Free Markets, Free People

Gulf oil

What do you do when your government flat out lies to you?

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 no only 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. 

~McQ

[ad] Empty ad slot (#1)!