On Winning the Energy Crisis

The Energy Crisis has never ended. When OPEC put the squeeze on us in the early 70's we called that an energy crisis.

Then they opened the valves and all was good.

When the Iranians did the same thing several years later we called that an energy crisis.

Then they opened the valves and all was good.

But the energy crisis never ended. It goes on to this day.

Nick Anderson has it exact.

Energy Independence: Why “Drill Here, Drill Now” Is Not an Option

President Obama’s budget, submitted this week, contains within its $3.6 trillion price tag something that will finally put the United States on the path of energy independence.

Obama’s budget makes a provision for tax credits for research and experimentation by making it a permanent fixture in tax law.

“Overall, the budget would invest billions in research designed to reduce climate change and guarantees loans for companies that develop clean energy technologies.”

This is brilliant. It takes R&D out of the hands of the government, where it has shifted in recent years with government funding of private research firms. As anyone who has dealt with government funded research, this is a virtual bottomless money pit with no formalized objectives, no measurement of performance vis-à-vis attainment of objectives, and no mechanism for implementation of results.

But that system does have an endless paper trail of requests for more funding.

Instead, energy companies are again given tax incentives to run their own research and development. Granted some of the above still occurs, but with accountability measurements in place, there are fewer places to hide excess.

In this research effort, emphasis will be on research to reduce climate change (i.e. reduce emissions of greenhouse gases), and on development of “clean energy technologies.”

Obama realistically expects failure. That’s my kind of guy.

“Sometimes you have to fail before you can succeed. And often it takes not just the commitment of an innovator, but the commitment of a country to innovation. Often what’s required is the support of government.”

Noticeably absent from his budget is the emphasis on current energy technology. That is, exploration and development of oil and gas, or the funding of such.

In actuality, as reported at USA Today, Obama’s budget calls for the ending of numerous tax breaks that the oil industry has enjoyed in the past, and penalizes oil companies for sitting on their proven reserves without developing them.

“President Obama's proposed 2010 budget takes pointed aim at oil and gas companies, eliminating myriad tax breaks and proposing new fees on the providers.”

“The plan put out Thursday would repeal tax breaks intended to spur oil and gas exploration and penalize companies that don't develop wells on land leased from the government. It could raise tens of billions of dollars the next decade.”

In other words, we are finally ending the insane policy of paying oil companies to explore for their own oil reserves, and giving tax breaks for sitting on their proven reserves.

And why not? Weren’t we last year beset by Republican chants of “Drill, Baby, Drill” and “Drill here, Drill now”? These aspects of the budget provide just the carrot, and just the stick, to get that done, right?

So now, all we need to wait for are the shrill cries from the sunset oil industry that the government is doing all it can to drive down domestic oil and gas production, driving up the rate at which we import oil.

OK, for those crying shrilly, I’d like to post this table of the 17 most prolific oil and gas producers, in the world. Here it is, read it and weep.

The United States has 21 billion barrels of domestic oil reserves and 3.3 billion mcf of gas reserves, enough for a reserve life of 8 years.

Contrast that to Canada and Saudi Arabia. If there were places to drill, baby, those are the places.

This table screams to those who want to listen that the United States should take itself out of the business of drilling until there’s no tomorrow, because tomorrow will come sooner than we think. It roars that we should invest full bore in alternative energy sources.

Which is exactly what the Obama budget it targeting.

Now, what were the objections to Obama’s budget again?

The Insanity of Drill, Drill, Drill

Now, while the Democratic Convention has all our eyes riveted to the TV, I was looking at other news in the Houston Chronicle today and noticed that with the incursion of Hurricane Gustav into the Gulf of Mexico, oil speculators drove up the price of crude oil nearly 3.5% in one day.

From The Chron:

“‘The question is whether it hits northern Mexico and southern Texas, or does it head for the big production areas’ of the Gulf, said Chris Jarvis, president of Caprock Risk Management LLC in Hampton Falls, N.H. ‘We're going into the peak storm season.’”

So while Republicans (and some Democrats) are screaming “Drill here and drill now” (the “here" being the Outer Continental Shelf) we have an approaching hurricane where the mere chance that it takes aim at offshore platforms drives up the price of nonrenewable oil and natural gas.

This is just crazy.

The false claim that drilling in the OCS will bring down gasoline prices at the pump is made even more false, if that is even possible, by today’s oil speculation market which cashes in on the slightest chance of a oil supply shortage caused by a hurricane.

Hurricanes are newsworthy but there should be no surprise here if one of them takes out an offshore production platform or two. And that the oil speculation market reacts as it does to news that is as thin as this is, merely underscores the need to close the Enron Loophole – the loophole that allows oil speculators to have too much control on the price of this commodity.

Instead of “Drill here, drill now,” as Republicans (and some Democrats) are saying, wouldn’t it be a safer and saner activity to launch an all out assault on developing alternative forms of energy (as other Democrats are saying)? Isn’t that the best use of our scientific resources? Let’s keep that oil in the ground for our grandchildren and their children. There isn’t any more oil being made that we can access for maybe another 2 million years, so maybe we should be a little more forward thinking.

But no, that won’t happen. Know why? It took me this many words to communicate a fairly complex thought about mindless exploitation of nonrenewable energy. It took a lot of time to write it.

I can’t reduce it into a sound byte like the Republicans (and some Democrats) do when they shriek from the rooftops: “Drill Here! Drill Now!”