Why is gas $4 a gallon - well let me tell you why ... Posted by: McQ
on Wednesday, June 18, 2008
So where are we in the discussion about using present energy sources (oil) while we get our ducks in a row concerning replacement alternative (and renewable) fuels?
In a word: nowhere.
It should come as no surprise to anyone, that like Social Security and Medicare, politicians on both sides of the isle have ignored the looming energy crisis for decades.
Well guess what, it is no longer a “looming” crisis – it’s here. And what have we to show for it? Record prices, increasing global demand for the only fuel presently available in quantity to meet that demand and an “energy policy” which can only be described as absolutely unresponsive to the public need. Or, if your prefer, pure garbage.
For 30+ years, our politicians have ignored this problem even when hints in the ‘70s and ‘80s gave them a glimpse of what was to come. They stubbornly refused to address the growing problem. Instead they ignored it. You see, actually addressing the energy problem would have required they admit that while the ultimate solution must come from all areas of energy production, in the short-term it must be primarily oil (and coal). But to admit that, they would have had to actually risk their political careers. They'd have had to make the case to the public that in order for there to be true energy independence, more nuclear power along with vastly increased exploitation of existing known oil reserves and more refinery capacity would have to be an integral part of any such a policy for the foreseeable future.
Instead, for the most part, they took the easy road, drank the popular environmental kool-aid, touted alternative fuel "vaporware" as being just around the corner, banned drilling, crippled our ability to build nuclear power plants and oil refineries and blindly ignored the intensifying global demand for energy.
Now, faced with the reality of $4 a gallon gas and the prospect of that never coming down again, they’re like deer caught in the headlights.
And when confronted with the reality that oil must be an integral and growing part of at least the short-term solution to our energy problem the usual suspects retreat into the cave, begin banging their tribal one-note drum and resort to petulant insult rather than signaling a willingness to discuss changing their mind for the good of their fellow citizens. A typical example of that would be the Senate Majority Leader Harry Reid, who, while respectfully calling the Vice President “oil man Cheney” said this :
“So all that Cheney can talk about, the Oil Man Cheney can talk about, is drilling, drilling drilling. But there is not enough oil in America to make that the salvation to our problems.”
Of course the 1.5 trillion barrels sitting in western US shale alone, not to mention the 89.5 billion barrels offshore, show Harry Reid to either be incredibly ignorant, in which case he should just keep quiet, or a plain old liar. The fact is the shale reserve alone would fulfill all our energy needs for about 200 years.
Giving Reid the benefit of the doubt he doesn't deserve as well as a very forgiving interpretation of his statement, perhaps what he is actually trying to say in his own muddled way is that oil isn’t “the salvation to our problems.”
Well, I'm sure this will come as a complete surprise to Mr. Reid, but as far as I know, no one is arguing it is!
What is instead being argued, in the absence of an energy policy for which Sen. Reid bears direct responsibility, is that oil exploration and exploitation may be the solution to our energy needs in the short-term while we try to make up for Reid’s 30 years of incompetence and politically motivated short-sightedness. It is he and those like him who have been instrumental in landing us in the mess we face today.
Instead of facing up to what he has failed to do while a member of the Senate, Reid childishly prefers to throw stones at the Vice President.
And Speaker Pelosi is no better:
“The president’s proposal sounds like another page from the administration’s energy policy that was literally written by the oil industry: give away more public resources to the very same oil companies that are sitting on 68 million acres of federal lands they’ve already leased.”
Of course, as with most things she says, she’s clueless about her claims. For those who are interested, an oil expert explains what Pelosi and Steny Hoyer seem not to understand:
Some lawmakers state that oil companies currently hold millions of acres of leases that are not producing. This is true, but not for the reasons politicians would have you believe. It seems the lawmakers would have us believe that oil and gas exist beneath every acre of every lease the government issues; that obtaining a lease was a virtual guarantee that the lease holder would strike oil and gas, or both. Obviously, that’s absurd. If it weren’t, I’d be on line at the Department of Interior trying to buy an acre or two for myself.
Drilling costs money. Thus oil companies have developed very sophisticated methods of exploring for oil and gas that don’t require the erection of a rig and any actual drilling (which is very expensive) until they're pretty darn sure there's a good bit of oil down there. Then and only then do they commit to a test well.
So what they are looking for, as they check these leases out, is enough recoverable oil to make drilling a test well worthwhile. If they are holding a lease, you can pretty much bet the house that they’ve processed that lease and the reason there isn’t an oil rig on it is because they’ve determined it to either be without oil or without enough recoverable oil to make it economically feasible to drill.
And with vast swaths of this country not producing a drop of oil because those two conditions exist, it isn’t at all infeasible that 68 million acres fit that description as well, is it?
Anyway, here we have an actual crisis laying in the laps of the leaders in Congress - who, by the way, promised they’d lower the price of gas when they were running their 2006 campaign, remember? - and when presented the opportunity to actually do something about it, they punt. Their response is to point fingers, insult, lie and blame “big oil” without ever doing anything positive to help the situation.
It is an amazing performance. I can’t wait until they suddenly realize that almost 70% of the country wants to see drilling increased offshore in order to drive gas prices down. I would imagine the reversal of their present positions will be so stunningly swift that both Reid and Pelosi will suffer from whiplash.
In the meantime, every time you fill up your car with that ever more expensive gallon of gas, you know exactly who to blame for being in this predicament. Pelosi and Reid aren't the only one's who've gotten us into this mess. Many of the others have a big old "R" behind they're name. Pelosi and Reid are simply the current crop. But they still deserve a giant, heaping helping of the blame and I think we ought to make sure they know we're well aware of that fact and not let them play the blame-shifting game (Congressional hearings with "big oil" anyone?) of which they're so fond.
When I hear the mantra "alternate energy" being sprouted around it makes me angry and sad. Of all the so called alternate energy schemes there is really only one which will make more than a token amount of difference. Of course that is the big evil bogey man Nuclear Power. The dragon that the left expended nearly three decades to slay.
Wind, solar, geothermal, even hydroelectric are all problematical, sure all of them together can make a small dent, but no amount of wishful thinking is going to suspend the laws of physics. They have all been studied and used extensively for decades now and are not "infant" technologies. They all have big drawbacks.
On the other hand the amount of recoverable fossil fuels (at current prices) is huge, really huge. If you count gas, coal, oil, oil from shale, it’s a fantastically huge amount. There is no reason that we should be paying as much as we have been for energy. It is all because of politics interfering in the market.
Wind, solar, geothermal, even hydroelectric are all problematical
Let’s take a look at how the left really looks at alternatives such as those listed.
Wind. Boy, don’t even get me started with this one. The Kennedy clan, you know those pillars of the LEFT, sued against a windfarm off the coast of Nantucket. Robert Kennedy Jr, that pillar among environmetal leaders in America today, led the legal attack with Teddy’s blessings. Reason: It would adversely affect the view from their villas. End of Windfarm - a source that would have provided the entire Cape Cod with all of their electric needs for the next 50 years. Similar windfarms are currently projected for the coast of Long Island - any bets the lawsuits will keep these farms off line for the next 20 years or so.
Hydroelectric. Another biggie in the alternative energy package. But has anyone tried to build a dam in the US lately. You know, the kind of structure through which waters flow, spinning turbines, creating electricity. The environmentalists will climb all over your collective *sses if you even try. Why? Your dam is destroying habitat - everywhere the water goes, habitat goes with it. (Even the argument that a lake or impoundment is a different kind of habitat doesn’t wash with these folks.) Can’t have that - even communities whose water sources are drying up (Atlanta, anyone?) can’t get permits to build dams. There is currently a major environmental movement in progress to destroy existing dams along many of the rivers in the US today, hydroelectric or not.
Goethermal. Another possibility but again one that has the environmentalist up in arms. What’s wrong with geothermal? You gotta drill to get to it. And the areas you gotta drill are pristine, natural sites and you also lose that habitat again with the drilling, etc.
Solar. Once again we have the environmetalists up in arms about solar collection farms. Why? Destruction of pristine desert landscapes and loss of desert habitat. Anybody ever seen a desert tortoise? You want to google how much the US government is spending to provide habitat access for these critters? Plan to spend a long time at your PC reading up on that one.
Bottom line? There is no easy solution to the current energy crisis. The CURRENT crisis? Trust me, this is only the beginning. There will be lots more to follow.
"For 30+ years, our politicians have ignored this problem even when hints in the ’70s and ’80s gave them a glimpse of what was to come."
I disagree. The politicians have not ignored this problem. They have adressed it in a number of ways. They have: Prohibited the exploration and exploitation of new sources of oil. Offshore, shale, ANWR, you name it. They have have placed numerous restrictions on the building of new refineries and what kind of gasoline must be refined. They have made it exceptionally difficult to get new energy infrastucture, especially in the case of nuclear energy, online. They have previously passed a wind fall tax on big oil that lead to more importation of oil and the enrichment of OPEC. I’m sure there is more that I have missed.
So the idea that they have ingnored the energy issue is not true. They’ve done just about everything they can to make it worse.
tkc does a decent job of talking about the US and OUR culpability...
Now let’s examine corporate culpability...you know Brazil, Cuba they all are drilling for oil now. Why is that? because prior to the last 3 years it was not profitable to do so. Now it is...Just like it wasn’t worth the effort to try to change the decision on ANWR or oil shale, or any other alternative...it wasn’t profitable. Oil had fallen to its 1975 price, in Constant Dollars, and no corporation saw the need for alternative fuel sources, and from the consumer view point that made sense too.
This is how markets work...its price spikes that spur innovation and until the price spiked there was no need for change. In fact, as oil had fallen in price, in real terms, since 1982 it made NO sense to drill or explore or seek any alternative.
Call it my contrarian Irish sensibilities, but all this caterwauling about Congress and the US consumer, is a bit silly...it made no economic sense to explore anything beyond the status quo until oil began its current dramatic rise.
Just like it wasn’t worth the effort to try to change the decision on ANWR or oil shale, or any other alternative...it wasn’t profitable.
Well, except that the oil companies were ready years ago to drill in ANWR (so obviously they were convinced it was economically feasible) and have been pumping crude out of the few OCS leases with oil for decades (again arguing fairly persuasively that offshore drilling is economically feasible).
Of course they’ve only been able to do that only where Congress has allowed:
The Basic Stats: Outer Continental Shelf (OCS)
-Total OCS Acreage: 1.76 billion acres
· Total Under Lease Now: 41 million acres
· Percent of Total Under Lease: 2.33%
· Total Acres Producing: 8.1 million
· Percentage of Total OCS Acreage Producing: 0.46%
· Percentage of OCS Off-Limits: 97%
Frankly if you think restricting use to 2.33% of an asset has anything to do with markets, you don’t know much about markets - libertarian or otherwise.
And since Congress controls the leases - both in OCS and on land - it is certainly a valid argument to say Congress has mismanaged us right into this crisis.
Reagan actually deregulated oil to some degree. That’s why most of the years after 1981 had cheap gas.
Hey, credit where credit is due: Pres. Carter actually started the oil deregulation process.
Of course, being a Democrat, he phased it in and attached a windfall profits tax to it. What Reagan did was come in and say "Forget the phasing-in crap, let’s just get it done. Oh, and no windfall profits tax."
The president’s proposal sounds like another page from the administration’s energy policy that was literally written by the oil industry: give away more public resources to the very same oil companies that are sitting on 68 million acres of federal lands they’ve already leased.
Man, didn’t she see "On Deadly Ground"? The nasty oil companies are exploiting these leases so hard that they are taking shortcuts, which means Steve has had to come in and kick their butts.
Hey, stop looking at me like that! How do you know it’s fictional? F-911 was considered a documentary, wasn’t it?
"But has anyone tried to build a dam in the US lately. You know, the kind of structure through which waters flow, spinning turbines..."
To be realistic, there are only a few sites where large dams can be built, and they were mostly done in the 1930’s. There are a number of small dams in New England (and probably other places, e.g. the Pacific Northwest) that either are generating or could generate some electricity, but they are being dismantled because they hurt the environment/habitat.
To be realistic, there are only a few sites where large dams can be built, and they were mostly done in the 1930’s.
Sorry, TA, but I have to disagree with you. The dams built in the 1930s represented the optimum placement for dams in certain areas, Tennessee Valley for example. But many major non-navigable rivers are ripe for hydro power and have been passed over to date - the Upper reaches of the Arkansas River is the best example to mind.
Also, there are many small communities across the US who are facing a water crisis in the coming years. These communities generally, through their state offices, apply for assistnace through the USDA’s Rural Utility Service (RUS). Many of these communities have offered proposal in the last 10-15 years for a drinking water impoundment coupled with hydro-electic power. It is many time no optimim but it is an attempt to offset the costs of the dam by the electric generation. Almost 90% of these plans are shot down by environmental activists over the habitat issue. Some 10 years ago, the city of Atlanta was working with RUS for a series of dams (10-12) surrounding the city. Most of these dams were located 40-60 miles ouside of Atlanta but all of them would be connected to Atlanta through a series of pipelines to the various water treqtment plants in the area. Again, most of these impoundments were shot down for environmental concerns.