Free Markets, Free People

gas

World’s largest oil producer? If we can get government out of the way …

That is the key. And, given the re-election of Barack Obama, it may not be very likely:

A shale oil boom means the U.S. will overtake Saudi Arabia as the world’s largest oil producer by 2020, a radical shift that could profoundly transform not just the world’s energy supplies, but also its geopolitics, the International Energy Agency said Monday.

In its closely watched annual World Energy Outlook, the IEA, which advises industrialized nations on their energy policies, said the global energy map “is being redrawn by the resurgence in oil and gas production in the United States.”

The assessment is in contrast with last year, when it envisioned Russia and Saudi Arabia vying for the top position.

“By around 2020, the United States is projected to become the largest global oil producer” and overtake Saudi Arabia for a time, the agency said. “The result is a continued fall in U.S. oil imports (currently at 20% of its needs) to the extent that North America becomes a net oil exporter around 2030.”

This major shift will be driven by the faster-than-expected development of hydrocarbon resources locked in shale and other tight rock that have just started to be unlocked by a new combination of technologies called hydraulic fracturing.

And there’s the rub. Fracking has been demonized by the enviros and the Democrats. Nevermind the fact that in this nation alone it has been in use for 64 years and over a million wells have been drilled using it. This is not new technology despite the apparent belief by some that it is and that it is dangerous.

Environmental groups and some scientists say there hasn’t been enough research on fracking.

Right.  1948.  A million wells.  No history there.

EPA is publishing new regulations on fracking which they claim will not impede production.  Any bets out there concerning the truth of that assertion?

We talk about “energy independence” often and others rightfully point out that oil is a global market and that it is difficult to become truly independent.  Given these new finds, I’m not so sure that argument is still valid.  Or at least it isn’t as valid as it was when we believed we only sat on top of 2% of the world’s reserves.

Let’s be clear here , the possibility of increased fossil fuel production, to the point of defacto energy independence flies in the face of everything the left wants to do in the energy sector.  Anyone who doesn’t understand that has not been paying attention.  We’ve seen it with this administration’s ban on off-shore drilling, putting areas of federal land off-limits and slow-walking the permit process.  There is no reason to believe that will change.  None.

We have the possibility to strategically help the country, create thousands if not millions of jobs, create revenue for government and begin to help a struggling economy get off it’s knees and at least begin staggering forward in a positive direction.  If the past four years is any indication, that’s an opportunity that will likely be passed up or at best, minimized.

Oh, this administration will talk a good game, it always does.  And it will claim it is interested in “all of the above” when it comes to energy.  But action speaks louder than empty words and the action we’ve seen from Obama, et. al., says exactly the opposite is true.

We’re sitting on potential energy resources that could be a veritable game changer.  One problem.  With a government in place that loves to pick winners and losers, it looks upon fossil fuel as a loser.

The results, unfortunately, are predictable.

~McQ

The new fossil fuel reality

Myth: The US has only 2% of the world’s proven reserves.

Reality:

From Canada to Colombia to Brazil, oil and gas production in the Western Hemisphere is booming, with the United States emerging less dependent on supplies from an unstable Middle East. Central to the new energy equation is the United States itself, which has ramped up production and is now churning out 1.7 million more barrels of oil and liquid fuel per day than in 2005.

“There are new players and drivers in the world,” said Ruben Etcheverry, chief executive of Gas and Oil of Neuquen, a state-owned energy firm that is positioning itself to develop oil and gas fields here in Patagonia. “There is a new geopolitical shift, and those countries that never provided oil and gas can now do so. For the United States, there is a glimmer of the possibility of self-sufficiency.”

Or, as the article from which those two paragraphs are taken is entitled, “Center of gravity in oil world shifts to America”.

And, given recent finds, there’s more than a “glimmer of the possibility of self-sufficiency for the United States” there is a real possibility for self-sufficiency if a coherent energy policy is put together that exploits the reserves we have.

Currently the US imports 45% of its petroleum needs.  29% of all imports comes from Canada, 8% from Mexico.  Saudi Arabia supplies 14% Nigeria 10% and Venezuela 11%, with lesser suppliers picking up the rest.

Canada’s supplies of crude oil are going to continue to rise, from a current base of 4.3 million barrels a day to 6.6 million a day in 2035.  But the US is projected to see a big an increase as well.  From the current 10 million barrels of oil a day to 12.8 million in 2035.

But that’s the case only if we tap into it or are allowed to tap into it, much being found under land controlled by the federal government who has been anything but friendly to the idea here recently.

Production has risen strikingly fast in places such as the tar sands of Alberta, Canada, and the “tight” rock formations of North Dakota and Texas — basins with resources so hard to refine or reach that they were not considered economically viable until recently

Technology has made the recovery of these resources economically viable and they promise a abundant energy future.

Then, of course, there’s natural gas, something the US is blessed with in huge quantities as well.  It is a distinct possibility that the use of natural gas will increase markedly over the next few decades as it is applied to more and more uses traditionally the realm of other energy sources.  Part of that may come among auto and truck fleets.  If so, then it is more than a “glimmer of a possibility of self-sufficiency” we’re beginning to see.

It is a real possibility.

But only if we use it.  And, only if the government and radical environmentalists get out of the way.

One of those two problems can be helped this November.

Forward.

~McQ

Twitter: @McQandO

The real oil production numbers Obama doesn’t want you to see

President Obama is fond of claiming that oil production is up at record highs for the past 8 years under his administration.

Well, yes, but here’s the clinker for him – they’re at record highs despite his administration not because of it.  In fact, he could have been a hero and had oil production at epic highs had he not instead done all he could to slow down oil production on federal lands.

“Yeah, yeah, we know McQ, you’ve been harping on this for weeks, but all you can do is throw out a counter-claim that he’s full of it.”

Well, let’s go to the numbers, shall we?

oil production

 

Here are the production figures for the last 4 years.   Note the “Total Federal”.  Note the decline.   I’m not the one trying to hide the decline, the White House is.  Note too the difference between 2009 and 2011. 

On the privates side of things, note total NonFederal.  Alaska has declined but others have boomed.  In fact so much that the NonFederal (i.e. state and private) have been able to offset the large drop in Federal land oil production and show a net increase.  That’s the number for which Obama has been trying to take credit.

And if you think oil is bad, check out natural gas:

 

Gas production

 

Again total Federal shows a huge decline.  Once more look at 2009 vs. 2011.  Then look at the huge boom in NonFederal production. 

The claim made by Obama, while technically true, is true despite the Federal government.  One way to better state that is while oil and gas production as a whole is higher than it has been in 8 years, oil and gas production on Federal lands is off significantly because of the Obama administration (and not forecast to increase).

A few more facts.  You’ll note that production is down in Alaska for both oil and gas?    In 2008, the oil and gas industry spent $2.6 billion to obtain 487 leases in the Chukchi Sea. To this date, the administration has not allowed a single well to be drilled on any of these leases.  But they’ll gladly whine about Big Oil holding all these leases, won’t they?

Current estimates show production on Federal leases in the Gulf of Mexico are down 22%.  Of course that’s the most significant portion of potential oil production the government controls.  It doesn’t get any better.  The forecast for production this year is it will be down 30%.   But, of course, that couldn’t possibly effect price, could it?

Finally, while onshore Federal oil production (not gas) has shown a modest gain, it could be much higher if the Federal government would cooperate in the Western Colorado area.  There, leasing is down by 68 percent since President Obama took office, and the number of wells drilled is also down. 68%.  But, you know, “drill, baby, drill” won’t work, will it?

See the freakin’ numbers.

~McQ

Twitter: @McQandO

President’s Jobs Council: “Drill, drill, drill”

President Obama’s “Jobs Council”, formed to take the heat out of criticism that he’s not doing enough to foster job growth, has come back with an interim report that can pretty well be distilled into three words: “drill, drill, drill”:

President Obama’s jobs council called Tuesday for an “all-in approach” to energy policy that includes expanded oil-and-gas drilling as well as expediting energy projects like pipelines.

“[W]e should allow more access to oil, natural gas and coal opportunities on federal lands,” states the year-end report released Tuesday by the President’s Council on Jobs and Competitiveness.

This, of course, is directly at odds with the administration’s attempt to “green up” American by pushing alternate and renewable fuels while engaging in foot-dragging, regulation and bureaucratic red-tape to slow down and sometimes stop the search for (and use of) fossil fuels.

You can almost hear the jaws of Steven Chu and Ken Salazar falling open. So what’s a President to do?

Well first, argue that what they said isn’t what they said, of course:

White House press secretary Jay Carney insisted Tuesday that the jobs council report does not endorse the Keystone pipeline.

"Well, first of all, the Jobs Council wasn’t talking about Keystone specifically," Carney said at his daily briefing. "The Jobs Council was talking about the importance of expanding domestic oil and gas production, a goal this president shares and has expounded upon at length, and has taken action as a policy matter to demonstrate his commitment to."

Nice double-talk Jay … this President “shares” the goal of  expanding domestic oil and gas production about as much as al Qaeda shares a goal for peaceful secular coexistence with the West.

His administration talks the talk, but when you look at the action they’ve taken it is hard to find evidence of that “shared” goal.

The problem for him, however, is this Jobs Council was his idea and he certainly implied that its existence meant he’d listen to their findings.  While he and Carney can weasel-word all they wish about the Keystone Pipeline, it does mean jobs.  Just as the shale gas finds in in the Ohio and Pennsylvania area do.

But instead we see the usual suspects involved in trying to demonize fracking and stop that process with the tacit approval of the Obama administration. 

The report notes that the Obama administration has called for new lease sales and said it will consider opening up new areas to drilling. But it says “further expanding and expediting the domestic production of fossil fuels both offshore and onshore (in conjunction with more electric and natural gas vehicles) will reduce America’s reliance on foreign oil and the huge outflow of U.S. dollars this reliance entails.”

Beyond oil and gas, the report calls for policies that improve energy efficiency, encourage private investment in energy research and development and expand renewable energy.

Note two things.   One the Council tries to soften the blow to the administration by attempting to gild their record up to now – an acknowledgement that the administration has “called for new lease sales and said it will consider opening up new areas to drilling”.

But again, what actions have they taken to this point to do those two things?  Nada.  Again, all talk, no action – at least no action that conforms with what the President has supposedly called for.

And also note the council calls on policies to “encourage private investment in energy research and development and expand renewable energy”.  Why?  Because the possibility of another Solyndra would be vastly reduced.   Sound advice that will most likely go unheeded.

Republicans, as you might imagine, have seized upon this report:

House Republicans quickly pounced on the jobs council report Tuesday, noting that the recommendations echo their "all-of-the-above" energy strategy.

"The President’s Jobs Council today confirmed what House Republicans have known all along, that American energy production will spur job creation and strengthen our national security," House Natural Resources Committee Chairman Doc Hastings (R-Wash.) said in a statement. "Unfortunately, it appears President Obama is ignoring his Council’s recommendations, much as he has ignored the views of House Republicans on energy production, economic growth and job creation."

More broadly, the jobs report calls for expanded oil-and-gas drilling, as well as “safe and responsible” natural-gas extraction from shale formations.

So?  So this is going to be a tough one for Obama to ignore, especially as his election campaign gears up.  He’s voted present on Keystone by delaying a decision until after the election.  But events keep going to spite him – PM Harper of Canada,  tired of the delays and nonsense surrounding the pipeline is now wooing China and Obama’s own Jobs Council has now pointed to the common sense solution to creating thousands of jobs – get the government to hell out of the way.

Problem?  The man just isn’t wired that way.  Government is the solution in his world – never the problem, despite mounting evidence to the contrary.

Let’s see how he handles this.  If Carney’s statements are any indication, China will be shipping Canada’s oil sands production west in the next few years unless we manage to get this man back to Chicago in January of next year where he belongs.

~McQ

Twitter: @McQandO

The government’s war against cheap fuel

Harold Hamm, CEO of the country’s 14th largest oil company, Continental Resources, is featured in the WSJ today.  He talks about oil, gas and his belief, given what he knows about our reserves, that we could be completely energy independent from OPEC if we’d exploit them.

Or, as the title of the piece says, North Dakota could be the Saudi Arabia of the 21st century.  He thinks our technology for recovery of oil and gas is at such a state now that we could economically extract gas and oil that was previously unrecoverable and do it at a very nominal price.

So Mr. Hamm goes to Washington and has a chance to meet President Obama.  He has a moment alone with him and tries to get the message across.

When it was Mr. Hamm’s turn to talk briefly with President Obama, "I told him of the revolution in the oil and gas industry and how we have the capacity to produce enough oil to enable America to replace OPEC. I wanted to make sure he knew about this."

The president’s reaction? "He turned to me and said, ‘Oil and gas will be important for the next few years. But we need to go on to green and alternative energy. [Energy] Secretary [Steven] Chu has assured me that within five years, we can have a battery developed that will make a car with the equivalent of 130 miles per gallon.’" Mr. Hamm holds his head in his hands and says, "Even if you believed that, why would you want to stop oil and gas development? It was pretty disappointing."

Disappointing?  It’s vesting our future in a myth (or at minimum a hope) while ignoring what we have in front of us upon which our economy runs.

Daniel Yergin hits the point:

With all the excitement over renewable energy, it might be reasonable to assume that fossil fuels such as coal, oil, and natural gas will go the way of the steam engine in the next 20 years.

Not so fast, says Daniel Yergin, author and one of the most influential voices in the world of energy.

"There is always the possibility that something big will happen very quickly, but probably not," Yergin said in an interview this week before delivering a lecture at the Free Library of Philadelphia.

"On a worldwide basis, about 80 percent of energy today is oil, gas, and coal. You say, What’s it going to be in 2030? Most studies say somewhere about 75 percent of the bigger pot."

Said another way, we should be doing everything we can at this moment to do two things – increase our oil and gas supplies and create jobs.  The oil and gas industry promise an abundance of both.

As for our alternate or green fuels – yeah, maybe some day as Yergin, who has spent years researching them, admits, but not anytime soon:

"I’m convinced there will be major changes," he said. "But given how massive the energy system is, how complex it is, things just don’t happen overnight."

Existing energy systems contain an enormous amount of embedded capital. New technologies have long lead times. Automobile fleets take a decade to turn over. And world energy demand is expected to grow 35 to 40 percent by 2030.

Wind turbines, after decades of development, are only now cost-competitive, he said. Photovoltaic cells, first used in spacecraft in 1958, still require subsidies.

"It’s not a light switch where you can go from one to another," he said.

Precisely.  It’s like trying to turn an aircraft carrier around that is going full speed … it not only requires miles and miles of ocean but a lot of time.  We’re not going to transition to any alternate or green energy source in the foreseeable future – gas and oil will continue to play a dominant role in our economy.   And it is high time we began to earnestly exploit our reserves.

Anyway, back to Harold Hamm.  Why is Mr. Hamm so excited about North Dakota?  Bakken shale:

How much oil does Bakken have? The official estimate of the U.S. Geological Survey a few years ago was between four and five billion barrels. Mr. Hamm disagrees: "No way. We estimate that the entire field, fully developed, in Bakken is 24 billion barrels."

If he’s right, that’ll double America’s proven oil reserves. "Bakken is almost twice as big as the oil reserve in Prudhoe Bay, Alaska," he continues. According to Department of Energy data, North Dakota is on pace to surpass California in oil production in the next few years. Mr. Hamm explains over lunch in Washington, D.C., that the more his company drills, the more oil it finds. Continental Resources has seen its "proved reserves" of oil and natural gas (mostly in North Dakota) skyrocket to 421 million barrels this summer from 118 million barrels in 2006.

"We expect our reserves and production to triple over the next five years." And for those who think this oil find is only making Mr. Hamm rich, he notes that today in America "there are 10 million royalty owners across the country" who receive payments for the oil drilled on their land. "The wealth is being widely shared."

The fact is that over the next few years, Bakken is going to provide huge employment opportunities, taxes, you name it – all of the positives that get an economy going again.

How much?  Well that’s still to be determined, but if our experience with the Barnett shale formation down Texas way is any example, lots.  Here are the results of a recent study of the impact of the exploitation of Barnett shale by the Perryman Group [pdf]:

More than 9 trillion cubic feet of natural gas have been produced from the Barnett Shale.  Currently, 24 counties have producing wells, with permits issued for a 25th county.  

Although exploration activity slowed during the economic  downturn, production from the Barnett Shale continued to rise, topping 1.8 trillion cubic feet in 2010. 

More than 70 rigs are currently drilling in the Barnett Shale. 

The Perryman Group estimated the positive effect of Barnett Shale related activity on the regional and state economies.  This economic stimulus stems from (1) exploration, drilling, and related activity; (2) pipeline investments and related operations; and (3) royalties and lease bonuses.  In addition, the oil and gas companies involved donate millions to area charities and pay substantial ad valorem taxes. 

The Perryman Group estimated the 2011 total effect of Barnett Shale activity to include $11.1 billion in annual output and 100,268 jobs in the region.  While the majority of the stimulus comes from exploration and drilling, pipeline development and royalty and lease payments also contribute to the overall impact. 

For the state as a whole, Barnett Shale-related activity leads to estimated 2011 gains in output (gross product) of almost $13.7 billion as well as 119,216 jobs. 

The Perryman Group estimates that the cumulative economic benefits during the 2001-2011 period include $65.4 billion in output (gross product) and 596,648 person-years of employment in the region.  For the state as a whole (including the Barnett Shale region), the total benefits over the 2001-2011 period were found to include $80.7 billion in output (gross product) and 710,319 person years of employment.

Approximately 38.5% of the incremental growth in the economy of the region over the past decade has been the result of Barnett Shale activity.  Moreover, the overall economic contribution of this phenomenon now constitutes about 8.5% of the local business complex. 

Activity in the Barnett Shale is also an important source of tax revenues to local entities as well as the State.  The Perryman Group estimates that in 2011, counties, cities, and school districts in the region will receive some $730.6 million in additional fiscal revenues due to the Barnett Shale and related activity. 

The State will likely receive another $911.8 million, for a total gain in local and State taxes of an estimated $1.6 billion. 

Over the entire 2001-2011 period, The Perryman Group estimates that local taxing entities received an additional $5.3 billion in tax receipts, with another $5.8 billion to the State. 

It would seem to most reasonable and rational people that encouraging this would be the smartest and one of the most effective ways to help the economy recover.

But apparently that’s just not the priority – at least when it comes up against the political agenda pushing the myth of instant green energy if we’ll just pour more money into it.

So, instead we get this:

Washington keeps "sticking a regulatory boot at our necks and then turns around and asks: ‘Why aren’t you creating more jobs,’" he says. He roils at the Interior Department delays of months and sometimes years to get permits for drilling. "These delays kill projects," he says. Even the Securities and Exchange Commission is now tightening the screws on the oil industry, requiring companies like Continental to report their production and federal royalties on thousands of individual leases under the Sarbanes-Oxley accounting rules. "I could go to jail because a local operator misreported the production in the field," he says.

The White House proposal to raise $40 billion of taxes on oil and gas—by excluding those industries from credits that go to all domestic manufacturers—is also a major hindrance to exploration and drilling. "That just stops the drilling," Mr. Hamm believes. "I’ve seen these things come about before, like [Jimmy] Carter’s windfall profits tax." He says America’s rig count on active wells went from 4,500 to less than 55 in a matter of months. "That was a dumb idea. Thank God, Reagan got rid of that."

A few months ago the Obama Justice Department brought charges against Continental and six other oil companies in North Dakota for causing the death of 28 migratory birds, in violation of the Migratory Bird Act. Continental’s crime was killing one bird "the size of a sparrow" in its oil pits. The charges carry criminal penalties of up to six months in jail. "It’s not even a rare bird. There’re jillions of them," he explains. He says that "people in North Dakota are really outraged by these legal actions," which he views as "completely discriminatory" because the feds have rarely if ever prosecuted the Obama administration’s beloved wind industry, which kills hundreds of thousands of birds each year.

Continental pleaded not guilty to the charges last week in federal court. For Mr. Hamm the whole incident is tantamount to harassment. "This shouldn’t happen in America," he says. To him the case is further proof that Washington "is out to get us."

And everything we’ve seen seems to agree with Hamm’s assessment.   He’s completely right about the wind power point.  In fact, the California condor, which was finally removed from the endangered species list, is probably going to end up going back on because so many have been killed by wind mills.  Not a peep from the Feds.

The government floods green energy—a niche market that supplies 2.5% of our energy needs—with billions of dollars of subsidies a year. "Wind isn’t commercially feasible with natural gas prices below $6" per thousand cubic feet, notes Mr. Hamm. Right now its price is below $4. This may explain the administration’s hostility to the fossil-fuel renaissance.

This administration’s policies are simply absurd to say the least.

We have the means, the technology and the will to exploit these natural resources.  They will provide millions of jobs (both direct and indirect) – good, high paying jobs.  That also means increased revenue at all levels of government, not to mention more and more energy security.

Mr. Hamm calculates that if Washington would allow more drilling permits for oil and natural gas on federal lands and federal waters, "I truly believe the federal government could over time raise $18 trillion in royalties." That’s more than the U.S. national debt, I say. He smiles.

Even if that’s only half true, what’s not to like or want, especially now in our current economic situation?

I have no idea …. ask President Obama.

~McQ

Twitter: @McQandO

Anyone–who is the number 3 oil producer in the world?

This may surprise you, but it is the US.  In fact, it probably does surprise you,  given all the whining about our dependence on foreign oil.  You’d think that we were a poor nation when it comes to petroleum resources and the amount we import.

Quite the contrary.  And you’d think that it would be in the best interests of the US to exploit its resources to a) give us a larger percentage of secure oil and b) employ oodles and bunches of Americans in an industry that has some pretty good and high paying jobs.

You’d think.

First the news:

The study released Thursday by the National Petroleum Council, a collection of industry, academic, government and other officials convened by the secretary of energy, touted how advanced technology has unlocked vast formations of natural gas previously deemed uneconomic to tap.

But the report also said the same drilling and production techniques that opened up shale gas – combined with success in the deep-water Gulf of Mexico, the Canadian oil sands and even surges in conventional oil onshore – are improving the nation’s potential to be more self-reliant for oil, according to the report.

"Contrary to conventional wisdom the North American oil resource base also could provide substantial supply for decades ahead," the report said.

FYI, this isn’t just some industry group turning out reports that favor drilling. 

The National Petroleum Council, a collection of industry, academic, government and other officials, convenes several times a year to gather information, give advice and issue reports on topics for the secretary of energy. The most recent report was a 2007 study on global energy supply and demand.

In 2009 Energy Secretary Steven Chu asked the group to look at U.S. natural gas and oil resources based on four concepts: economic prosperity, environmental sustainability, energy security and prudent development.

Optimistically, the Council believes that the US and Canada combined could produce 22.5 million barrels a day when the new resources are added in.  Secure oil.

And, if we’d just get to work and try to tap these assets, Goldman Sachs believes we’ll surpass Russia and Saudi Arabia as the largest oil producer in the world by 2017:

And earlier this month, Goldman Sachs said in a note to investors it expects the U.S. – now the No. 3 oil producer behind Saudi Arabia and Russia – to take the top spot by 2017.

This, given the current economic (and political) conditions, should be a no-brainer, shouldn’t it?

Well shouldn’t it?

~McQ

Twitter: @McQandO

Employment: Why “government spending” should be shelved in favor of encouraging private investment

In macro terms its really fairly simple.  We have always come out of busts with booms.  Wondering what the next boom is going to be and how to help it launch itself is where government should be looking and trying to act  – not at deficit funding government make work projects and future energy schemes still some decades from reality.

For instance – a little look into the not to distant future and a scenario that would help us in both the balance of trade and employment, arenas (the latter almost immediately).

But also, we will help to satisfy burgeoning demand for petroleum in Asia, South America and Africa. Yes, the US is an oil importer. But if we import less, that will help to satisfy world demand just as much as if a new exporter appeared on the market. If we import a billion barrels a year (2.74 million barrels a day) less, at current prices that works out to $100 billion off of our huge trade deficit. This could also be a huge engine of job growth. We now have about 2,000 rigs drilling, and more are being added all the time. For each rig there are the roughnecks, the service companies, the drilling pipe and casing producers, the local service providers, etc. It is big business, and growing fast.

Fortunately, we have lots of places to drill, in various shale formations around the country. (It’s not “shale oil” in the classic sense, better to call it, “shale associated oil”). For those who think that Yankee ingenuity is a thing of the past, just look at our oil and gas industry. It serves as a powerful testament to the power of the free enterprise system that a great many people chipping away at the same problem can come up with creative new ways of extracting oil from the earth that a centralized government program of oil production would never (and has never) originated. You don’t see these new drilling techniques coming from Russia, which is still sadly statist in its efforts to exploit natural resources.

We have the resources, we could be exploiting them now (relatively speaking) and have them benefit our economy while we do the pie-in-the-sky energy research the Democrats think is the panacea to all our problems.  I’ve never understood their insistence on ‘either/or’ in that regard.  Why can’t we do both simultaneously – which seems both logical and would help do exactly what they claim they want – employ Americans. 

Timothy Siegel’s point about innovation is well taken as well.  One of the reasons we’re moving past the peak oil predictions of the past is because of innovation from private oil companies that is allowing them to extract harder to reach and exploit oil and gas at a reasonable price.   We, as a nation, should be encouraging that instead of doing everything in our power to cripple such innovation.

Instead we get solutions like those below from the left.  Government should spend money when one of the greatest engines for economic revival is left sitting at idle while the administration figures out how to get more sugar in its gas tank.

It’s freakin’ nuts.

~McQ

Twitter: @McQandO

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The Obama Administration’s war on American petroleum

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.

~McQ

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Jobs, Jobs, Jobs …

Or not.

What is something you probably shouldn’t do if you want to see an industry “save or create” jobs?  

Increase their costs?

U.S. oil and natural gas producing companies should not receive federal subsidies in the form of tax breaks because their businesses contribute to global warming, U.S. Treasury Secretary Timothy Geithner told Congress on Wednesday.

It was one of the sharpest attacks yet on the oil and gas industry by a top Obama administration official, reinforcing the White House stance that new U.S. energy policy will focus on promoting renewable energy sources like wind and solar power and rely less on traditional fossil fuels like oil as America tackles climate change. 

Got that? They shouldn’t get tax breaks because they “contribute to global warming”. Freakin’ incredible. An ideological reason given to deny tax breaks. Here’s government again picking winners and losers.

The Obama administration’s budget would levy an excise tax on oil and natural gas produced in the Gulf of Mexico, raising $5.3 billion in revenue from 2011 to 2019.

And in a time of financial crisis, that cost will be passed on to whom?

Obama’s budget would also place a $4 per acre annual fee on energy leases in the Gulf that are designated as nonproducing. The budget proposal projects the fee would generate $1.2 billion from 2010 to 2019.

Of course, they’re talking millions of acres out there. As Sen. Cornyn points out, it won’t be the ExxonMobile’s or the Chevrons which will be hurt by this:

Senator John Cornyn of Texas criticized the tax increases, saying they would hurt independent energy companies that provide a large share of U.S. oil and gas supplies.

“My view is that higher taxes on small and independent producers here in America will make us more dependent on imported oil and gas while we transition to cleaner energy alternatives, a goal we all share,” said Cornyn. “And it will also hurt job retention and job creation in the energy sector, which provides an awful lot of jobs in this country.”

Pure brilliance.

Yup – it’s all about “saving or creating” jobs – if government approves.

~McQ