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Democrat and Environmentalist Turns Traitor on Drilling for Oil
This is an editorial - and a confession.
I’ve become a Bush Democrat. I’m so convinced, thanks particularly to the Bush years, that the Republican party is on the wrong track fiscally, internationally, environmentally, and socially in terms of judicial appointments that I would vote for a broomstick if it were a Democrat against any Republican for any office. That even includes Charlie Christ and a few other Republicans whom I respect greatly. I just don’t want that party in power any more.
But (you knew there was a “but”) I think the Democrats and the environmentalists are wrong about a key aspect of energy policy, drilling for oil. I think the U.S. needs to drill, drill, drill - everywhere. That is, assuming control by each state of the final decision regarding their respective shores. And in a safe way, to be sure. And only as part of a broader energy policy that includes strong incentives to transition to electric vehicles and produce electricity in clean and renewable ways. And I would add a windfall profits tax on excess oil company profits too, as I discussed a few days ago.
The main reason the Democrats are wrong about drilling is actually the central argument that they themselves make: that it will not produce oil for ten years. But, hey guys and gals, that’s exactly when we are REALLY going to need it. Maybe a little earlier. But believe me in ten years oil will be well over $500 a barrel - maybe $1,000 a barrel - and scarcer than you can imagine. We will have stopped driving not only Hummers but even light pick-up trucks, except when totally necessary. We will no longer be profligate users of oil. We’ll be driving small cars and electric cars, taking public transportation, car-pooling, and adopting all sorts of good habits.
And still the price of oil will be sky high because the Chinese and Indians and Russians and Saudis will all have six times as many cars on their roads as they do now. And the Mexicans will not be exporting any oil - in fact they will need to import it. Only the Russians, the Canadians, and some OPECers (like the Saudis but not the Iranians) will be exporting oil, and not nearly as much as they do now. (And the Brazilians will be a bright spot too).
If oil could be delivered in just a few years from newly authorized U.S. drilling offshore and in ANWR (where only very wealthy people could ever afford to visit- although hardly anyone ever does), I’d be opposed to it. We do not need another “hit” of oil while we are still addicted to it, as Tom Friedman argued in today’s New York Times. But in ten years the addiction will be over. We will have made the transition to an electric economy. And we will never go back because renewable electricity from wind and concentrating solar thermal plants and other sources will be so much safer, cleaner and cheaper than the oil to which we are now addicted.
This suggests that Tom Friedman was wrong today to say that drilling now will feed our oil addiction. But his central point was right, that Congress needs to re-authorize incentives for producing alternatives to oil. His drilling point was wrong only because he apparently does not understand enough about the timing of peak oil, the rapid transition, and the availability of the oil we would get if we began now to authorize more off-shore and ANWR drilling now. But Friedman is no more wrong on drilling than the Democrats who actually know it will be ten years before the oil flows and still oppose it.
What a really smart Democratic party would do at this point is trade off new drilling rights for a windfall tax on the unnecessarily high part of oil profits and then re-distribute the tax revenue to consumers and thereby save our economy from the consumer meltdown that is now in progress. Just like the Berlusconi government is doing in Italy.
I’ve been an Obama fan from the start because I think brains and judgement matter and I think he’s got more of both than anyone else. Of course, you can’t use your brains too much during an election campaign other than to get elected. (Can you imagine if Bill Clinton had campaigned on welfare reform in 1992? He’d have been murdered by his own party!) But I am hoping that if Obama can get elected, he’ll manage to push the Democrats toward more rational energy policies - like increased drilling for oil off the Outer Continental Shelf and ANWR - that might actually help the country. When we need it. Not now, but ten years from now.
Tags: peak oil energy investsments
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15 responses so far ↓
1 mark // Jun 22, 2008 at 6:32 pm
I suppose the concept of buying time now escapes you, we need to develop alternatives before the economy totally collapses under the inflationary effects of higher oil prices.
Windfall taxes will accomplish the desired effects of lower demand, via higher prices and economic slowdown. Also, reduce remaining incentive for major oil companies to escape liquidation status. Oh yes, maybe higher prices would encourage retribution attitudes to change.
Right, beat on the oil companies in a communistic manner and strive for prosperity………..
2 mark // Jun 22, 2008 at 6:53 pm
Socialism is supposed to be the land of the free and free speech, but watch them tax us out of our freedoms, much like the British………..
3 mark dibble // Jun 23, 2008 at 5:04 am
I think you have fallen under the paradigm of change to find a 53% tax rate………..
4 k. Vora // Jun 23, 2008 at 6:32 am
Sorry, Jim! There is no Bush Democrat! Democratic Party is infested with closet Republicans!! I am an Independent with socially liberal and financially conservative views. I don’t care about who sleeps with who as long as it is with consent, and no minors or payments are included. And, I do not want anybody to pickpocket me.
There are nearly 45 million acres already leased for exploration, but they sit idle. Why? There are no more rigs or manpower to explore them. Nor there is any oil shortage. It is far cheaper to build refineries to process existing but untapped heavy oil than explore 15,000 feet deep. There is plenty of heavy oil, and by one estimate, for 200 years.
This offshore exploration nonsense is to grandfather the rights at lucrative deals, or picking our pockets. What we need is a competition to oil (fossil fuels). We need to fund all alternatives, including those bugs that convert garbage into fuel.
Under Bush administration, we as a nation, are becoming poor everyday.
K. Vora
5 mark dibble // Jun 23, 2008 at 7:48 am
Why did the Saudis increase oil in such a small amount. Either they have plenty of oil and wish to keep prices low so they can outlive alternatives, or they want to maximize returns over measured time while economies liquidate or possibly convert.
6 mark dibble // Jun 23, 2008 at 8:43 am
Wouldn’t spare capacity be classified as hoarding? At 4 mmb/d depletion and increased demand for 1 year, 700 mb/d increase will hardly touch needed oil?
7 Barkley // Jun 23, 2008 at 11:48 am
” But I am hoping that if Obama can get elected . . . ”
Hope is not a plan.
8 Charles // Jun 23, 2008 at 1:45 pm
Jim, I’m shocked you endorse Obama. The only logical reason I can think of for an energy man like yourself to endorse Obama would be because he may let a few of the majors have a few more leases. (This is evident as his Exxon-is-evil ads were pulled off T.V. the day after Exxon gave him a huge sum of money as a campaign contribution. I find it funny that Obama repeatedly boasts of not taking money from major corporations or the oil companies but no one seemed to notice when the Exxon ads were pulled from T.V. immediately as oppose to being run 46 times a day on CNBC and other major news networks.) You cannot actually believe he will let anyone drill in ANWR, can you? You should know that his idea to tax the majors more heavily will only increase the prices of energy for all of us consumers. (Corporate income taxes do not exist, they are just passed on to consumers almost in full.) On top of all that he is completely against nuke energy which will be an impossible hurdle to overcome if we were to move more towards a national electrical grid, something I know you are a huge fan of. Obama would be the worst thing that could happen to energy consumers in this country short of the strategic petroleum reserve catching on fire.
In response to K. Vora, Bush has actually saved us money by filling the STR, every barrell the U.S. gov’t has bought has been a profit for this nation. If we hadn’t stopped filling the STR, we will still be making back some of the money we lose every single day overseas because of poor policy planning on both sides of the asile, not just the democratic side.
9 mekats // Jun 23, 2008 at 6:50 pm
Jim, sadly I think you are engaging in fanciful thinking re Obama. You’re confusing education with brains. I have not seen or heard many references to capitalism being the solution to all the problems he cites. Instead it is more government programs. And taking economic lessons from the Italian government is not something I’d recommend ever.
10 K. Vora // Jun 23, 2008 at 7:33 pm
Charles, compute the numbers and tell us how many millions Bush saved by STR. By the way, for each trillion dollars spent one needs 7.6 Billon barrels of oil at $130 a barrel. And how many days of oil Bush purchased in his near eight years in the office? By the way, was it not interfering in the free market? Oil in STR is oil out of the market.
I hope you have seen the oil price charts showing oil taking off AFTER the fall of Saddam from ~$28 to $135+ and no end in sight. All this is blamed on India and China demand.
Finally, why don’t you address the 45 millions acres already leased that are not explored for anything.
Bush Cheney & Co. are snake oil salesmen, and have taken the country for a ride toward an abyss.
11 Charles // Jun 23, 2008 at 9:59 pm
K. Vora,
You bring up points that are blatantly incorrect. Firstly there are not 45 million acres leased offshore in total, the number is closer to 41.9 million of which over 10 million is being used. On top of that, environmentalists make it so that permits (not the same thing as leases) take up to 5 fives to obtain. Also, when a company buys these leases they generally buy them in blocks and they may only need to build one well in order to extract the oil over a large area of land.
In terms of the STR, even though oil is taken off the market we at least our hoarding for our countries personal good, I for one think this is a worthwhile sacrifice to make and its also a great investment. I’m not sure at what price all of the crude was purchased but I can tell you that every single barrel is a profit for the United States. The reason we have to send billions of dollars over seas is because the left hasn’t allowed us to drill in ANWR. Before you start with the “it takes 10 years for oil to come to the market” the point is not about lowering the price of oil but instead about keep U.S. dollars in the United States. Even if it doesn’t lower the price (which it probably would) we would be keeping $600-700 billion U.S. dollars in America.
Going into Iraq has actually saved us from even higher oil prices because Bush has installed many of the majors that will allow the Iraqi’s to potentially their production within 5 years. The short term has caused people to not think rationally when it comes to the longer term good.
We’ll continue this later.
12 K. Vora // Jun 23, 2008 at 10:38 pm
Charles, be specific – cite real numbers in your posts. We have had arm-waving for eight years (remember WMD?).
With your logic, why not just invade Saudi Arabia and screw them Arabs! Take what we need! Saudis are fat and have no war experience, besides they are the ones who have been funding Wasabis who train young kids to be future terrorists. Besides, we already are there and cost is so small!!! This will also shut up Iran!!!!
If Iraq oil were to be in market, it is oil in market. Whether it is sold to US or not. It is a SUPPLY. And, world oil price will be down. But Iraq oil is nowhere to be found.
Have you ever seen a map of new wells being placed called infilling by many oil companies?
I say 45 million acres and you say 42 million acres. By your account, 10 millions acres are being used. Well, go explore the remaining 35 millions of acres before asking for more!
Your $600~$700 billions from ANWR will keep us in Iraq may be three more years as Iraq cost is soon to exceed $200 Billions per year, and McCain et. al. would like to stay there forever (100 years or more) without even thinking that even Iraq will run out of oil!
What Iraq war has done is that any country can render anybody without ever admitting, and without ever bringing them on trial, while shoving light pens in their behind. Look at what is going on Zimbabwe and you will see Bush doctrine operating in full, and there is nothing we can do. As you admit indirectly that war was about taking oil from Iraq, and Mugabe sees it the same way, you see, he claims he was appointed – oops anointed by God.
13 Charles // Jun 24, 2008 at 5:36 am
You missed the point on the leasing contracts, those statistics are flawed becasue they only count leases with rigs on them. There can be leases adjacent to the ones with the rigs on them that are still being used because the rig is extracting oil or gas from that lease also. The rig doesn’t have to be directly on top of the land for the land to be in use. Of course there is no way to know the real statistics on this number but I would highly doubt with the current price of oil and gas that E&P companies are doing anything short of everything they can to take advantage of the situation. Part of the problem comes from a gross amount of underfunding for energy in this country that has been going on for at least 25 years, probably much longer.
Saddam may not have had a nuke but he did gas his own people multiple times in the 1990s which to me still counts as chemical weapons. The Taliban also had similar crimes against their people.
On top of that its not like Bush is stealing their oil, he is just putting the majors in talks with the Iraqi oil minister to speed up the process, these barrels will go to the open market once they come online.
Saying Iraqi oil is no where to be found is a blatant lie. Check out this link.
http://en.wikipedia.org/wiki/Oil_reserves
I have seen estimates higher than this, but 115 billion barrels seems like more than “nowhere to be found.”
Also we won’t save $600B-$700B annual from ANWR, that is just the amount of money that we send overseas each year from importing oil. If we got our act together in terms of E&P and used more natural gas we could probably bring our import levels down at least 30% from where they currently are, if not more.
If you are so worried about the $200B from Iraq, why wouldn’t you support new leases? New leases will cause E&P companies to give huge sums of money to the government for the bids and in your mind they wouldn’t even use the acerage anyways! With the current price of oil and natural gas I’m sure these revenues from leases would be able to offset a large portion of that war bill that is set to start declining in the near future.
14 mark // Jun 24, 2008 at 7:00 am
It’s capitalism, don’t you think that if a profit in drilling 30,000 acres was possible it would be done. I think directional drilling would legally have to account for offset acerage.
It is reported that the 1-mmb/d oil surplus is really sour crude, of which, bids are hard to come by. This is not a security blanket.
15 K. Vora // Jun 24, 2008 at 9:46 am
Charles, the reality is that these leases remain unexplored, because we simply do not have rigs, manpower, or even pipeline infra-structure and refineries. To the best of my knowledge, industry has to invest in them, and they have not. Why? Because, there are cheaper alternatives, like importing oil.
Honestly, get real. Modern warfare is all about WMDs, 500 ~ 5000 lbs bombs kill the same way as any other. Shock and awe kill the same way. Sure it is a horrific death by gas, but so it is by cluster bombs, napalms, spent uranium bullets, or by sticks and iron bars in Zimbabwe. Many in military think gassing is better as it does not destroy infrastructure, like the neutron bombs that were being researched during Carter. It is like herbicide for people we don’t like at the moment.
By the way, Saddam gassed nearly 15 years before he was shocked and awed. International community just sat there. Gassing of his people was another lame excuse like WMD for the snake oil salesmen. I also find it very difficult to understand when conservatives become bleeding heart for the events happened 15 years ago and did nothing then.
It is estimated that the US has up to 2 TRILLION barrel equivalent in fossil fuels to be exploited. But what is in the ground is what is in the ground; same for Iraq. Today, Iraq has no significant oil in the market, that is all that counts.
If you are not worried about $200 billions for a war forever, why not spend the same amount here on infrastructures, alternative energy, better local transport, incentives for fuel efficient vehicles.
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