Free Markets, Free People
Check out this graphic:
Right now the US imports about 70% of its oil. 30 years ago, we only imported 28%. What happened?
Well our economy boomed, we created a huge demand for more oil and we had to find other sources. But that’s not the only reason. The government of the US hasn’t been the most helpful ally in this battle for resources. ANWR is the perfect example of what not to do politically. The Clinton era narrative of “it will take 10 years before we have anything” rings hollow right now some almost 20 years later. Obviously had we done what was necessary then, we’d be reaping the benefit now.
But that graphic is stunning, don’t you think? In a partnership with Canada (the country from which we import the most oil and it is a extraordinarily secure source), who now provides about 20% of our total consumption (US + Canada = ~ 58% of our annual total), we could be 92% self-sufficient in 20 years. What that would mean is we could get that other 8%, for instance, from Mexico (now providing about 10% of the total). Or not. We’d no longer be held hostage by an oil cartel and unfriendly or unstable countries.
Right now 30% of our imports come from Saudi Arabia (2), Venezuela (4), Nigeria (5), Iraq (6), and Algeria (8). We could eliminate every one of them as a supplier. Every. One.
Of course that means doing something politically now. But that doesn’t seem to register with this administration. And that seems funny given the obvious screaming need for them to be seen creating jobs and driving the unemployment rate down.
Check out these numbers from a study by Quest Offshore Resources done at the behest of the American Petroleum Institute and the National Ocean Industries Association.
- Total offshore-related oil and gas employment could hit 430,000 in 2013 if the permit slowdown is reversed, including about 187,000 new jobs.
- New policies could result in a 71 percent increase in oil and natural gas spending in the Gulf to $41.4 billion.
- Texas (will reach 149,000 jobs) and Louisiana (129,000) would gain the most from a return to normalcy in the Gulf, but the jobs impact would touch a number of non-Gulf states as well – including California, Pennsylvania, Ohio and Michigan, Quest says.
- Tax revenues would accrue to all levels of government "if the government pursues a balanced regulatory approach that allows for the timely development of the backlog of (Gulf) projects in an environmentally responsible manner." Said API President and CEO Jack Gerard: "We need to create taxpayers, and that’s what this would be doing."
Result? A 20 year program that would result in jobs, revenue and energy resources.
Seems like a no-brainer right? Politicians are currently embroiled in debt ceiling negotiations, but take a look at what doing something like this would mean:
By granting comprehensive access to U.S. oil and gas reserves, $4 Trillion in state and federal revenue could be generated to fill American treasuries and eliminate nearly 30 percent of the national debt.
That growth would spur new jobs – lots of new jobs:
530,000 jobs could be created with increased access to U.S. oil and gas resources. To put that in perspective, that would provide enough jobs to employ 85 percent of Vermont’s entire population. By 2015, development of the Marcellus Shalealone could create 160,000 jobs in Pennsylvania, 20,000 jobs in New York and 30,000 jobs in West Virginia. Add that to the 9.2 million Americans currently employed by the oil industry and you’ve got the economic engine powering our economy and our way of life.
That is how you turn an economy around. That is how you increase revenues to government. That is how a smart government would approach the current problem (and in more areas than just gas and oil).
Instead we have the “permatorium”. If you’re wondering why this isn’t happening, you need to ask the administration:
"The slow pace of Gulf development since the accident has cost jobs, revenue and energy production," said API President and CEO Jack Gerard. "The study shows what could be accomplished on jobs if project approvals and permits could get back to a normal pace. We’ve done the necessary work raising the bar on safety. We cannot continue to delay developing energy and hiring people in the Gulf. The disappointing unemployment numbers from the government last week make this more important than ever," Gerard added.
The “accident” of course is the spill in the Gulf. And Gerard is right. This slow down, after the industry has “raised the bar on safety” is inexcusable. Especially in this unemployment climate. Especially in this economic climate. Especially with tax revenues down. And especially with energy insecurity so prevalent.
9.2% unemployment, a slowing economy, a revenue starved government, a country suffering from energy insecurity and a huge part of the answer sitting right there in front of them – and they refuse to act.
This should go a long way toward breaking our dependence on foreign oil, shouldn’t it?
“By some estimates, the oil you recently discovered off the shores of Brazil could amount to twice the reserves we have in the United States. We want to work with you. We want to help with technology and support to develop these oil reserves safely, and when you’re ready to start selling, we want to be one of your best customers. At a time when we’ve been reminded how easily instability in other parts of the world can affect the price of oil, the United States could not be happier with the potential for a new, stable source of energy.”
That’s what the President of the United States said on March 19th in Brazil. He’s all for Brazil developing its oil reserves, but here at home? Not so much.
And in case you missed this late last year, it’s also telling:
The U.S. is going to lend billions of dollars to Brazil’s state-owned oil company, Petrobras, to finance exploration of the huge offshore discovery in Brazil’s Tupi oil field in the Santos Basin near Rio de Janeiro. Brazil’s planning minister confirmed that White House National Security Adviser James Jones met this month with Brazilian officials to talk about the loan.
The U.S. Export-Import Bank tells us it has issued a "preliminary commitment" letter to Petrobras in the amount of $2 billion and has discussed with Brazil the possibility of increasing that amount.
So we’ll “invest” in Brazil’s oil industry, but essentially shut ours down?
Brilliant strategy, Mr. Obama. Outstanding energy policy, Mr. President – all but shut domestic oil down, outsource oil jobs to Brazil (plus subsidizing it) and make us more dependent on foreign oil.
As API’s President Jack Gerard said:
“It is beyond comprehension the administration would encourage trade for Brazilian oil while obstructing U.S. oil and natural gas development, eliminating related jobs here at home, and decreasing oil and natural gas revenues to the U.S. Treasury when the government is trillions of dollars in debt. The message from the White House to America’s oil and natural gas workers: we’re going to outsource your job.”
“The administration is missing the obvious: what makes sense for Brazil also makes sense for the United States. Like every other nation, we should be developing our own oil and natural gas resources. It’s good for energy security, good for the economy, good for jobs, and it will help bring down our deficit.”
“The administration says it supports more oil and natural gas development here in the United States, then at every turn discourages it. And today, the White House is making a deal with Brazil for the oil it is not allowing companies to produce here. There’s nothing wrong with buying Brazilian oil, but there’s a big problem when we’re forced to because we’re held back from producing our own.”
This is simply unbelievable. Investors Business Daily wraps it up for you:
Obama wants to develop Brazilian offshore oil to help the Brazilian economy create jobs for Brazilian workers while Americans are left unemployed in the face of skyrocketing energy prices by an administration that despises fossil fuels as a threat to the environment and wants to increase our dependency on foreign oil.
That nails it.
Whose president is he again?
It’s a rhetorical question for the most part, since it seems to be a daily occurrence anymore. Obviously it is hard to trust any government that does that on a regular basis and with a straight face. But that’s what we’re faced with. The latest example comes from Ken Salazar, head of the Department of the Interior, and as usual, he’s dissembling about oil production.
Kyle Isakower at API’s “Energy Tomorrow” blog, brings us up to date on some of Salazar’s numbers:
Last week, Interior Secretary Ken Salazar told Congress that oil production in the Gulf of Mexico "remained at an all-time high, and we expect that it will continue as we bring new production online." He claimed: "In 2009 there were 116 rigs in the Gulf of Mexico, in 2010 in February, 120, in February 2011, 126."
Key points: production “remained at an all-time high” last year. And that such a state would continue to exist as “we” bring new production online. Additionally, Salazar claims an increase of 10 rigs in the Gulf of Mexico from 2009 to last month.
Not true says Isakower citing Baker Hughes:
- Four days before the Deepwater Horizon accident there were 55 rotary rigs actually drilling offshore in the Gulf of Mexico.
- On May 28, 2010, when the administration announced the six-month moratorium on deepwater drilling, there were 46 rotary rigs operating in the Gulf.
- Last week, 25 rotary rigs were operating in the Gulf of Mexico.
The point of course is oil production comes from working rigs. While there may be more rigs (by 10) in the Gulf, there are less working rigs (by 30) than in 2009.
As Isakower quips:
Claiming an increase in idle rigs in the Gulf as a success story is like claiming the job market is great because a lot of people are unemployed and available to work.
As for the production figures and the claim by Salazar that production remained at “an all time high” is technically true, the next part of his claim is demonstrably false. Isakower explains:
The Energy Department’s Energy Information Administration reports that production in the Gulf of Mexico is in decline, forecasting a decline of 250,000 barrels a day from Gulf production, due partly to the moratorium and restricted permitting. While the annual production figure for 2010 was greater than 2009, EIA’s month-by-month production figures show a peak in May of 2010, and a relatively steady decline since. And EIA Petroleum Engineer Gary Long told trade publication E&E News that the rig count in the Gulf was cut in half after the Deepwater Horizon accident and that it wouldn’t rebound to previous levels until the end of 2011 under the assumption that the permitting process is restored to historical rates. Further, since there is a lag time from the time an exploration permit is approved to the time of actual production, and since
noonly a handful of permits for new wells have been granted since April of 2010, it is likely that Gulf of Mexico production will continue to be hit hard in 2012 and beyond.
If anyone is monitoring the permitting process as it stands today, they know that the assumption about the process that Long uses isn’t valid (1 permit granted this year that I know of and that just before the hearings at which Salazar spoke). What that then means, as Isakower notes, is production in the Gulf will remain “hard hit” and lower than 2009 until well beyond 2012.
So, here we have a critical need (the production of more oil) that could produce thousands of good paying jobs, would boost a regional economy not to mention provide money for the federal treasury (taxes and royalties) and we have a government official claiming we’re at record levels and will remain there and beyond because “we” have more rigs in the Gulf now than we did 2 years ago.
API is relatively gentle about it saying, [w]e appreciate that when it comes to selling the administration’s energy policy, Secretary Salazar is in a tough position”.
I don’t have to be that diplomatic. Salazar isn’t “selling” anything, he’s spinning nonsense to Congress. There is no cogent or responsible energy policy evident from this administration. Instead, it has declared war on a vital industry that is absolutely critical to our nation’s economy and, using the Deepwater Horizon disaster as an excuse, placed barrier after barrier in front of the industry for almost a year to discourage new drilling operations.
Unfortunately the war has been successful. Drilling rigs have all but abandoned the Gulf to be deployed elsewhere around the world. That is a travesty and an inexcusable outcome of a thoughtless policy pressed for political reasons. Again, the administration spins nonsense to make it sound like they are on board with more oil production while doing everything in their power to block it.
The sad truth is the results of that “policy” will eventually be paid by you, at the pump, as gas prices continue to rise.
Remember that in 2012. It is another part of the record of the Obama administration. And in 2012, Obama has to do something he’s never done before in his political life – actually run on his record.
Yesterday was a rather interesting day for me. Besides being a mild and pleasant day in Washington DC, a new Congress was being sworn in and an vital industry group was making the “state of American energy” known via a presentation and news conference at the Newseum – a museum about the history of gathering of news (and a place you should definitely put on your “must visit” list the next time you’re there).
The American Petroleum Institute’s Jack Gerard made a very sound and clear argument for the development of an energy policy which will best benefit this country and economy. Backed by a Wood Mackenzie study, the choices seem stark and the best one seems obvious. As he laid them out, choice one is to continue the policy of limited or no access to domestic drilling areas both on and off-shore and taxation of the industry at an increased percentage in order to generate revenue for government use. That will certainly generate revenue – no doubt. But at what real cost to the economy? That is the question.
Choice two is to open up access and focus on safe and environmentally sound drilling to boost production here in the US. That, of course, would have the critical side benefit of creating hundreds of thousands of jobs and, by the way, producing more revenue for government than choice one.
The numbers for the two options come from the Wood Mackenzie study as cited in an API press release.
The study calculates that increased access to America’s oil and natural gas reserves could, by 2025, create 530,000 jobs, generate $150 billion in taxes, royalties, and other revenue for the government, and “boost domestic production by four million barrels of oil a day.
The other choice? Not so good: “Raising taxes on the industry with no increase in access could reduce domestic production by 700,000 barrels of oil equivalent a day (in 2020), sacrifice as many as 170,000 jobs (in 2014), and reduce revenue to the government by billions of dollars annually”
That latter policy choice would reduce our domestic oil production, cost jobs, raise the cost of doing business for the oil and gas industry of which most will be passed along to those who can least afford it. Plus:
An additional 1.7 million barrels of oil equivalent a day in potential production that is currently of marginal economic feasibility would be at greater risk of not being developed under the modeled tax increase.
So again we see some pretty stark examples of how government enabling an industry would be vastly more beneficial to the economy and its own revenue coffers than would government using regulatory restrictions, denial of access and a straight up scheme of taxation.
Yet right now we have an administration which is choosing the latter course and is seemingly at war with that industry- an industry that “supports more 9.2 million U.S. jobs and 7.5 percent of the U.S. economy, and, since 2000, has invested nearly $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.”
Does that make sense to you?
The energy policy choice that enables Americans to increasingly address their own domestic energy needs with good paying jobs and will actually provide more in revenue for the government than taxation alone seems the obvious choice.
So why aren’t we seeing it being made?
I’m in DC for a energy speech by American Petroleum Institute President Jack Gerard. Disclaimer – API provided for my transportation, hotel, etc. That, of course, will not change or even influence the fact that I am a strong proponent of the America petroleum industry and feel we should be exploiting our own native petroleum resources to the maximum. Instead we seem to be on a reverse course. Our government seems to be at war with the industry. And, of course, those who’ll pay the price are you and me at the gas pump.
If you noticed lately gas prices are going up. Steve Everley of American Solutions gives you the top 5 reasons why that’s the product of the Obama administrations actions and policies.
It began right after President Obama took office in 2009 – Ken Salazar, the Secretary of the Interior, cancelled 77 oil and gas leases in Utah. A year later 61 were cancelled. Salazar also unilaterally extended the “public comment” period for new offshore drilling by another 6 months, thereby again delaying the process.
Meanwhile in Congress, the Democratic House passed a very harsh cap-and-trade bill. It imposed taxes on CO2 which would have significantly raised the price of gasoline had it passed the Senate. In fact, as Everley mentions, a less stringent cap-and-trade scheme studied by Harvard University would have raised gas to $7 a gallon. Thankfully, the House bill died with the 111th Congress. However, it now appears the EPA is prepared to do what Congress couldn’t and via regulation, impose a carbon cap.
Then came Deepwater Horizon and the excuse to shut down offshore drilling for a 6 month period. That was quickly done by Salazar and we began to suffer the results in lost jobs and product. Since the first moratorium has expired, the administration has unilaterally imposed a second one of 6 months.
The effect has been devastating to the industry (especially in the Gulf states) and it has put the US in an energy hole.l The Energy Information Administration projects that we’ll see a decline of 220,000 barrels per day from offshore sources in 2011. Prior to the Obama administration’s shut down of that source, EIA had projected increases in production for 2011.
Why this is happening should come as no surprise to anyone who has acquainted themselves with candidate and now President Obama’s energy policies. They simply don’t include gas and oil. In fact, as most should remember, when a candidate for the presidency Obama said he knew what he wanted to do in the energy arena would drive up the cost of gas, but he thought that was necessary for environmental reasons and because he thought it would help incentivize the green energy industry.
If I’ve said it once, I’ve said it a thousand times – any comprehensive energy policy must include the exploitation of all traditional energy sources to include oil and gas. They are key and critical to our economy and way of life, and cheap energy is what helps fuel the economy. Any energy plan must be reality based and recognize that you can’t abruptly cut off oil, gas and coal without wreaking havoc on that economy. And you have to have a plan to transition the economy from the traditional fuels to the greener and more renewable fuels as they become viable and affordable.
None of the alternate fuels that the environmental crowd wants to replace traditional fuels fits either of those two criteria yet. Until they do we must maintain and expand our traditional fuel exploitation. To not do that, especially in a time of recession, is absurd.
Lift the ban on offshore drilling, support the oil, gas and coal industries and integrate them into any energy plan produced. Do that now. And then take a look at the state of alternate energy sources and make an honest, not political, assessment of where we are today, when those technologies and fuels will be viable and affordable, and plan accordingly.
That’s how it should be done. That is not, however, how it has been done.
The double-talking Obama administration, who lectured us about the need to wean ourselves from our dependency on foreign oil, has, through actions taken by Interior Secretary Ken Salazar, made the goal of less dependency less likely.
Salazar, yesterday, announced a new level of bureaucratic requirements sure to slow and provide disincentives to increases in domestic oil and gas exploration. In the first year of the Obama administration’s tenure, Salazar had already slowed such exploration to a walk As the Institute for Energy Research (IER) reports:
* Under the first year of the Obama administration’s 2009 oil and gas leasing program, fewer onshore and offshore acres have been leased than in any previous year on record.
* The Interior Department collected less than one-tenth the revenue from oil and gas lease sales in 2009 than it did in 2008
* For the year 2008, lease sale revenues produced a return for the taxpayer of $942 per acre leased. In 2009, taxpayers received about $254 in return for each acre leased under the Obama administration – indicative of the quality of leasable land made available under Sec. Salazar
* More than 97 percent of the 2.46 billion acres of taxpayer-owned lands in the public domain are presently not leased for oil and gas exploration
In a time of economic hardship where federal revenues are way down and deficit spending runs rampant, it is almost criminal to do what Salazar has done. As the Industrial Energy Consumers of America points out:
“At a time when we should be working to enhance our energy supplies here at home, we believe it would be a mistake to pursue policies that would make it more expensive or difficult to access critical natural-gas resources …”
But that is precisely what Secretary Salazar intends to do. IER president Thomas J. Pyle released the following, which pretty much calls the administration out on their absurd policies concerning domestic exploration for oil and gas. Frankly, I think it is an understatement:
“When it comes to paving the way for the responsible development of homegrown, job-creating energy resources, no administration in history has done more to ensure producers do less.”
The Bureau of Land Management released the following:
Under the reformed oil and gas leasing policy, BLM will provide:
* Comprehensive interdisciplinary reviews that take into account site-specific considerations for individual lease sales. Resource Management Plans will continue to provide programmatic-level guidance, but individual parcels nominated for leasing will undergo increased internal and external coordination, public participation, interdisciplinary review of available information, confirmation of Resource Management Plan conformance as well as site visits to parcels when necessary;
* Greater public involvement in developing Master Leasing and Development Plans for areas where intensive new oil and gas extraction is anticipated so that other important natural resource values can be fully considered prior to making an irreversible commitment to develop an area;
* Leadership in identifying areas where new oil and gas leasing will occur. The bureau will continue to accept industry expressions of interest regarding where to offer leases, but will emphasize leasing in already-developed areas and will plan carefully for leasing and development in new areas.
BLM Director Bob Abbey said the increased opportunity for public participation and a more thorough environmental review process and documentation can help reduce the number of protests filed as well as enhance BLM’s ability to resolve protests prior to lease sales.
Of course, anyone who has been around for more than a day or two has seen this sort of wording before and know how to read between the lines. For instance, note the last sentence. “Increased … public participation” means environmental groups opposing such leases will be given much more access to the process. “A more thorough environmental review process” means leases will essentially be held hostage to a review process which could last years. Finally, the “ability to resolve protests prior to lease sales” means the priority will be to make the protesters happy, not those seeking a lease.
The effect, of course, will be less exploration, less production, fewer jobs and more dependency on foreign oil. Given the economic climate today and the country’s energy needs, that’s inexcusable.
As Jack Gerard, president of the American Petroleum Institute warns:
About 9.2 million Americans rely on the oil and gas industry for their jobs. By imposing these unnecessary additional hurdles, American jobs will be threatened along with the economic opportunities afforded by oil and gas development.
So, instead of safely and swiftly exploiting domestic resources (and creating jobs and increasing revenue) it appears the plan is to sit on an estimated 86 billion barrels of oil and 420 trillion cubic feet of natural gas offshore, as much as 35 billion barrels of oil in Alaska and the Chukchi Sea, and a massive 2.2 trillion barrels of energy in oil shale deposits in Utah, Wyoming and Colorado while Salazar plays politics with our energy future.
And apparently force you into those electric cars the government is dumping all that money into.
According to API president Jack Gerard, in a letter he sent to members of Congress, the plan included in Waxman-Markey is pretty darn clear:
The legislation will drive up individual and commercial consumer’s fuel prices because it inequitably distributes free emissions “allowances” to various sectors. Electricity suppliers are responsible for about 40% of the emissions covered by the bill and receive approximately 44% of the allowances – specifically to protect power consumers from price increases. However the bill holds refiners responsible for their own emissions plus the emissions from the use of petroleum products. In total refiners are responsible for 44% of all covered emissions, yet the legislation grants them only 2% of the free allowances.
Upon reading that I assume anyone with the IQ of warm toast can see where that is headed. It is a targeted tax on oil and gas which will be passed on to the consumer in just about every conceivable way possible. Both at the pump and in the cost increases rolled into products we buy due to increased transportation costs, etc.
Electricity, however, whose coal plants are supposedly one of the primary producers of CO2 and very much responsible for the emissions problems we supposedly have get a pass. Does that even begin to hint that this legislation isn’t just about controlling CO2 emissions?
In fact, it shouts it out fairly clearly doesn’t it. Keep the proles happy by ensuring their power to the house is subsidized and stick it to them at the pump where government (who now has a stake in the game) wants consumers buying “green” cars. Don’t you just love it when a plan begins to come together?
Moving on, Gerard’s letter lays out some sobering numbers:
This places a disproportionate burden on all consumers of gasoline, diesel fuel, heating oil, jet fuel, propane and other petroleum products. An analysis of the Congressional Budget Office Report indicates that it could add as much as 77 cents to a gallon of gasoline over the next decade. And, according to the Heritage Foundation this legislation could cause gas prices to jump 74% by 2035. That means, at today’s prices, gasoline would be well over $4 a gallon.
Of course by 2035 we’ll all be riding around in vehicles powered by uincorn methane. And everyone knows that unicorn methane is nontoxic, environmentally friendly, smells good and is eco friendly.
That said, there is the cap and trade plan as it pertains to one vital segment of our economy in all its simple glory. It will force you to pay outrageous prices to use petroleum products in order to move you to the desired, but not yet available, means of conveyance. In the meantime, and until it is available, you’ll just have to suffer with the cost increases. Also remember that government estimates of cost are notoriously conservative and the real cost of such legislation is likely to be much higher than anticipated.
And don’t laugh too hard when they try to sell that to you by saying they’re attempting to save the planet. They’re exempting coal fired power plants for heaven sake. Trust me, this isn’t about emissions. If it were, they wouldn’t treat natural gas the way they do in the legislation as the letter points out.
After all, they’re the government and they’re there to help.
Sometimes the little surprises life hands you are the most pleasant. While in Houston at the Offshore Technology Conference, my trip sponsored by API, I happened to meet another blogger who introduced himself to me as a “raging liberal”. In the course of three days and a few good beers, Chris Nelder and I had some very enjoyable and interesting conversations. And, interestingly, Chris and I agree on where the policy debate stands as it pertains to energy. Chris wrote an outstanding article detailing his observations about the current situation, and, for the most part, I agree completely with his well thought out assessment. Here is his list of “10 Inconvenient Truths” that he feels all policy makers must understand before they can effectively plan for the future:
1. We have extracted nearly all of the world’s easy, cheap oil and gas, and now we’re getting down to the difficult, expensive stuff. The largest untapped resources that remain are in extreme places like deepwater and the Arctic, and marginal formations like shale. As a result, global oil production has for all intents and purposes peaked. Natural gas production will also peak in 10 to 15 years. Neither technology nor high prices will change that. Therefore we must begin to replace those fuels with renewables, and use what remains much more efficiently, with the expectation that most of the world’s oil and gas will be gone by the end of this century.
While I agree with Chris’s point about renewables, I’m not quite ready to buy into the idea that “most” of the world’s gas and oil will be gone by the end of the century, especially if we make progress developing cheap, renewable and clean alternatives. That’s not to say he might not be right, but I continue to look at the improvements in technology and the fact that the same sort of predictions have been made for decades and here we are. But on the main point of gearing up renewables, we agree completely. We must prepare for the possibility Chris is right and we need to do that now.
2. Drilling for oil and gas drilling in the OCS and ANWR must and will be done; our need for those fuels is simply too great to pass them up. An additional 2-3 mbpd will put a dent in the roughly 12 mbpd we now import, but if we drill for it now, it won’t come to market for 10 years or more. By that time, it probably won’t even compensate for the depletion of conventional oil in North America, nor will it do much to reduce prices. But it will be crucially necessary, and producing it won’t make an ugly mess of the environment.
You see someone on the left here who has studied the problem, understands the processes used and has formed an opinion that is outside his side’s political mainstream. He understands that technology has advanced to the point that the oil and gas industry can drill for oil and gas safely and with a very small footprint. In fact, advances in sub sea technology are almost to the point where the entire process can be safely and productively located under the waves. So, in a “comprehensive” scheme, the left has got to drop its almost knee-jerk resistance to such drilling and understand it must be a part of an overall energy solution.
3. Renewables are clearly the long-term answer, as is an all-electric infrastructure that runs on its clean power. However, it will likely take over 30 years for renewables to ramp up from a less than 2% share of primary energy today to 20% or more. They probably won’t even be able to fill the gap created by the decline of fossil fuels. Oil and gas currently provide about 58% of the world’s primary energy, and they will remain our primary fuels for a long time to come.
To believe “green fuels”/renewables are the immediate and total answer to today’s energy needs is to deny reality. We have to remember that there is going to be a growing energy gap as more and more nations come on-line in the first-world and demand more energy as a result. Oil, gas, nuclear and coal are going to play a large and significant part of bridging that gap even as we work to develop renewables. As a nation we cannot afford that sort of short-sighted thinking. It is critical that everyone understand that while the preference is for renewable, clean fuels, the reality is they’re still quite a ways off, while the energy demand continues to grow unabated and certainly with no concern for our personal energy preferences.
Here at the Offshore Technology Conference in Houston, we were able to hear from a very distinguished panel concerning the energy “debate”. I put the word “debate” in scare quotes because it seemed that the consensus of the panel was there really isn’t a productive debate going on.
Roger Ballentine of the Progressive Policy Institute says that the two sides are talking past each other with little real effort to engage in anything which would actually address strategic energy policy.
Sen Lisa Murkowski, addressed the audience by video and spoke of a “comprehensive” plan which would include all types of energy, obviously including oil and gas. She spoke of a “scarcity of will” on the part of Congress to aggressively go after our own natural resources and cited the Gulf of Mexico as an example. There, she said, lays 45 billion barrels of oil and 320 trillion cubic feet of natural gas that we seemingly refuse to tap.
Yet as API’s President and CEO, Jack Gerard pointed out, when polled 67% of the American public want the exploitation of the oil and gas assets to be found on the Outer Continental Shelf (OCS), and that last week the Florida House passed a bill authorizing drilling off the coast of Florida by a 70-43 margin. That is a huge margin and speaks loudly about the public’s sea change in attitude concerning offshore drilling.
But it seems like no one in power in Washington is listening. And that brings us to the second point this panel made – it is necessary to engage the public/consumer and get them involved in this debate. It is they who will live with and pay for whatever Congress cobbles together regarding energy policy. So far, however, the only thing that has accomplished that level of public engagement is the price of gasoline at the pump. When it was at $4 a gallon, the public emphatically weighed in saying “this is unacceptable” and “do what it takes to fix it (to include drilling in the OCS). Since the price of gas has retreated, to be replaced by the economic recession, the public’s attention has been diverted elsewhere.
But we’re at a critical juncture right now. Legislation is being written and moved ahead within the Congress even while panelists in Houston on both sides of the political spectrum are saying the debate needs to begin in earnest, in a bi-partisan and productive way and the public needs to be engaged.
This was a wide ranging panel and I took 16 pages of notes. This particular post covers 2 of them at best. However this gives you a sense of the frustration to be found among those there representing government, industry and think tanks. Both sides of the broad political spectrum on the panel agreed that the bi-partisan “civil discourse” that would move this sort of policy forward in a positive way doesn’t at present exist even while the legislation outlining future policy is being written.
I’ll have much more to say about this as I wade through the pages of notes I took, but this suffices to give the general impression of where we are when it comes a well thought out and comprehensive strategic energy policy. In a word, nowhere. I’ll get into the “why” of that (“climate change” is the “cultural wedge” that is being used to muddy the energy debate), and the implications in another post.
That problem would be putting up with me for 4 days.
I’m in Houston at the invitation of the American Petroleum Institute (who is kindly picking up the tab) to cover the Offshore Technology Conference here. About 75,000 oil folks are converging on the place for 4 days of conferences and panels on various topics.
Today, the “Meeting The Energy Challenge” panel meets and it should be interesting. We’ll have the president of Shell Oil, a Senior Fellow of the Progressive Policy Institute, the president of the API, the presidents of the American Trucking Associations and Air Transport Association, the president of the Consumer Energy Alliance, the Executive Director of the National Council on Energy Policy and Rep. Shelia Jackson Lee (D-TX) and Sen. Lisa Murkowski (R-AK) here to talk about that – I’m looking forward to it.
And Pogue – if you read this and can respond, yes, I will be glad to buy you a beer – just let me know when (other than monday night) we can do it prior to Thursday before I fly out.