. I live in Calif. and remember all to well the deregulation that spawned the faux energy crisis here. Our power was sold on an open market and we had to buy it back at a much higher price and had shortages. Rolling blackouts were a joke! The oil "shortages" are the same "gift" in a different box. Deregulation. The gift that keeps on taking. Does Enron ring a bell? Mortgage meltdown? Want a refinery in your back yard? We see now that people gaining smarts about what's really going on here and the price of oil goes down. Investers, Hedgers, speculaters are getting the message. We need to get off the oil and go as green as possible. Then watch oil prices drop.
I am surprised that the politicans that are favoring new offshore drilling are not hyping up the 1000's of decent and high paying new jobs that would be created. That includes in areas with a need for such jobs in California and Florida. Then there is the investments and operations of facilities to support those facilities which means more tax income to local and state governments. Of course all those workers need housing, stores and so on, so there is a multiplier affect.
These could be major tipping point to make local and state governments, residents and taxpayers to make the deal with the devil as to enviromental risks and how little it would help the oil prices.
Nor are they pointing out the benefits to the Treasury from increased production royalties and the improvement in our trade deficit. But then again politicians are not necessarily the sharpest knives in the drawer.
I rather US oil companies get profits than Saudi Kings. Even 200000 bbls is 200000 less for the Saudis...
There are some important facts that Dean Baker left out of the truth of this matter and Senator Obama would be wise to start talking about them.
They can be found here,
http://bid
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