Please don’t buy the offshore drilling lie. New offshore drilling will not, even if it produces, provide any gas or oil for use by the market for at least ten years. Lifting the ban on off-shore drilling may make people feel better, temporarily, may even make gas prices go down a few cents right now; but none of that solves the real problem: our energy independence coupled with environmental responsibility.
Republicans calling for lifting the congressional ban are resorting to the basest sort of trickery. Scaring the public into thinking the Democrats are not interested in our economic welfare and what high gas prices are costing us.
But here are some facts:
There are at least 58 million acres of drillable land in the United States right now. Much of it has capped wells that could be re-opened in the search for new oil.
The Energy Department itself has stated that offshore drilling will take years to produce.
We now export 9% of the oil we produce We do that because oil companies can make more money exporting it than selling it here. If we were to keep that 9% it could make a difference in current oil prices.
Everyone knows by now that Exxon’s (which produces only 3% of the world’s oil) profits for the last quarter broke all records. According to the Huffington Post, Exxon ‘s “earnings rose 68% to $10.01 billion from $5.95 billion a year ago (with) the main driver…record crude prices, partially offset by lower sales volumes and higher operating costs.”
Analysts will tell you that net profit isn’t the same as profit margin, and they’re right. But in this time of great need and skyrocketing costs, it would behoove the oil companies to cut the profit margin and plunge some of those profit dollars into investing in new energy sources. T. Boone Pickens, despite his own vested interest in natural gas, of which he owns an enormous amount, can’t be the only oil tycoon willing to invest in something other than oil..
This current crisis is partially manufactured by oil speculators and partly a result of America (and the world’s) greed for oil, when we could have and should have been going gangbusters on developing real, cost-efficient energy sources for the past thirty years, since the last oil crisis.
Both Obama and McCain have come out with energy “solutions.” McCain’s, at first, was to eliminate the ban on off-shore drilling. Obama disagreed. He has since said that he might support some offshore drilling (but no drilling in ANWR) if the other parts of a comprehensive energy policy could receive bipartisan support and something could be done sooner rather than later. Yesterday, McCain accused Obama of flip-flopping. That same day McCain said that he might agree to a compromise, too. I, for one, don’t think Obama flip-flopped because I like the idea of a politician who mixes realism with idealism, i.e., “this is what I would like to do, but this is what is possible right now.” And I like the idea of whoever is running for president being honest about it the need to compromise.
Article comments
— go to most recent comments1 - Dave Nalle
Very impassioned, but replete with factual errors.
Lifting the offshore drilling ban is not 'trickery' as you suggest, but good sense. We need oil in the transitional period while we develop other alternatives. The standard democrat line that they should open old wells first is the actual trickery. Those old wells and shale reserves are very expensive to exploit and hold a very limited and unpredictable amount of oil. It sounds like a lot of acreage, but that's not what oil is actually measured in. It's like saying you can't have a new cup of coffee until you've licked the dried foam off of the rim of your old cup. It makes no sense.
As for the increase in Exxon's earnings, let's consider what it would do for consumers if we took half their profits away. Take that $5 billion and let's divide it up between all the customers on a per-gallon basis. With Exxon selling about 22 trillion gallons of oil per year by my calculation and assuming your 3% figure is correct, that would give customers back 2/100ths of a cent per gallon. Woohee! I'm going to be rich.
If that doesn't demonstrate that this 'excess' profit is solely a function of sales volume on a tiny profit margin, I don't know what will hammer that into people thick, socialist skulls.
As for 9% of our oil being sent overseas, that's nice. And how exactly are you planning on stopping that export? Planning to move the state of Alaska closer to New York? Oil is a fungible resource. It doesn't matter where it comes from or who buys it, it's all part of one great resource pool.
It really scares me to think that people who share the abyssmal, ideologically self-righteous ignorance of economics and the oil industry displayed in this article and in the rantings of many others on the left, might have any kind of role in setting our energy policy.
The reality is very simple. We need access to oil which is plentiful, faster to get to and cheaper to extract to cover our short term needs. That means offshore drilling in new but proven fields. That will buy us the time we need to develop improved technology, a need which is not going to go away just because we open up more oilfields. We also need a government policy which will encourage lower domestic consumption and the development of better energy alternatives in the private sector. We need ALL of this in one bill and we need to pass it now, not after the election as Nancy Pelosi would prefer.
Dave
2 - Baritone
If you read Dave's latest post and a number of his comments, our current energy crisis is owing almost wholly to the Democrats and to Nancy Pelosi in particular. She is one evil and incredibly powerful woman.
That she ended the current session of the House and sent them on to vacation is seen by Dave and most Republicans as a heinous solely political act putting every American at peril.
The fact is that Rep. Pelosi was not going to allow Republicans to ramrod legislation supporting off-shore and other drilling without adequate consideration. All such legislation would accomplish would be, perhaps a short-term knee jerk reaction in the oil futures markets. Given the long term in which it would take to realize ANY new domestic oil and the complications which are likely to ensue, the markets would likely return to their record highs in short order. Meanwhile the anticipation of new crude oil sources would have the effect of slowing the development of alternative energy sources.
Or you could just sit back and blame Nancy Pelosi.
B
3 - Dave Nalle
If you read Dave's latest post and a number of his comments, our current energy crisis is owing almost wholly to the Democrats and to Nancy Pelosi in particular. She is one evil and incredibly powerful woman.
This is not actually anything like what I said. I never ascribed the crisis itself to the democrats. They're just taking advantage of a situation which past legislatures and administrations have irresponsibly allowed to develop.
That she ended the current session of the House and sent them on to vacation is seen by Dave and most Republicans as a heinous solely political act putting every American at peril.
Did you see her on Meet the Press yesterday? She pretty much admitted it.
The fact is that Rep. Pelosi was not going to allow Republicans to ramrod legislation supporting off-shore and other drilling without adequate consideration.
They've had months to work on it, and the current proposed bills include both more drilling for the short term and incentives for long term alternative energy development. They're also bipartisan proposals with plenty of democrats backing them.
Dave
4 - Lisa Solod Warren
Nowhere did I suggest that Exxon return its profits to the people.
I also ask that you refrain from calling me and anyone else who shares the opinion presented in the above editorial "self righteously ignorant"of economics or a "socialist." I,for one, am neither.
I suggested a much broader economic policy, rather than relying on just opening new fields in places that will cause great environmental damage. I talk about the long term timetable of getting oil that way and how it will solve none of our problems now. I know about the existing fields and their problems but I still support our trying to work in them, with them, before we begin to drill elsewhere, where results will not be seen for at least a decade.
Bob Herbert's column in today's New York Times is a good place to start reading. Conservation and incentives for new technology seem to make much more sense than just digging for oil everywhere we wish.
5 - Baritone
Dave,
On a past thread you went out of your way to blame Democrats for virtually ALL of our current energy woes going back 30 years. You made a case for Democrats always being the foot draggers and generally the bad guys.
You ascribe some evil motives on the part of Pelosi. She is in a position much closer to what is actually going on in Congress than you or any of us here. You really have no idea what prompted her to shut things down. Because it suits you, you assume that her motives were and are ONLY political, or to assert her power as Speaker.
B
6 - Oil Baron
"It really scares me to think that people who share the abyssmal, ideologically self-righteous ignorance of economics and the oil industry" don't really understand the issue..."
Both Democrats and Republicans who represent the special interests who control US foreign policy are responsible for $4 gasoline.
For decades, American economics and the oil industry have been hijacked by the special interests which control US foreign policy.
7 - The Obnoxious American
Dave is right on here (sorry lisa and btone). Read the following WSJ article titled "Pelosi's Energy Stonewall" - THIS is the type of democracy you'd favor? Wake up fellas.
Here are a few facts to chew on.
The first great sham of the Dem energy policy:
Yes, it may take 7-10 years for new drilling to actually yield refinable oil. Had we started this 7-10 years ago, perhaps we wouldn't be in this position now.
But MUCH more importantly, even if it takes 7 to 10 years to get any actual oil from domestic sources, the impacts of us merely changing our tune on domestic supply WOULD HAVE AN IMMEDIATE EFFECT ON PRICES.
86 mil barrels per day demand, 85 mil available in supply. Speculators can bid the prices higher because they know no new supply is coming online, yet demand will only grow. In terms of speculative investment, this is a no-brainer, of course speculators will buy futures at a higher price, because its pretty clear the price will go higher, and what do you know, it does in fact go higher.
America may be sitting (and adjacent to) on as much as 40% of the world's oil supply. If we made the decision to actually use that supply, speculators in the market would have a more difficult time bidding future prices up. They'd know that at some point demand will be quelled with more supply originating from the US. Future prices, and quickly actual prices, will go down.
In terms of existing leases, the next great sham in the Dem energy Policy
Oil drilling isn't like back in the Beverly Hillbilly days, oil companies spend lots of money on exploration. They may have a lease of land to drill on, that does not mean that there is oil to be raised from that land, nor does it mean that even if there is oil, that it can be raised in a cost effective fashion.
The idea that Oil companies are just sitting on supply in order to gain even more land to drill on is not only absurd and disingenuous, but I am surprised Lisa, as a Blog Critic, that you'd continue that faulty line of reasoning. Just a little bit of research in your articles please?
Third great sham of dems energy policy - windfall taxes
This has been covered here already in other articles, but I'll some it up in one good question - how will taxing the Oil industry lower what I pay at the pump? Right, it wont.
Fourth great sham of dems energy policy - Alternative technology
No matter how much we wish it were so, there simply is no alternative fuel that will keep our trucks delivering food and supplies, keep our cars delivering us to work, or keep our planes in the air. As much as it is laudable to look for alternative energies, and as much as I agree that we should invest more in such efforts as a country, merely doing that will NOT resolve the issue anytime soon, and perhaps will take even longer than drilling domestically would.
Dems are all wrong on energy. Sorry but it's true. The American people as a whole are not stupid and they aren't buying it, which is precisely why Obama changed his tune on drilling. At least Obama can see the obvious, even if his hordes of fans cannot.
8 - bliffle
It would be very bad business for the US to open OCS for drilling now under the current oil lease contracts. As it is the USA is losing $1.2billion/year in royalties that they have historically received due to an "oversight" in those contracts. Those "oversight" losses will total at least $60billion as the contracts run out.
It is bad business to allocate OCS under these disadvantageous terms. In fact, a normal business would use this opportunity to cajole rectification of existing royalty terms from it's customer.
The oil companies are not actually interested in drilling OCS right now , partly because USA oil consumption has been falling all year due to US consumers voluntarily reducing consumption and exercising conservation measures. Some communities are seeing gasoline price drops of about 80cents already.
But the oil companies want to get those OCS contracts because they will be under the existing unfavorable royalties. Then they will simply hold the land in reserve for the future. They have no desire to start immediate drilling, so it will not happen, and the horizon for the tiny relief of OCS oil is pushed out further.
From the USA standpoint, OCS drilling is BAD BUSINESS.
We shouldn't panic hastily into OCS drilling with a solution that we cannot initiate, that will deliver only small returns, and is many years in the future. It is bad business to make a hasty decision on a long range plan.
9 - Andy Marsh
All i keep seeing from the left is more BS excuses for not drilling and what's the answer of the day for how to reduce our energy costs? Check your tire pressure...just great.
10 - The Obnoxious American
The fact is, the left WANTS higher gas prices, because the higher gas prices are, the better it is for the left's alternative energy and environmental policies.
As per the WSJ link (I'd ask any fair minded American to read that important article), lower gas prices keep the question of fossil fuels out of the minds of most. The left truly believes higher gas prices will necessitate change in our current energy scheme and thus they want to keep prices high or even higher.
To their mind, lower gas prices are a problem, because it makes consumers indifferent, and more likely to buy SUVs and the like. Perhaps the dems are right about that, after all this is exactly what happened after oil prices dropped in the 70s.
That said, being right in terms of indifference does not mean we should do nothing about gas prices. Higher gas prices has an impact elsewhere too - the economy - everything costs more because everything costs more to make and to ship.
So despite claims of caring about the average guy, this is a case where the left seems to put the needs of environmentalists above the needs of the average joe, and even the needs of the American economy in general. For shame!
11 - Dan Miller
Here is an interesting development,
So, now that it is too late to vote on anything, those Democrats who would like to appease some of the stupid energy wasteful folks back home can support domestic drilling, if they really feel as though they must.
The mirrors are pretty obvious, but I'm not so sure about the smoke, which as we all know causes global warming.
Dan
12 - Dave Nalle
You know, Bush has the authority to call Congress back from recess and keep them in DC until they pass a comprehensive energy bill.
dave
13 - Dan Miller
Dave,
Nice idea, though, and it might put a few more stRight. However, according to the LA Times, he is not going to do that:
rains on the Congressional blue dress.Dan
14 - bliffle
Andy, like McCain, is scornful:"Check your tire pressure...just great."
Actually, you have MORE to gain from checking your tire pressure than from drilling OCS. the Department of Energy Information (dei.gov) says that correct tire pressure can lower your gas cost about 3%, which amounts to 12cents/gallon today!
As an old time race car mechanic, I also advise you to fill your tires with nitrogen instead of atmospheric air. That's right, nitrogen. Ask the NASCAR guys about it.
Nitrogen dissipates heat better, excludes water (which can unbalance your wheels) and since the Nitrogen molecules are so much bigger than air (on average) your tires stay right for longer.
I think there's a Nitrogen Institute on the web that explains it more.
You can fillup from a standard Nitrogen bottle available at your local gas dealer (plus a valve apparatus), or you can just go to Costco. Most Costco stores have a Nitrogen generator and will fill you up for about $40.
But lacking Nitrogen, your next best bet is just get a $15 12v. tire pump at the autostore and use it to keep your tire pressures correct.
What could be easier?
15 - Andy Marsh
No offense bliffle, but you really don't seem like a NASCAR kinda guy.
I realise that keeping tire pressure right saves gas mileage, it also saves the tires. I check mine every time I take a trip of any length. But it's surely not the answer to our energy needs.
We need these A-holes in DC to choose all of the above. We need alternatives, wind, solar, geothermal, nuclear, hydro-electric and hydrogen more than all of them as far as I'm concerned and yeah, we need to drill for more oil.
I live in a coast state, so it would affect me more than a lot of people that are bitching about it. The local Sierra Club pres put a big editorial in the paper a couple of weeks ago. One of her big excuses for not wanting to drill off the coast of VA is because it would be detrimental to national security. LIke the Sierra Club ever gave a fuck about national security. She says because the VA coast is a big navy training area that oil rigs would get in the way, but in the next breath she says we could put windmills out there! I say, if you put oil rigs off this coast, they're pretty well protected, with the monster naval presence we have here.
And I'll never forget the first time I drove through Long Beach. Early in the evening and right off the shore I thought I saw these really cool condos on their own little island. I found out later that they were actually oil rigs. And if you didn't know it, you wouldn't know it to look at them.
16 - bliffle
The NASCAR reference was for the benefit of stock car fans, I raced in SCCA in the 50s. But EVERY competent race mechanic knows about Nitrogen.
All commercial airplanes use nitrogen in the tires. I don't know if it's required for GA.
Actually, proper tire pressure will save you about twice as much money as drilling OCS and ANWR, and you can do it right now, not wait 15 years. Typically, restoring neglected tires to proper pressure saves about 3%, or 12cents per gallon. OCS and ANWR oil will only reduce gas cost by about 6cents per gallon, in 2025, according to the Energy Information Administration.
The oil companies want to get those oil leases NOW under the current royalty plans which are grossly unfavorable to the USA. Then they will just let the fields lie undrilled.
17 - Lisa Solod Warren
From the San Francisco Chronicle, July 22:
Most of the country's estimated offshore reserves - about 75 percent - lie in areas that have been drilled for years or are being opened for exploration. Roughly 48 percent of the nation's estimated reserves, or 41 billion barrels, lie beneath the western and central Gulf of Mexico, where oil companies armed with new drilling technology are pushing into ever deeper water. Another 27 percent of the estimated reserves, or 23.6 billion barrels, are believed to lie off the north coast of Alaska, where the federal government sold oil exploration leases this spring, despite fears that the work would hurt the polar bear population.
18 - The Obnoxious American
Lisa,
Glad to hear that you've finally come around.
I too ensure my tires are inflated properly. In fact, I inflat them to the max. It makes for a slightly more bumpy ride, but it also handles better, and has a small MPG benefit. I really like nitrogen, but I never trust others to inflate my tires to the max, especially when it costs 20 bucks for a nitro inflation.
I also keep my AC on sparingly, use fuel cleaners and religiously change oil and filters (myself) every 3000 miles. I am amazed at how it seems most people do not take care of their cars. And taking your car to jiffy lube is just asking for trouble. I am positive that those guys don't know the different between syn and regular, between 10w30 and 5w30. My old car took 5w30, and I caught jiffy lube putting in 10w30. I had them drop and refill, and then I did my own oil change afterwards (can you say neurotic). Since then I do it myself just to ensure it is done right.
19 - Lisa Solod Warren
Excuse me, OA?
20 - bliffle
Incidentally, NASCAR.com recommends proper inflation to save gas and tires.
If you go to NITROFILL.com you can locate nitrogen vendors. They also have a calculator for yearly savings based on your yearly mileage, etc.
Each tire requires about 40-50 gallons of oil, i.e., about 1 barrel, to manufacture. So you can expect tire prices to zoom upward. If you've been wondering whether to get new tires this might be the right time while the old stock made from low price oil is in inventory. Next year expect tire prices to, maybe, double. That's as big a hit as the yearly gas price increase.
21 - Dr Dreadful
Yes, it may take 7-10 years for new drilling to actually yield refinable oil. Had we started this 7-10 years ago, perhaps we wouldn't be in this position now.
You do realize, don't you, Obnox, that roughly the same thing could be said about alternative fuel research?
We have got to ease off on the oil fixation. Or we'll be back here in another 20 years having the same argument.
22 - Andy Marsh
Doc - you're right, we do need to get off oil, but let's be real, it's not gonna happen any time soon. I mean, come on, how many vehicles are there in this country? How long will it take to trickle down some of those hybrids into used car lots? What percent of the population can afford to go out and convert vehicles to alternative energy?
If our local govt's had done anything right, there'd be more mass transit in this country that was actually worth a damn. But most areas don't have a mass transit system even worth talking aobut!
23 - Dr Dreadful
I know, Andy, that's why I said ease off on the oil. Turning the Gulf of Mexico into a giant waterlogged pincushion doesn't to my mind qualify under that description.
Some of the best manifestations of human ingenuity have been when backs were to the wall - much of the weaponry and technology that came out of World War II comes to mind.
But let's face it - this isn't the 19th century, and the technologies we need aren't going to come from a few eccentric polymaths with time on their hands. They're going to come from big business - and if the oil companies are still preoccupied with scouring the Earth's crust until they're absolutely certain that not a teaspoon of viable oil remains in the ground (and that could well take a hundred years or more), they're not going to be worried shitless about where their future profits are coming from and aren't likely to be doing much to address that.
24 - Dr Dreadful
And your mass transit remark:
Tell me about it...
25 - Andy Marsh
True, I don't see any solutions coming from big oil, even though they profess to be working on it.