Free Markets, Free People

Oil Exploration


China Buying Oil Leases Off American Shore?

That’s the word from Mark Tapscott at the Washington Examiner:

Gas prices here in the U.S. are creeping back up towards the $3-per-gallon mark even as news breaks today that China’s state-owned energy firm just closed a deal to buy interests in four development leases on the American Outer Continental Shelf (OTS) in the Gulf of Mexico.

The deal, which requires approval of the U.S. government, is between Norway’s Statoil and China National Off-Shore Oil Corporation (CNOOC). This is the same CNOOC that would have bought Unocal four years ago for $18.5 billion but for pressure from Congress, according to The New York Times, quoting an energy industry trade publication.

Because it must be approved by the U.S. government, the Statoil/CNOOC deal puts President Obama and Ken Salazar, his Secretary of the Department of the Interior, which controls OTS leasing, in a difficult position.

Really? Why does it put the government in a “difficult position”? Oh, you mean the apparent willingness to sell these leases to foreign entities vs. opening them up to domestic American exploration?

The deal also focuses renewed attention on Salazar’s slow-walking of a new plan for approving energy exploration and development in the OTS, which includes approximately 1.7 billion acres, and, according to Interior, holds up to 86 billion barrels of recoverable oil and more than 400 trillion cubic feet of natural gas.

The administration is moving much too slowly to open more of the OTS to development for domestic U.S. uses, according to Jack Gerard, president of the American Petroleum Institute …

But it apparently isn’t moving too slowly to open up the OTS to foreign competitors.

In the meantime:

If the administration approves the deal, it will be more vulnerable to charges that the White House is being careless with U.S. national security issues in the energy sector, and that it is putting the interests of a foreign power before those of U.S. energy consumers.

If Obama and Salazar reject the deal, it will likely complicate relations with China, the emerging Asian superpower that defense experts predict will be able at will to challenge U.S. legitimate national security interests around the globe in the near future.

Oil isn’t going away anytime soon and its use is critical during any transition to alternate energy sources (which, for the most part are vaporware). Additionally, the charge that the Obama administration is playing fast and loose with US national security will resonate if the public becomes aware that domestic producers have been barred from OTC production but foreign producers are given access.

So the dilemma facing the administration is one of its own ideological making. Its “slow walking” of the plan for domestic producers to explore the OTC is a decision it made to thwart the desires of a majority of the nation to secure those assets for the US’s use. And now it’s going to hand them over to China?

That will not play well in at all in middle America.

~McQ

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