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.
There’s a difference between a political use of the SPR and an emergency use of the SPR. It is for the latter the SPR exits. However the Obama administration has decided to use it for political reasons.
Why do I say that? Well, 30 million barrels of oil is about a day and a half use in the US. Or said another way, this is nothing more than political busy work in an attempt to pretend like the administration is a) concerned about the price of gasoline and b) doing something about it.
But a short walk back through their history with the oil and gas industry makes the case that they’ve essentially been opposed to gas and oil exploration and have used every excuse and bureaucratic means to slow or stop it in the two plus years they’ve been calling the shots.
American Petroleum Institute president Jack Gerard sums it up nicely:
"It’s confusing as to why we would wait to this point to release part of the (SPR), but we’ve still failed to step forward and say let’s bring long-term supply to the marketplace, create American jobs at a time when we have 9.1 percent unemployment and produce millions of dollars of federal revenue at time when we’re struggling with a debt and deficit crisis. … Just yesterday the administration sent a letter to Capitol Hill opposing a permitting bill that was designed to expedite permits in Alaska to produce oil and natural gas. We are getting a confused message."
API’s Mark Green make the most important point in a succinct three sentences:
The United States could and should be taking steps to increase its own production by 2 million barrels a day or more for decades – which is possible if the government would grant much greater access to America’s ample oil and natural gas reserves.
In the long run this would do more for consumers, increase energy security, create jobs and help solve the debt and deficit crisis, to which Gerard referred, by delivering more revenue to government.
Instead of a long-term energy strategy that would help keep the strategic reserve in reserve, the administration seems to be taking action for the sake of taking action trying to cover itself while the economy keeps struggling.
Karen Harbert, president and CEO of the Chamber of Commerce’s Energy Institute adds:
The Obama Administration’s decision to release oil from the Strategic Petroleum Reserve is ill-advised and not the signal the markets need. Unrest in the Middle East is likely to continue for quite some time, so a temporary increase in supply is not a substitute for a long term fix. Our reserve is intended to address true emergencies, not politically inconvenient high prices. Rather than dabbling around the edges, the Administration should take steps to increase domestic production of oil—on and offshore, like the bill the House passed last night. With U.S. crude oil production expected to decrease by 90 million barrels in the next year, the Administration should instead focus on increasing domestic production will improve our energy security, reduce our dependence on foreign oil, and create thousands of jobs.
Note the numbers she cites. The administration is releasing 30 million barrels over the next 30 days while presiding over a total drop in production of 90 million barrels annually due to their opposition to increased domestic production.
What is being done with the SPR release is simply more smoke and mirrors from the smoke and mirrors administration. It does nothing to address the long-term need for increased domestic production, it will do nothing to address the price of gasoline (there is no supply problem at the moment) and it is a misuse of an asset that is to be used for real and dire emergencies.
But then we’ve come to expect nonsense like this from the Obama administration. Symbolism over substance. Pretending to be both concerned about consumers and engaged in helping them when in fact their real policy is to opposed the real solution – increased domestic drilling.
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.
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.