Earlier this month, Royal Dutch Shell, coming off the most rapacious
quarter in its history with a 60% increase in earnings to $8.47 billion,
spurred on in large measure by OPEC-inflated crude oil prices,
announced that it had successfully obtained the drilling rights to 275
lease blocks in the Chukchi Sea offshore northwest Alaska. These new
lease holdings, together with Shell's lease holdings in the Beaufort Sea
moved David Lawrence, Shell's Executive Vice President Exploration to triumphantly
exclaim they have the "potential of becoming a new heartland for Shell."
And there, in a nutshell you have it. What was once the national
patrimony of all Americans is now becoming the new 'heartland' for
Royal Dutch Shell. To give you a sense of the giveaway, the Minerals
Management Service, the federal agency responsible for the auction covering
29.7 million acres has estimated that the area contains 15 billion barrels of
"conventionally recoverable" oil and 77 trillion cubic feet of conventionally
recoverable gas. Shell, as the high bidder, is proudly proclaiming it is paying $2.1 billion
for the leases. Leases that appear certain to be in the most prolific areas of the Chuckchi
Sea. That amounts to a grand cost of 14 cents a barrel permitting access to the potential
of some 15 billion barrels of a commodity now selling near $100/bbl.
Yes, there will be development and drilling costs but nothing even closely approaching
the avalanche of prospective revenues from the oil and gas when all is said and done.
By the way, if these numbers become too overwhelming for you, at today's prices the market
value of 15 billion barrels of oil is about $1.5 trillion dollars ($1,500,000,000,000). And
that's not counting the 77 trillion cubic feet of natural gas. The risk reward ratio is so
staggering, that with house odds such as these, Las Vegas would have been
out of business years ago.
Perhaps a little insight into the agency whose talents were able to
organize stripping this resource from our patrimony to the moneyed and
vested interests of a senior player of the oil patch coven, might well
be edifying. The Minerals Management Service, the federal agency
responsible for this boondoggle (over the objections of conservation groups
and the Inupiat Community of the Arctic Slope) is a division of our trusted Department of the
Interior whose reputation was cause for Earl Deveney, the Interior
Department's Inspector General to comment in exasperation at the
Agency's fostering of a culture of "management irresponsibility" that
tolerated conflicts of interest, to the point "Short of crime, anything
goes at the Department of the Interior." Not to be outdone Rep. George
Miller (D-California) felt moved to comment, "If things keep going
like this we're going to need two sets of handcuffs, one for the oil
companies and one for the bureaucrats."
But wait, it gets better. This begins to read like a 'whodunit?' Three
guesses. Who serves as General Counsel for Shell? You probably nailed
it. None other than Gale Norton, who served for five years as President
Bush's Secretary of the Department of the Interior. If only Sherlock
Holmes were around to do justice to all of this.
Cause and effect? Who knows, but given the incestuous traditions
between the oil companies, this oil addled administration and the
Department of the Interior, one can bet that we, the public, will be
getting short shrift. That the bulk of the wealth derived from the
development of these public lands will land on Royal Dutch Shells
bottom line and not in the public purse. We will be paying for the oil
twice. Once through the giveaway at the well, and again at the pump
when we buy it back through the price of gasoline.
How much better served we would be, how much more assured we would
feel, if we knew our national resources remained in the public domain
and were under the stewardship of a National Oil Trust and developed for the nation
as a whole and not the crony racket that our government has permitted to run amok
with its pittance royalties, munificent tax breaks, loopy depreciation allowances and on.
That such a trust would be empowered to manage, with particular environmental
sensitivity, the enormous and still untapped energy reserves located on
our public lands and underneath the oceans off our continental shelf.
As pointed out in a previous post ("An Energy Agenda For a New Age: Time
For a National Oil Trust" 11.20.06) the National Oil Trust could be
modeled after Norway's Petroleum Directorate whose stated objective is
to create the greatest public value for Norwegian society from
Norway's oil and gas deposits. The Norwegian government also created a
national oil company, Statoil, whose prime function was the marketing
and distribution of the Norwegian State's direct interest in each
production operation. The Norwegian State owns a 70% share interest in
Statoil, the balance owned by investors worldwide including a broad
array of global market funds. Profits from the oil and gas operations
accrue to the Norwegian Government's Pension Fund and is invested in
conservative bond and stocks. Were we to have a similar structure, the
trust could be mandated to direct investments toward developing a full range of
alternative energy sources and to expand our mass transportation. It could
well become the cornerstone of a viable program aimed at breaking our
environmentally suicidal addiction to fossil fuels.
But then again the Shells, Exxons, Chevrons and the oil patch generally
have far greater sway over our 'elected' representatives in Washington
than the rest of us. 'They' with their 'K' Street honchos and their politico money-raising talents. 'They' have exercised this mordant influence for years and it is well past
time that they be held to account!
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Let's hope that when Obama comes in, he rescinds any such bogus sale and let Royal Dutch sue America, and if any Bush appointed Judge sides with Royal Shell, let that judge be impeached, but not before he or she is tarred and feathered.
Oil companies pay billions of dollars for the leases ($8.47 B in the case of Shell). Then they spend billions of dollars to drill, hopefully resulting in something that is economic to develop- then they file a developement plan which ultimately has to be approved by the department of commerce which if approved allow them to pay billions of dollars to develop and bring the product to market. They then pay billions of dollars in royalty (by the way the BLM (which includes the MMS is the #2 supplier of revenue to the Fed Gov, just behind the IRS) along the way facing all sorts of roadblocks in an effort to develop the resources of we the people. The result (hopefully) is jobs, taxes, royalties and reduction in imported oil to the US.
This is a far cry from a rape of "the national patrimony of all Americans" that Mr. Learsy would have you believe. If oil companies don't drill and develop our oil and gas reserves, who will? The government? The Press? Mr. Learsy?
"spurred on in large measure by OPEC-inflated crude oil prices"- thats a silly comment. Oil prices are going up becuase the dollar is going down, because China and India are developping and the handful of super giant oilfields are maturing and declining. OPEC has little impact anymore.
"spurred on in large measure by OPEC-inflated crude oil prices"- thats a silly comment. Oil prices are going up becuase the dollar is going down, because China and India are developping and the handful of super giant oilfields are maturing and declining. OPEC has little impact anymore.
And so operates the Republican worldview:
All things on this earth are resources to be exploited, be they natural or human resources.
There is no future beyond the money that you can sieze within your lifetime.
Morality plays no role; money is your only friend, so only money merits your loyalty and rightly is the focus of your lust.
Anything that stands between you and money is to be destroyed.
(P.S. Go to church, on the off chance there is a hell.)
This is the area where the Bush presidency has been a smashing success: Giving Sweetheart deals to large corporations like Shell and Halliburton, et al.
Its been a great time to be a big corporate CEO and the big shareholders of these companie---but for the rest of us--it has been a disaster.
I'm glad to see the focus of Mr. Learsy's posts staying on the political/economics side and away from dismissing the peak oil production phenomenon as he has so often done.
But then it would be hard to continue to maintain that PO is not real today, when even the head of Royale Dutch Shell sends a letter to employees announcing the beginning of the end. Or when articles like this appear.
http://www.gulfnews.com/business/Comment_and_Analysis/10192654.html
It is interesting to note that Mr. Learsy's arch enemy (it would seem, based on previous sneers at the man), Matt Simmons is afforded so much credibility by heads of oil companies and even the Saudis.
It would be nice if Mr. Learsy were to acknowledge his error in some future post. Somehow I suspect that won't happen.
V
My God what have we done? Are we that stupid as a country to give away what some day we will regret. This is one of the biggest mistakes that we could of ever done. This is like a bank account for this country and we are giving it away, I feel so helpless and how can I look up to our leaders. Sounds like money in someones pocket. What is wrong here? How does this get fixed before the rest of it goes too? Any ideas?
I worked as a biologist at the Arctic Wildlife Refuge in 1989 for the fish and wildlife service. The political leaders at Interior are shameless shills for the oil industry. They were then and still are. They are the legacy of Daniel Plainview.
In addition, the Inupiat for pro oil development. It is the Athabaskans to the south who are dependant on caribou who aren't. No one listens to them.
http://search.barnesandnoble.com/booksearch/isbninquiry.asp?userid=jJ7pYfxAPl&ean=9780738844916&displayonly=EXC#EXC"
What's the difference between this and the Hydrocarbon Law BS the Bush admin has been trying to get the Iraqis to sign up to? This is a giveaway and Shell knew it. Our elected representatives are whores and are paid to look the other way. This is a government of the corporations, for the corporations and paid for by the corporations.
This "news" won't even rate a blip on the MSM, only Britney and what color everyone wore to the Oscars.
Yes, but if we allow more drilling that will eventually increase supply and that will put downward pressure on prices.
Don't you guys want to help the little people?
Denmark requires that oil companies pay royalties to drill in the North Sea many times the rate required in the United States. And the oil companies are falling over themselves to pay them, because oil and gas are so profitable.
These royalties help the little people you are concerned about. First of all, Denmark has a positive balance of payments, and a governmental budget surplus. This keeps the Danish Crown strong. Danes have not been hit nearly as hard by oil price increases as Americans. Half the rise in oil prices is attributable to a declining dollar, caused in part by trade and budget deficits. The price increase in Denmark percentage-wise is about a third of that in the US.
Royalties also pay for public services for little people. Higher education is tuition-free to master's level, plus students get a stipend of $800 a month. It is open to all Danes, based on merit. And most of Denmark's universities are ranked among the top 200 in the world. Middle and working class families don't have to mortgage the house to put their children through college.
Plus there is a whole array of other social services that Danes receive, payed for in part with oil royalties, that the little guy in the US doesn't get.
And considering the profits the oil companies are making, do really believe we have to give OUR natural reseources away for peanuts to get lower prices. Stop being so naive. Rockefeller called competition a sin. Big oil has been a price fixing racket for over a century.
That just means the oil companies there have to charge more to make that profit. Not sure what your point is in relation to my post.
My point is the more oil you pump (supply) the better the likelyhood of oil prices decreasing.
Oil companies themselves really do not set the price of oil. This happens in the marketplace. Oil is a commodity that rises and falls based onthe supply and demand equation in the marketplace at any given moment.
This is real basic economics.
Increasing supply (ie: more drilling) puts downward pressure on the price regardless of which oil company is doing the drilling. Alls I am saying is let drill more. In the meantime if someone develops alternatives to oil that make economic sense that will reduce the demand for oil. These things WILL happen in the free market. It does not require government intervention.
No, you miss my point. The oil industry has been highly successful at putting market forces out of play. If you believe there is a free market for oil, you simply are not paying attention. The free market for oil disappeared in the late 1800's with Standard Oil and Shell. If Denmark were to lower it's royalty charge today, do you really believe the oil industry would pass this on to consumers in full? Get real.
The mineral resources of the United States are owned by all the people. When we sell assets, we should behave like any rational seller in "free market" and take as much as the market will allow. Anything less is foolish.
If you apply your logic to individual's economy, you would end up with following ridiculous scenario:
My house is worth $500,000, but I'll give it away to someone for $50,000, because that person will then have to demand less in wages which will reduce the cost of the products they produce which in the end will benefit me as a consumer. This is exactly what you are suggesting American citizens should do with public resources.
Now do you really think that this will drive prices down? I don't think so, its controlled. The profits from this will come from us and to the other countries willing to pay the price. These people could care less about the little people and the sooner you realize this the better off you will be. That oil is a national treasure and should be held for the future when we will be desperate for oil and it will be gone. Big mistake here.
These things make you wonder "Isn't there anybody in Congress, or in the administration of our Federal Government, who opposes this kind of abuse of a public resource, a sort of privatization of public property... opposes it on behalf of the American People, whose resource and property it is?
And if unable to successfully oppose things like this, then to at least sound the alarm, and alert the American People in a timely manner, as to what's going on in their Federal Government?"
And of course, the above essay concludes with an answer of sorts, to that question:
"But then again the Shells, Exxons, Chevrons and the oil industry generally, have far greater sway over our 'elected' representatives in Washington than do the American People.
They have exercised this mordant influence for years and it is well past time that they be held to account!"
And while I can hardly imagine many sincere well-meaning civic-minded American Persons disagreeing with all the thoughts and sentiments contained in the above essay (and even in my comment on it), I'm at a loss to explain the extraordinary hatred and vile being directed at Ralph Nader right now, for his continued interest in participating in the process of electing our President, and for his continued concern and sounding of the alarm, about not only the things mentioned above in this essay, but a host of other things, all on behalf of the American People, and in opposition to the greed and corruption of money and corporate influence in Congress and in the administration of our Federal Government.
Go figure the contradiction, even tragic irony, of such hatred and vile as is being directed at Mr. Nader presently, with the concerns expressed in the above essay.
Well..what does he accomplish by entering the race now? Where was he, closer to the beginning of the primaries, when everyone else was running? You'd think that he'd want more time to get his message across? Coming in now just makes him the schoolyard bully who, if he can't have it..no one else will either! Sorry, but this doesn't float!
The solution is to demand an energy policy that favors renewable energy rendering their investment worthless.
I usually disagree with Mr. Learsy, but I totally agree with him on the necessity to hold our resources for the American people. There should be an agreement with Shell to bring in our oil to our market. It is more about energy security than the money. Mayhaps a partnership between government and oil companies. Good luck to us all!
National Oil Trust. Good words, but it might be better to call it a Strategic Petroleum Endowment?
Agreed. The "National" part sounds too much like "nationalization" - as in taking from the rich and giving to the poor. Can't have that in the USA, can we?
Also, I trust no one with our Alaskan heritage. That kills off the "trust" word. "Endowment" sounds more like it belongs to all of us (which it does, doesn't it?). The "oil" is right, but "petroleum" sounds more all-encompassing - in case we ever decide to admit that we do more with oil than make gas out of it (petrochemicals, plastics, etc.).
You can also point out that once the oil leave the ground it can end up anywhere in the world. Oil coming from the shores of Alaska ending up in say China. What a rip-off!
Thanks for the Post.
When is this going to end?
When your lights go out.
Another Piece to the Puzzle:
This just -- has -- to be related.
You all remember who the Ambassador to The Netherlands is, don't you?
None other than Roland E Arnall, billionaire, and former top dog at Ameriquest. Remember them? Subprime mortgages. Scandal. "Investigations." Oh yes, and top Bush contributor in 2004.
You can almost bet that with Royal Dutch Shell headquartered in the Hague, there's money out there creating this deal.
And get a load of the front page (today) of the US Embassy there: http://netherlands.usembassy.gov/ with this story:
Super Tuesday Breakfast "One Big Happening of Democracy"
February 6, 2008 Ambassador Arnall hosted a Super Tuesday breakfast in the Royal Theatre in The Hague for more than 500 guests. The audience heard remarks from Ambassador Arnall and invited Dutch and American commentators, and watched a recorded message from Governor Schwarzenegger from California, addressing the party.
They also greatly enjoyed a live videoconference from Los Angeles with pollster Frank Luntz, live music, and even an unscheduled performance by some U.S. comedians who were also guests. "Americans make one big happening of democracy," according to Dutch Member of Parliament Hans van Baalen.
Any takers?
Oh yes. One other thing. Ask yourself: Why would the folks at a big party in The Hague "greatly enjoy a live videoconference from Los Angeles with pollster Frank Luntz....?"
Frank I. Luntz (born February 23, 1962) is an American corporate and political consultant and pollster who has worked most recently with the Fox News Channel running focus groups after presidential debates. Luntz's specialty is "testing language and "finding words" that will help his clients sell their product or "turn public opinion on an issue or a candidate."[1] Luntz formed The Luntz Research Companies in 1992, and maintains an office in Alexandria, Virginia.
If, as has been speculated on other Blogs, the financial center of the world is moving from NYC to London, once again, then it only holds that they will begin buying up what they could not hold by force in 1776. Look at the creators and owners of the so-called Federal reserve and notice that the largest bank in England is at the top of the list.
The oligarchy tightens its tentacles around our testicles more every day, with a wink and a nod from the MSM. In the end, there will be blood.
This is 'AN INSIDE ROBBERY' by the BUSH regime and the American people should sue for this outrage of thievery from the American Treasury and people.....
If BIG OIL is willing to give ONLY pennies on the dollar for 'imminent domain' prperty they get from cronies in Texas and oil producing states they should HAVE TO PAY FULL AMOUNT ON THE VALUE OF THE PUBLIC RESOURCES AND LAND THEY STEAL THROUGH THE REPUBLICAN PARTY THUGS...
You are right on. Why isn't this front page head lines in all the papers. Hey they need to serve us better too. I am sorry to say but when it comes to the political schene, $$$$ talks. The head lines should be the Bush regime gives away to Dutch Shell our national treasure for pennies.
I agree with you. Its aweful to say the least. We the people. B.S. $$$$$$$
How come Gale Norton hasn't been indicted yet? it has to be right around the corner.
Don't forget. The Alaska Pipeline is run by BRITISH PETROLEUM. Although I doubt the country of origin is relevant to the multinational corps that seem to be running our world.
Actually, the Alaska Pipeline is owned by the Alyeska Pipeline Service Company, which is owned by British Petroleum, Exxon/Mobil, and ConocoPhillips. But I agree with your main point. Multinationals could care less about our national sovereignty.
http://www.hoovers.com/alyeska-pipeline/--ID__105158--/free-co-profile.xhtml
Shitfire...our own "government" could care less about our national "sovereignty".
Money is all that matters...
This is the way that our little vindictive bully coward bottom feeding marionette in the WH can get back at his enemies, "the librals" who do fight for the enviornment, by selling off public lands, mining them, oil drilling them, logging them, etc. Interesting that when this auction was happening it was done under the radar and the MSM did not comment at all. I heard the first announcement on NPR at about 3AM on NPR. Another very sad moment that will last many many decades in this country. Shell of Mexico purchased many acres to drill for oil also. The animals up there who are getting more scarce all the time also will be gone, the Inuits will lose their lifestyle and this god damned mental case in the whitehouse will not even blink. I am heartsick. And you do know why they kept postponing putting the Polar Bear ont he endangered species list, don't you? Yup. I think we have such a fascist government that it will take years or the end of the world as it is to get over some of this. Gawd damn bush and his cabal. Damn them.
Hold them to account? Good God! The only possible way for Americans to control their own lives is to auction their vote in the same manner as our Congressional legislators sell themselves on the K Street auction mart.
Posted February 25, 2008 | 06:15 AM (EST)