Dems: You Can Box McCain In on Oil Drilling -- In a 'Postpartisan' Way
It's going to come up again and again in the next two months. McCain - and the woman he says is the most knowledgeable person he knows about energy - are going to repeat that Republican mantra: "Drill, baby, drill."
The phrase has a lot going for it. It's semi-erotic, it resonates with a certain Missy Elliott joint1, it excites the base, and it makes some undecideds think: Why not?
So here's what Obama and the Democrats can do. They can say "Yes, John McCain, we'll go along with drilling as part of a long term energy strategy, but only under the following conditions:
1. All of the oil produced by new drilling - all of it - must be sold to American markets.
2. It must be sold at reasonable margins, without the rapacious profits of recent years.
3. Republicans must agree to end oil speculation.
So, Sen. McCain, as they say in the movies: Are you in or are you out?"
It would be smart strategy to make this offer now, before the debates. That way when energy issues are raised, that 'drill' mantra can be completely defused. If they don't accept this deal, they're acknowledging that they are acting on behalf of the oil companies and not the American people. They are pushing a policy that will not benefit the public - just their corporate backers.
Or they could take the deal. That would be a good thing, and a real step toward postpartisanship. I don't want to see more offshore drilling, but if we can put an end to oil profiteering - and to the exhaustion of our natural resources to enrich a few - it would be a trade-off worth considering.
About item #3: There is a heated debate going on right now among economists about the extent to which trading in oil futures is driving the price of oil, but an initiative like this would remove whatever bloat remains in the market. It would also ensure that no future Enrons can gestate in the dark like poisonous mushrooms.
I believe in hope - but as the French poet Paul Eluard said, "Hope raises no dust." This proposal would raise some dust. Whether accepted or rejected, it could change the energy debate.
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1Here's the Missy Elliott citation, for you archivists: "Why you all in my grill? I'm thinkin' it's time to chill. Yeah, but you on a drill, though. I couldn't even step out the baby blue Bonneville."
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1) I really don't understand why this is an issue. Oil produced in the Gulf of Mexico, or off the East Coast, or off the West Coast is going to end up in the US market. US oil companies do not want to pay to transport crude to markets like China, when the biggest petroleum market in the world is on their doorstep. We only export 500,000 barrels of crude oil a day, and that's all to Canada.
2) Noone seems to mind when oil companies were taking it on the teeth when oil was at $12/barrel in the late 90's. Why should Exxon or Chevron risk money (oil exploration success is about 50%) for marginal returns? They could just invest money overseas or in their own stock, and the US would receive no royalties dollars.
3) What does this even mean?
I got a a proposition for you. You can keep your job, but you can not collect a pay check larger than what I and like minded people say you can. Also, you can only write for hard core leftists and liberals, no moderates or libertarians. Also, you will not be allowed to compare your pay check to what others may be making and you will not be allowed to consider other jobs that may pay a higher rate.
Add two more conditions:
4) Drill in existing off-shore leases first;
5) Support extensions on the renewable energy tax credits and establish a national renewable energy portfolio standard.
re: your #4
Why would you require this? What if the reason that they're not drilling there is that it's not profitable?
re: your #5
Why would you require this as a precondition for drilling? This has nothing to do with drilling, why would you even bring it up, except that it's something you want? I want a Ferrari, but that doesn't mean that giving me a Ferrari should be a precondition for drilling.
Jbatch let me clue you in on something. My late uncle worked with Penrod drilling and was a super on what was at that time the largest rig in the North Sea. It was so big, two ocean going tugs were built just to tow the thing. The tow chains were 1/2 mile long, each link weighed 90 pounds.
Now Jbatch, money was invested in this equipment and effort because the cost bennefit numbers looked good. Drilling for oil is not a social program, it's about making money. Price and the ease of getting oil out of the ground dictate whether a company will drill or not.
You keep repeating the same democrat line. "Drill on existing leases first." Why are they not doing that Jbatch? At the same time, why would they drill in the North Sea, the most dangerous place on earth to extract oil? Use your brain Jbatch, the Feds need to open up more leases where much more oil is likely to be found. It's in the North Sea, it's off shore on the outer shelf and it's in Alaska
Drill in existing leases first. What about geology, does that play in to your equation? You cannot find oil where oil does not exist. The choice of where to drill should (and still does) fall within the purview of the companies that risk exploration dollars. Oil companies do not poke holes in the ground on a random basis, the problem is (in the GOM) we have been exploring and drilling for the last 60 years and have drilled over 50,000 wells while setting over 4000 platforms. What we have to explore has been picked over and we need new unexplored areas to expand in. The whole point is to find new oil and natural gas, drilling dry holes or making marginal discoveries does not move the needle for the country.
5. Give up all unused dry land leases.
6. No Deep Water Royalty Relief clause.
What is an "unused" lease?
"No Deepwater Royalty Relief clause"- are you referring to the law passed by Congress and signed by Bill Clinton (Deepwater Royalty Relief Act). You are referring to the law that has been udheld by the courts or are you speaking prospectively into the future (I agree no royalty relief is required at current commodity prices). Are you suggesting a do over? What about the sanctity of contracts and law?
So, you want to carve out a piece of the free market system to create an island of command economy? Government to dictate sellers, buyers, price? No, it's politically and pragmatically unworkable.
A workable approach would be requiring those extracting resources to pay the public for the value of resources removed. The US system lets oil drillers and miners extract value by the mega-ton while compensating the public very, very little. The process often rapes the enviornment, and always rapes the citizens. A substantial tax on extracted resources by the barrel or ton makes obvious sense.
I agree, the dems can box McCain in on this. They also need to be shouting over the din and reminding everyone that we can start offshore drilling today, but it would be years before we would feel the impact of that at the pump.
don't shout too loudly, you might be wrong.
I like it, but would add one more proviso:
4) Any royalties that Alaska (or other states) receive as a result of granting leases will be turned over to the federal government.
Do states receive royalties for drilling on federal lands?
In general no. As to leases that abutt one another at the state/federal boundary yes. New legislation talk increases the cut ot the states to where they would get a piece of the federal royalty out to a greater distance than currently.
So you are suggesting confiscation of state minerals by the federal government?
We need to re label the drill drill drill drill issue. It makes sense to drill for oil in the US if we have it. that is a tough argument to combat when it is dumbed down to that level. The real argument should be where do we drill first? Do we drill in the millions of acres the oil companies haves asked for and received permission to drill in first? Or do we start the drilling in the one place we already set aside as the LAST place we want to drill for oil? The argument of where do we start does not simply gloss over the fact that big oil wants to drill where it makes them the most money. That does not make them evil or the enemy, it is simply how a business operates, the best interest of the country are not part of their bottom line. That bottom line though is not in line with the agenda and best interests of the American people.
So we should ALL be screaming drill drill drill, just start drilling in the places we already agreed on, when we reach our last resort, we can then talk about drilling in areas we agreed where to be saved for a last resort situation. Make them explain why we should start in the highest risk areas first? Why risk other business and the environment when there are millions of acres of safer places to drill for oil?
How do you answer the charge that there isn't oil in those other acres? Because that answers your question.
(or at least enough oil to be economically feasible)
How do I answer the charge that there isn't oil in those areas?
Who knows? Only the drill bit knows for sure. That's why we explore. Modern 3 D seismic will reveal geologic structures that can be tested by drilling. when a number of wells are drilled, well control will help fine tune. Our fine politicians have not allowed even speculative base line seismic to be shot over the moritoria areas so we as a nation have no clue as to what our potential hydrocarbon reserves are.
it is not about drilling, it is about exploring. Drilling is the last step in the exploration process and the amount of drilling is not indicative of the effort made.
Highest risk from what standpoint? Risk in terms of success? That call needs to be made by the people risking the money and having the expertise to do so, not the politicians. Yes oil companies exist to make a profit- are you surprized?
I do not agree with Government setting a "reasonable" profit for any business unless Government is going to guarantee profits and cash flow for life for that business. I also don't think that oil speculation is the big issue as it has been shown that speculation works both ways to raise and lower prices. Blaming things on oil speculation ignores the fact that this is a supply and demand problem.
I would only add that I think it is ridiculous that the Democrat Congress voted to ban imports of CANADIAN oil that is coming from the Oil Sands in Alberta. Instead of importing oil from a friendly neighbor, they would rather us have to import oil from Venezuela, Saudi Arabia and the rest of the Middle East/Africa. Not only that, there were plan to build large refineries in the US for this oil (one was proposed for the old steel mills in Gary, Indiana) but that has been scratched due to the ban.
One other issue is the use of sugar cane ethanol from Brazil. Right now, the Democrat Congress has voted to create high tariffs (tax) on the importation of Brazilian ethanol on behalf of "Big Farm" folks like Archer Daniels Midland despite the fact that sugar cane ethanol is more efficient than corn ethanol.
http://www.nytimes.com/2008/06/23/us/politics/23ethanol.html?pagewanted=1&_r=2&adxnnl=1&adxnnlx=1221044765-4iBFZ5wyItFc5xcZ9SvFBw
Pointing out that our oil companies are NOT national like Venezuela or Mexico would be a big point in the debates, and I agree that controlling speculation or profits just for oil companies would never fly in the USA. We already know about how much oil we have here in the US, and it ain't much. WE WILL NEVER BE OIL DEPENDENT. We use 22 MILLION BARRELS A DAY. Evidently, the citizens of this country would prefer to go on using that much until it's gone, so get ready for 10 dollar a gallon gas. Soon. Or, we could go all out to cut our consumption of oil in a very dramatic way, thereby saving it for things we really need it for (plastics, rubber, fertilizer, etc), drop the price, and making it last longer for future generations. But I think people just like their cars and trucks too much. Especially repuglicans.
What busines ever created has more of a "guarantee of profit and cash flow" than the oil industry?
This is not supply and demand economics. There is no large scale alternative or "other" company to buy from. The republicans deregulated the industry and now there is no longer any competion and no longer a choice in the marketplace. Exxon spent more money buying back it's own stock llast year than it has in "alternative energy exploration and research". THey have a monopoly on a product that we must have for our economy to function. We need to think about changing that model. The next Bill Gates might come from the energy business if we only invested the needed time and money to reseach alternative sources of energy. At the current rate of improvement, solar energy will be cheaper than oil by 2019. A littlel investment into that area might very well shorten that time dramatically. Once it becomes cheaper, many of the other problems fix themselves. The oil industry is not going to start this moving.
This is supply and demand economics, no matter how much you might state otherwise.
There is demand for this product. There is supply of this product. The supply will increase if the feds allow drilling in areas that they currently don't. Prices will drop when there is more supply.
There is risk involved in drilling, now matter how much you might state otherwise. As to your assertion that oil production is a monopoly, ask RoyalDutchShell, ConocoPhilips, BP, and the myriad others if there is a monopoly on oil production. At *most* there is a high barrier to entry because drilling is expensive and risky.
So what if the oil companies aren't going to start it moving? How about you start it moving? Create your own alternative energy company and market your energy source if it's so darned easy.
And while I'm asking questions you won't answer...why should you get a say in how Exxon spends money they earned?
i think you have the oil industry confused with someone else, perhaps public utiities. There is no more risky business tht the oil business On average we drill wells that are unsucsessful 8 out of 10 tries, does that sound like an easy path to success.
No competition, come to Houston, I guess you just don't know where to look for us. We are an extremely competitive industry competing for a scarce resource which is expensive and hard to find.
Are you investing in solar? Good luck with that.
You are right in two ways: 1) The drill drill drill campaign is just a distraction because it has no near (in the next 10 years) term benefit and Democrats are percieved weak on drilling, and 2) some estimate that 2/3 of domestic oil/refined products are sent to Asia anyway, so what national security interest is served by more domestic production unless it is no longer exported.
The other issue more significant. There is no oil in the OCS, ANWR, and NPR, only estimates. Estimates are made by comparing other geological basins that may be similar (and are producing), probability analysis, and statistics. There has been nothing found in these areas. It could take several decades or more to prove up any reserves that may exist (if any), and the economics due to harsh weaher and remoteness may block any development.
It is a good campaign tactic as long as you don't bring up any facts. But not very responsible governence to bet the farm on something that may not exist.
The problem is that the people that think science is all magic and mirrors on global warming do not question the science that thinks their might be oil there. You can not have a rational discussion with irrational people.
So why not let the oil companies invest their time and money seeing if there is oil there while the alternative energy companies do their thing, too? What's the downside?
If alternatives pan out, great. If not, we're better off having begun drilling than if we didn't.
Doesn't *that* seem like good governance?
Isn't that exactly what Gov. Palin suggested a few days ago?
There is no doubt that a lot of these areas will get drilled over the next 10-30 years. It will take that long to evaluate any new opportunities. But how long did it take to develop Hibernia?. Chevron has a giant oli discovery in deep water Gulf of Mexico but they reckon it will cost $85 per barrel to develop. Why don' we just subsidize Chevron with guarantees and get on with it since we know the oil is there? They are not going to develop it unless costs are cut by 75% or so (just guessing)
The only viable way to increase production that will benefit consumers is secondary recovery and infill drilling in existing areas, which is what the House Democrats want to do. They also want to gradually move away from dependence on hydrocarbons for transportation since that effort can make gains of 100%, versus new drilling that at best can improve oil production by several percent. So the best bang for the buck from a public policy standpoint is the support alternative energy.
There is no oil in the OCS?
I never hear the democrats making the correct argument on drilling
They need to break it down like a business deal because that's what it is.
So:
The United States owns land that is very valuable because it has oil in it.
The republican plan is to basically give that land away, lease it out for pennies on the dollar to private, multi-national corporations who will then drill our oil out and sell it back to us at full retail price.
Sounds like a bad deal to me
Now if there was some kind of fixed rate deal, so that oil they got had to be sold at say $70 a barrel we could maybe look at giving these companies this land to drill. Of course we would also make it clear on paper that they are going to pay a lot for any oil spills in cleanup with no way to wiggle out of it
Nothing is "given' to the oil companies. Leases are granted based on competitive bids and Uncle Sam decides if a tract receives a fair value for the lease or the bid is rejected. Last stats i looked at- in the last EGOM sale, the average bid was $1.8MM per 5760 acre tract- that is $3,125 per acre- is that "pennies on the dollar"? The company I work for is not a multi-national corp- we are a small company that lives and dies by the price of oil and natural gas and we drilll 75 wells per year.
It is very clear that we are responsible for adhering to all of the regulations and laws that govern our operations, including pollution. It is very much on paper. I suggest you do a little research on oil and gas operations in the GOM and learn just a tad more on the subject.
1. All of the oil produced by new drilling - all of it - must be sold to American markets.
* While this is the most reasonable of your suggestions, it's not completely workable, but fine, this.
2. It must be sold at reasonable margins, without the rapacious profits of recent years.
* How, exactly, would you define "reasonable?" As we should all know by now, oil company margins are not that high, by comparison to other industries. So how much is too much? (Go ahead and answer the followup question: Who are you to say what's a reasonable profit for someone else's activity?)
3. Republicans must agree to end oil speculation.
* You didn't do enough hand waving to just make the concerns about this idea vanish. Speculation drives prices both ways, and provides liquidity to the markets. Just because you don't understand what they do doesn't make them evil.
"Who are you to say what's a reasonable profit for someone else's activity?"
Since they want to drill on Federal land, we (not "I") are the ones who own the land. So who are we to say what's reasonable ? The landlord, that's who.
If the oil companies don't like the deal, they can walk away from it and find somewhere else to drill.
We may own the land but we are also the consumers. Where does the idea of us not benefiting in many ways from local production come from. Some benefits would include high paying jobs in production and distribution. Less oil tankers on the oceans may be eccologically beneficial and closer transportation costs could make supply cheaper. These are our resources and democrats pandering to extreme enviromentalist interests have blocked the peoples access to these resources. Energy suplies are a major ecconomic and security issue for our nation. You cannot just talk the talk you have to walk the walk.
I see you answered the second part, but skipped the inconvenient first part. So then go for it: How much profit is too much profit, and how exactly did you arrive at that figure?
You skipped the first question: How much profit is too much?
How exactly did you arrive at that number?
All this drilling bullshit is just one more gift the Bush crime family wants to give to his oil buddies on his way out the door. Wake up America!! Enough!!!
Exactly right. I would also be interested if the american taxpayers are going to pay for the investigation in Chenny's part in the bribery charges against Halliburton, KBR on oil deals in foreign countries. (Stanley turned over as a witness).
So what your saying is if this happens then Obama is locked into Oil drilling...Drill Baby Drill
The oil companies don't want to drill - are you kidding me? Why would they want to spend millions and millions on development, equipment and labor - when they can just act as the middle man, sit in a board room with a big stogey and watch the cash pile up.
Why would they dilute the market making more "liquid gold" available?
I say call their bluff: Drill away, boys, but it has to be sold here.
They aren't even paying the lease fees, you know - guy in the Bureau of Land Management blew the whistle on it a year or two ago - hundreds of millions owed - the guy got canned I believe.
They aren't even paying the lease fees? What is this? Who is they? My company sure pays and every company I have worked for the last 28 years has paid. Have I been working for companies that didn't know they didn't have to?
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