Free Markets, Free People
Note the capitalized word in the title?
President Obama is campaigning as a champion of the oil and gas boom he’s had nothing to do with, and even as his regulators try to stifle it. The latest example is the Interior Department’s little-noticed August decision to close off from drilling nearly half of the 23.5 million acre National Petroleum Reserve in Alaska.
The area is called the National Petroleum Reserve because in 1976 Congress designated it as a strategic oil and natural gas stockpile to meet the “energy needs of the nation.” Alaska favors exploration in nearly the entire reserve. The feds had been reviewing four potential development plans, and the state of Alaska had strongly objected to the most restrictive of the four. Sure enough, that was the plan Interior chose.
Why? Because Ken Salazar in his infinite wisdom, knows more about all of this that you proles, especially the proles in Alaska. The excuse?
Interior Secretary Ken Salazar says his plan “will help the industry bring energy safely to market from this remote location, while also protecting wildlife and subsistence rights of Alaska Natives.” He added that the proposal will expand “safe and responsible oil and gas development, and builds on our efforts to help companies develop the infrastructure that’s needed to bring supplies online.”
Got that? Restricting use of a area designated by Congress for a specific purpose, a purpose backed by the state in which the area is located, will “help industry” and expand “safe and responsible oil development”.
George Orwell, call your publisher. Time to update Newspeak. Up is now down, and restrictions now “help industry” and “expand” development.
Meanwhile in coal country:
Two coal companies in Pennsylvania blamed President Obama and his Environmental Protection Agency (EPA) for the layoffs announced last week.
“[T]he escalating costs and uncertainty generated by recently advanced EPA regulations and interpretations have created a challenging business climate for the entire coal industry,” said PBS Coals Inc. President and CEO D. Lynn Shanks in a statement on Friday, as noted by the Pittsburgh Post-Gazette. The company also cited weaker-than-normal demand for coal.
Shanks’ comment on the EPA came as he announced a 28 percent work force reduction. “PBS Coals Inc. and its affiliate company, RoxCoal Inc., laid off about 225 workers as part of an immediate idling of some deep and surface mines in Somerset County,” Post-Gazette added. “The company now employs 795 workers.”
Yes, the Obama promise to essentially put coal out of business is indeed making progress.
So wait, we have the administration restricting the oil industry in Alaska and the EPA causing layoffs in coal country, and my guess is Obama will attempt to brag about how many jobs he’s created tomorrow night. Any takers?
That said, guess who is getting “fast tracked”?
The Interior Department set aside about 285,000 acres for commercial-scale solar in Arizona, California, Colorado, Nevada, New Mexico and Utah. The federal government will offer incentives for development, help facilitate access to existing or planned electric infrastructure and ease the permitting process in the 17 zones.
“Energy from sources like wind and solar have doubled since the president took office, and with today’s milestone, we are laying a sustainable foundation to keep expanding our nation’s domestic energy resources,” Interior Secretary Ken Salazar said. …
The development program approved Friday cuts some up-front costs for developers, as the federal government already has performed National Environmental Policy Act assessments for the sites.
The administration fired the most recent volley Wednesday by affirming tariffs on Chinese imports. The Commerce Department determined Chinese solar panels were sold below fair value and that its solar businesses unfairly received direct government support.
Now for the irony:
Yes, you read that correctly — even with all of the many types of subsidies and special government treatment the solar industry receives, they still can’t compete, so the government affords the domestic industry protectionist tariffs… purportedly because China gives its own industry unfair government help.
Anyone who still thinks this isn’t the most political, inept, corrupt, ideologically driven and opaque administration in the history of this country has to have been living under a rock for a few hundred years.
This bunch makes one pine for Jimmy Carter.
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.
Gallup tells us that economic confidence has slumped sharply in the past two week due mainly to the spike in gas prices driven by the unrest in the Middle East and North Africa.
Funny how that works, no? Gas prices go up, economic confidence goes down. And the rest of that goes “economic confidence goes down, incumbents suffer”.
So you’d think smart politicians would want to ensure that they’ve done everything they could to ensure gasoline prices remain as low as possible.
You’d think. But that’s not exactly what has happened here, is it? We’re now in the 10th month of a drilling moratorium imposed by this administration, so there’s really no immediate or impending increases in production domestically that could help ease this, is there?
The slump in confidence is likely tied to gas prices, which have risen sharply amid growing political instability in the Middle East, most notably in Libya. The U.S. Department of Energy reported an increase in gas prices from an average $3.14 per gallon nationwide during the week ending Feb. 14 to $3.38 this past week. In addition, news media focus on the challenges governments are having in passing budgets may also affect Americans’ perceptions of the economy.
Gallup’s Economic Confidence Index comprises two measures — one assessing consumers’ views of current economic conditions and another measuring their perceptions of whether the economy is getting better or worse. Both components are more negative than they were two weeks ago, but most of the change has come from increasingly pessimistic expectations about the economy’s direction.
The pessimism is being driven by the understanding that we haven’t the means to effect the problem nor have we done anything in the interim to improve our ability to effect the problem. In other words, we’re more at the mercy of foreign oil now than we were when this administration took office.
Secretary Salazar has been on a vendetta against oil, using the unusual but certainly horrific accident on the Deep Horizon platform, to effectively shut down a critical portion of the domestic oil industry. It has cost thousands of jobs and billions of dollars (not only to the industry but to the government in the form of royalties and taxes). Rigs which were scheduled to be deployed in the Gulf before the moratorium are now deploying elsewhere. It costs millions for companies when oil drilling rigs sit idle. So they’re off to do what – exploit foreign oil fields. And they most likely won’t be back in Gulf waters anytime soon.
The point, of course, is the entire energy situation in the US is being badly mishandled by the incumbent administration. And while they sit and fiddle, we become less and less able to effect world pricing for oil because our capability has been hamstrung by a government and bureaucracy that is basically antagonistic to fossil fuels.
That’s a risk, especially in these economic times. If the economy is still in this sort of shape, pessimism still holds the majority in consumer confidence and gas prices hang around the $3.50 range, even some of the so-called front runners in the GOP at this point might be able to squeak out a win. And it would most likely, as Charlie Cook predicts anyway, mean a tough election for Congressional Democrats in both houses.
Gasoline isn’t going to go down anytime soon as the unrest continues to roil the ME and N Africa. And if something happens in Saudi Arabia, all bets are off. But it is interesting to see how quickly the price of one commodity – albeit a critical commodity – can turn sunshine to gloom with the public. It is something to watch going forward.
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.
During the last days of the Bush administration, there was a small flurry of hope among proponents of drilling for oil and gas which is off our coast. The president lifted the ban on offshore oil drilling and Congress, understanding the politics of the moment, let their ban expire. As the Washington Examiner explains, that leaves only one obstacle to the US finally going after what is thought to be about 3 billion barrels of oil and 11 trillion cubic feet of natural gas:
So the only thing keeping U.S. firms from drilling off our own continental shelf is President Barack Obama and his secretary of the interior, Ken Salazar, who is slow-walking the approval process that must be cleared before the work can begin.
However, President Obama has managed to break 2 billion of your dollars loose to loan to Brazil to help bankroll their offshore drilling in the Atlantic. One assumes that will give Brazil a savings which will allow them pursue drilling in the Gulf of Mexico as well, since they are one of a number of nations pursuing oil and gas there:
Brazil, China, India, Norway, Spain and Russia have all signed agreements with Cuba and the Bahamas to initiate exploration and production in the Gulf of Mexico within the next two years. So the prospect of seeing Russian oil rigs 45 miles off the Florida Keys — where American oil companies are now forbidden to drill — is a very real possibility.
That “very real possibility” would see us buying oil from the Gulf from foreign oil producers when it was just as readily available to us and our own companies.
And who would you rather produced it – US companies who have proven over the years that they have the ability to recover both oil and gas safely and in an environmentally sensitive way or foreign companies 45 miles off your coast who could give a good rip one way or the other how environmentally safe their methods were?
Then there’s the recession, jobs and the government’s hunt for revenue. This seems like a natural “shovel ready” industry that wouldn’t cost the taxpayer a nickle to crank up but would benefit the economy and the tax base:
According to the American Petroleum Institute, the development of America’s coastal oil and gas resources would generate more than $1.3 trillion in new government revenue and 160,000 high-paying jobs over the next two decades.
Instead of going full bore and trying to get this program off the ground – or in this case, in the water, we’re still piddling around trying to pass legislation:
Senators Lisa Murkowski, R-Ak., and Mary Landrieu, D-La., are bipartisan co-sponsors of a bill that provides coastal states such as Florida their fair share of revenues produced by off-shore drilling and production. The same thing should be done for states on the East and West coasts. California Gov. Arnold Schwarzenegger and the state’s lawmakers hope to tap deposits off Santa Barbara to generate billions in royalties, and Virginia’s front-running gubernatorial candidate Bob McDonnell has made drilling 50 miles off that state’s coast a key component of his energy plan.
Meanwhile foreign nations are moving to exploit resources we should have been exploiting for decades.
We have a huge looming energy gap. We’re behind the curve as it stands right now. While all the politics is focused on health care reform, this need isn’t going away and only becomes worse. Instead of “slow-walking” this, Barack Obama and Ken Salazar should be fast-tracking it and getting us out in those offshore areas to grab the most productive regions first. If we don’t, we’ll be moaning about how the percentage of oil and gas we import has gone up again.
And, as usual, that will be our own negligent fault.