Oil looks to be one of the big election issues for November, and it's really starting to percolate out there. I have been advocating for increased energy production (starting with drilling for oil) for quite some time, among many others on the conservative Right. For a brief but good account of our history of ignoring energy problems, thus creating the mess we're in today, follow this link. I'll come back to this link more later, but let's first set the stage.
The question has been out there for a couple years: how much are Americans willing to pay for a gallon of gas before they get ticked off? Now we know: $4.00. So what does the public think? There is a clear drop in demand as the result of these prices. Recent polls clearly show (here, for example) that Americans are fed up with the nonsense being foisted upon us by Congress in regard to energy. I heard one radio commentator cite a Gallup poll (unfortunately, I couldn't find it online) that said 67% of those polled want the oil companies to start drilling for more oil. In another poll, 80% said they were experiencing hardship from gas prices. Just look at the headlines and the evening news shows - gas prices and oil prices are being discussed all over the place. It's on the public's mind, and it's moving in the direction of more production. Newt Gingrich's American Solutions movement to Drill Here, Drill Now, Pay Less has been signed by well over 1,000,000 signatures in just a couple weeks of being posted online. Expect that number to climb even further as the word spreads even more.
There is clearly a mandate building for Congress to do something about this problem. If you cut through the politispeak, Congress has a number of things they could do to help immediately as well as in the long-term. Don't believe Congress is not at least partially to blame! Investor's Business Daily reports on how it is Congress and environmentalists who have stymied energy exploration, production, and development. One recent excuse Congress is throwing it is that these oil companies have millions of leased acres that they're not using to pump oil. How much water does that hold? None.
Or, how about this from the Institute for Energy Research:When oil companies spend big money leasing land, they are buying access to a great deal of territory, much of which has no oil and gas underfoot. They have to spend still more big money pinpointing the parts of that land where those energy resources are.
All the while, they have to weave their way through a labyrinth of environmental rules that Congress has imposed on them, plus defend themselves against bogus legal attacks from green extremists. Then, even when oil is found, it can take years to prepare to drill.
So when Pelosi and other congressional Democrats claim the oilmen are "sitting" on all that land, under which lies an ocean of crude they are gleefully keeping from consumers, those senators and representatives are lying through their well-sharpened political teeth.
The fact of the matter is that 94% of federal onshore lands remain unleased, while 97% of offshore areas are similarly off-limits to oil exploration.
Or, how about the Wall Street Journal:The Claim: "Increased domestic drilling activity has not led to lower gasoline costs"
This may sound compelling at first, but "drilling activity" has nothing to do with the price at the pump. Supply - or actual energy production - is what influences the price at the pump. While it's true that exploratory and development drilling has increased across the board since 2000, the important fact is that actual domestic energy production has fallen to levels not seen since 1947 during the same period.
The Claim: "Energy companies are not using federal lands already open to energy development"
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 false. If it were true, who wouldn't be on line at the Department of Interior trying to buy an acre or two for themselves?
Unfortunately, there are no guarantees. Oil and gas might be found during the exploration phase of the lease, or it might not. This process, and those that involve satisfying all of the government requirements, defending against frivolous environmental lawsuits, and preparing to drill if energy is found can take a long as a decade.
[U]ntil the actual exploration is complete, a company does not know whether the lease will be productive. If, through exploration, it finds there is no oil or natural gas underneath a lease – or that there is not enough to justify the tremendous investment required to bring it to the surface – the company cuts its losses by moving on to more promising leases. Yet it continues to pay rent on the lease, atop a leasing bonus fee.In addition, if the company does not develop the lease within a certain period of time, it must return it to the federal government, forfeiting all its costs. All during this active exploration and evaluation phase, however, the lease is listed as "nonproducing."
Obviously, companies want to start producing from active fields as soon as possible. However, there are a number of time-consuming steps to be taken before they can do so: Delineation wells must be drilled to size the field, government permits must be obtained, and complex production facilities must be engineered and installed. All this takes considerable time, and during that time, the lease is also listed as "nonproducing."
Because a lease is not producing, critics tag it as "idle" when, in reality, it is typically being actively explored and developed.
In other words, they're at best ignorant, and at worst (much more likely) they're blatant liars trying to deflect blame from themselves. But a cursory look at the facts puts Congress squarely on the hook, along with their accomplices in the environmental loony bin. In fact, the liberal Left is already planning to blunt any efforts at further oil/gas development. Guess what they're going to use? That's right, the polar bear. See how these things all mesh together?
So what do our presidential candidates think, and where do they stand? This is one of the most stark differences between the two, and could be a decisive issue in November. First, Barack Obama. He is living up to his reputation as the most liberal Senator in Washington, a man who never -- literally, NEVER -- breaks from his party's traditional positions. He opposes drilling for oil in ANWR, he opposes drilling off-shore, he opposes development of oil shale in Colorado, oil drilling in North Dakota... He opposes everything that would actually create an increase in energy production. Basically, he feels that these efforts would not produce any noticeable effect in the near future and therefore should not be attempted. I have two problems with this idea. First, we are not only talking about next week and next month - this energy problem will continue to get worse until it gets FIXED. If Bill Clinton hadn't vetoed ANWR in the mid-90's, we'd have 1-1.5 million barrels of oil coming out of there right now, which would have a noticeable effect on current prices. The fact is that he did, and now we're paying for it. What Obama is suggesting is precisely the same stupid logic - who cares about ten years from now, when I'm just dealing with now? In one of his many campaign trail gaffes, he didn't appear to be at all concerned with the price increases, but rather the fact that they happened too quickly. He's said before that Americans are going to have to adjust their standard of living downward, and this appears to be another instance of that. If that doesn't illustrate his elite (i.e. wealthy and out-of-touch) attitude toward the rest of us, I'm not sure what does! The second problem I have is that he is wrong about the immediate effect, but I'll come back to that later. So, we know what he opposes; what does he favor? Taxes and regulation. Obama wants the windfall profits tax on oil companies and policies like CAFE standards and 'green' light bulbs to conserve energy.
The question for Obama: how does any of that increase our energy production? Conservation is fine, but we're a growing population with a growing economy. Just to keep the standard of living we have today, we'd need steadily increasing energy production, so where is that going to come from? The best he has done is throw out some platitudinous ideas about wind farms and alternate energy development over the next 30-50 years, but he has yet to give any details about how he'll accomplish that. This also illustrates how economically illiterate he is: oil prices are governed by the laws of supply and demand, not the wishes of environmentalists and Democrats. He is basically saying that he'll be content to tax Americans into oblivion until he's out of office, and the consequences of more inaction on energy be damned.
The disturbing part is that his party is following along with him. An incredible 37% of Democrats now believe that government should take over the entire oil industry! In fact, two different Democrat members of Congress have actually proposed just that! That's the sort of thing that dictators do (i.e. Hugo Chavez in Venezuela), not duly elected representative governments! This number is a shocking signal that the nanny state -- wanting government to control and 'provide' everything about daily life -- is alive and well in the Democrat constituency.
Barack Obama's energy plan is an exact mirror of what Jimmy Carter did in the 1970s, and that gave us energy shortages and skyrocketing prices. I'd like to hear how Obama's going to have it work out differently, because the facts are that his policies are an absolute nightmare for the American economy and millions of American families.
Let's shift gears and look at John McCain. He has proposed ending the federal ban on off-shore oil drilling. This is a reversal from his previous stance, prompting the predictable flip-flop accusation from Obama. I'm not at all convinced that McCain is dead set on increasing energy production, but at least he is saying the right things, and if public pressure keeps up, it seems likely that he'll follow through. Even if he is guilty of political expediency, at least we get the right result for Americans. Of course, he may be genuine, and his change may be due to the different situation we face today than in past years. As Charles Krauthammer recently wrote:
Krauthammer points out that McCain still opposes drilling in ANWR, so it's only a partial reform. But, again, I'll take it if it means we get moving in the right direction.At a time when U.S. crude oil production has fallen 40 percent in the last 25 years, 75 billion barrels of oil have been declared off-limits, according to the U.S. Energy Information Administration. That would be enough to replace every barrel of non-North American imports (oil trade with Canada and Mexico is a net economic and national security plus) for 22 years.
That's nearly a quarter-century of energy independence. The situation is absurd. To which John McCain is responding with a partial fix: Lift the federal ban on Outer Continental Shelf drilling, where a fifth of the off-limits stuff lies.
This is a change for McCain, but circumstances have changed. When the moratorium was imposed in 1982, gasoline was $1.20 and oil was $30 a barrel. Since the moratorium was instituted, we've had two wars in the Middle East, and in between a decade of garrisoning troops in Saudi Arabia, Kuwait, Bahrain, Qatar and the UAE to preserve the peace and keep untold oil riches out of the hands of the most malevolent of our enemies.
Technological conditions have changed as well. We now are able to drill with far more precision and environmental care than a quarter-century ago. We have thousands of rigs in the Gulf of Mexico, yet not even hurricanes Katrina and Rita resulted in spills of any significance.
But let's stay on ANWR for a moment. By any account, there are tens of billions of barrels of oil out there, just waiting to be developed. I've blogged before about the numbers: it would take us only about 2,000 of the 19,000,000 acres to access all that oil, and that area is essentially a wasteland with no appreciable 'pristine beauty' at all. John McCain likened ANWR's pristine condition to the Grand Canyon, which is completely ridiculous. Jonah Goldberg points out that the Grand Canyon gets 5 million visitors per year and is surrounded by a bustling economy of tourism. Even so, it is considered awe-inspiring by those who have been there; ANWR is only considered pristine by those who have never seen it and are not likely to. How's this sound:
Most of the images of the proposed drilling area that people see on the evening news are misleading precisely because they tend to show the glorious parts of ANWR, even though that's not where the drilling would take place. Even when they position their cameras in the right location, producers tend to point them in the wrong direction. They point them south, toward the Brooks mountain range, rather than north, across the coastal plain where the drilling would be.
In summer, the coastal plain is mostly mosquito-plagued tundra and bogs. (The roughnecks at Prudhoe Bay joke that "life begins at 40" - because at 40 degrees, clouds of mosquitoes and other pests take flight from the ocean of puddles). In the winter, it reaches 70 degrees below zero (not counting wind chill, which brings it to 120 below) and is in round-the-clock darkness.
I can't imagine why a Sandals resort hasn't moved in yet, can you?
But there are other costs to not developing ANWR, too: 10 million jobs. Right Truth has the numbers, but if we could knock ANWR out of the park, we would pump the equivalent of 10 million jobs back into our economy, theoretically reducing unemployment to 0 while destroying OPEC's stranglehold on our oil supply and tipping the trade deficit back in our favor. What's not to love with that deal?
Victor Davis Hanson puts it more bluntly: start drilling, it's the right thing to do.
The debate in Congress over more refineries and nuclear power plants; drilling in the Arctic National Wildlife Refuge and off our coasts; and developing oil shale, tar sands and liquid coal has been usually a predictable soap opera: Grasping Republicans supposedly wish to enrich energy companies, while idealistic Democrats want only to protect the environment. But those black-and-white positions, hatched in the good old days of $1.50-a-gallon gas, should now be revisited on the basis of far different moral considerations.
One is fairness to the poor and middle class. Like it or not, radical environmentalism (and those behind it who provide the lobbying, funding and influence to block energy legislation) appeals to an elite not all that worried when gas prices rise or electricity rates go up -- since fossil energy use goes down.
But a paradox is that most environmentalists think of themselves as egalitarians. So, instead of objecting to the view of a derrick from the California hills above the Santa Barbara coast, shouldn't a liberal estate owner instead console himself that the offshore pumping will help a nearby farm worker or carpenter get to work without going broke?
Another paradox: American laws and technology ensure a rig off Florida or in Alaska has far less chance of springing a leak than one in the Persian Gulf or the Russian tundra. If there really is a shared "planet earth," then aren't we all its collective stewards? By locking out energy exploration in the United States, we are encouraging it almost everywhere else.
He also illustrates another example of how the environmental flavor of liberalism involves two sets of rules and has unintended consequences. Am I developing a theme? I guess that happens when one is based on a foundational set of principles.
Anyway, Rush Limbaugh recently stated a rather obvious reality: out of all the people and industries in this country, who is it that actually goes out and produces oil and gasoline for us consumers? There's only one group, and that's 'Big Oil'. If that is the case, why is Congress doing everything it can to penalize and tax Big Oil? What does that do to help address our energy needs as a nation? Nothing.
In fact, it makes things worse, because foreign oil companies have a definite advantage when it comes to operations and development costs if American companies suffer under burdensome taxation and regulation. Americans lose jobs, and dollars go to foreign oil producers rather than home-grown ones.
But McCain is not alone. President Bush recently called on Congress to lift the ban on off-shore drilling. That's all fine and good, but there are two parts to that ban, and one of them can be revoked instantly by the President himself? Now might be a good time to call the White House and suggest he does that, don't you think? That would put the responsibility squarely on the Democrat-controlled Congress, further alienating them from the wishes of the American public. Bush apparently wants to revoke the ban in tandem with Congress, but I would pose the question of when has this Congress ever worked with him on anything that they didn't first want? Get real. Ditch the Presidential ban, and crank up the pressure! This is a sure-fire election issue, so claim it!
Here are a couple other thoughts on the matter. Obama and the Democrats say that even if we started drilling now, it would be years before we saw a major price effect. Two thoughts. First, even if that's true, so what? We'll need relief in five or ten years just as much as we need it now (maybe more)...why wait? Second, they're wrong. Look at what happened when Saudi Arabia recently announced an increase of just 200,000 barrels per day - the world market price of oil dropped by several dollars. They hadn't actually done it yet, they just announced it. And that's a tiny increase. Now, what do you suppose would happen if we announced -- with legislation to back it up and mandate it -- that we were going to go full speed ahead with new oil and natural gas drilling, refinement, and production facilities? The world market price of oil would plummet. There are several reasons why.
First, because we CAN. We have the technology and the funding to make it happen. I personally don't believe it would take ten years to see a noticeable production increase; I'd bet on 3-5 years, tops. When there's profit to be had, the capitalist engine guns full-throttle, and things happen fast. Given that, I think the higher supply would drop the cost through simple economics much sooner than the Dems predict, in addition to just making the announcement. Second, because it would signal a real strategy to break the stranglehold of Middle East oil on us and the rest of the world. It would mean America is more able to defend itself and its allies and continue its economic growth, which propels the rest of the world. Third, because we're on an oil bubble right now. If you're a long-time reader of my blog, you've seen me post before about how the current prices are artificially held high, and the bubble is going to burst sooner or later. An announcement like this from us would make it much, much sooner. Finally, because we are sitting on a mind-bogglingly huge amount of resources - not only are we sitting on hundreds of billions of barrels of oil (both off-shore and on-shore) and are the Saudi Arabia of coal (meaning we have more than anyone else in the world), but take a look at this via Noel Sheppard (emphasis mine):
Oil shale is prevalent in the western states of Colorado, Utah, and Wyoming. The resource potential of these shales is estimated to be the equivalent of 1.8 trillion barrels of oil in place... In comparison, Saudi Arabia reportedly holds proved reserves of 267 billion barrels.
So you see, the question is not whether we have resources available. The question is not whether we have the technology or money to access those resources in an environmentally responsible way. The question is purely a matter of will. The Democrats, led by Barack the Obamessiah, don't have it. Do you? This battle will only be won by American citizens like you demanding their elected representatives go get those resources for the benefit of our country.
There's my two cents.
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