Less Rigs, less work, more unemployed

From CNN:

The White House responded Thursday to concerns that the ban on drilling for oil in the deep waters of the Gulf of Mexico will cost the region thousands of jobs.

"The six month moratorium on deepwater drilling was instituted for a clear reason," White House spokesman Ben LaBolt told CNN. "The President believes we must ensure that the BP Deepwater Horizon spill is never repeated."

But Louisiana Governor Bobby Jindal said that prohibiting deepwater drilling could cost the state up to 6,000 jobs this month, and 10,000 jobs over the next few months, in a letter sent Wednesday to president Obama.

If the ban continues for an "extended period," Jindal said, the state could lose up to 20,000 existing and new jobs by next year.

The moratorium was extended last week from 30 days to six months pending the outcome of an investigation into what caused an oil rig operated by BP to explode and sink last month.

The ban requires all Gulf wells in more than 500 feet of water to shut down, and also prevents permits from being issued for any new deepwater drilling.

However, there are 4,515 shallow-water wells in the Gulf that will not be affected, according to the Louisiana Mid-Continent Oil and Gas Association (LMOGA)...

...According to the LMOGA, roughly 33 floating drilling rigs in the Gulf will be idled as a result of the ban. Jindal said 22 of those deepwater rigs are off the coast of Louisiana.

And the group estimates that as many as 1,400 jobs are at risk for each of the 33 idled rigs.

Those jobs pay an average of $1,804 per week, which means the potential for lost wages for all 33 rigs could be as much as $330 million per month, LMOGA said.

Comment: I understand that people are upset about this horrible spill that continues unabated as I write this, but there is already a strong indication coming from the Obama administration to curtail or prevent future off-shore drilling. Some of this is to appease the radical "greenies" in the Democratic party but also to look like he is being tough on BP and Big Oil. Less drilling for our resources means less American jobs and less tax revenue. It also means more reliance on foreign sources for a product that, despite what "greenies" tell us, we will continue to use and need for decades to come.

The Louisana oil spill and liberal dreams

This WSJ piece on off-shore drilling and the Louisiana accident is right on the mark:

As the oil in the Gulf of Mexico moves toward the Louisiana and Florida coasts, the left is already demanding that President Obama reverse his baby steps toward more offshore drilling. The Administration has partly obliged, declaring a moratorium pending an investigation. The President has raised the political temperature himself, declaring yesterday that the spill is a "massive and potentially unprecedented environmental disaster."

The harm will be considerable, which is why it is fortunate that such spills are so rare. The most recent spill of this magnitude was the Exxon Valdez tanker accident in 1989. The largest before that was the Santa Barbara offshore oil well leak in 1969.

The infrequency of big spills is extraordinary considering the size of the offshore oil industry that provides Americans with affordable energy. According to the Interior Department's most recent data, in 2002 the Outer Continental Shelf had 4,000 oil and gas facilities, 80,000 workers in offshore and support activities, and 33,000 miles of pipeline. Between 1985 and 2001, these offshore facilities produced seven billion barrels of oil. The spill rate was a minuscule 0.001%.

According to the National Academy of Sciences—which in 2002 completed the third version of its "Oil in the Sea" report—only 1% of oil discharges in North Americas are related to petroleum extraction. Some 62% of oil in U.S. waters is due to natural seepage from the ocean floor, putting 47 million gallons of crude oil into North American water every year. The Gulf leak is estimated to have leaked between two million and three million gallons in two weeks.

...As for a drilling moratorium, it is no guarantee against oil spills. It may even lead to more of them. Political fantasies about ending our oil addiction notwithstanding, the U.S. economy will need oil and other fossil fuels for decades to come. If we don't drill for it at home, the oil will have to arrive by tanker and barges. Tankers are responsible for more spills than offshore wells, and those spills tend to be bigger and closer to shore—which usually means more environmental harm.

Comment: The wailing at liberal blogs regarding this horrible accident has, of course, reached its expected perfervid pitch. And I see the usual cavil arguments about a de-regulated oil industry prompted by George W. Bush prevented the use of an acoustic switch which would have prevented all of this mess. All of this is of course unfounded. Some countries do mandate the use of an acoustic switch (Norway, Brazil) and some do not (U.K.). U.S. regulators decided against the use of the switches because of cost and reliability issues. I tried to point out to one guy that all the acoustic switch does is set off the more central blowout preventer remotely and that subs had tried to activate the blowout preventer manually with no success which means that the acoustic switch may not have mattered one way or another. The blowout preventer is malfunctioning. He was not impressed with my argument but instead deleted my post. Classy.

I also made the following observation at other blogs when liberal bloggers were quick to jump on the "drill, baby, drill" crowd and their point on how safe off-shore drilling is: When an airliner tragically crashes and kills everyone aboard, does anyone suggest that society should revert back to ocean liners to get from, let’s say, Boston to London? No. When there is a pile up of cars where passengers are killed, does anyone suggest that society revert to the alternative of horse and buggy? No. Accidents happen even in a perfect world and no reasonable person is going to revert to a lower standard of living because of the threat of the odd incident. So why is oil held to a different standard than other technologies?

Oil is utilized in some form in every stage of production for a constellation of goods. How are you going to make medical devices, medicine, fertilizer, parts for vehicles, etc. without petroleum? Our economy would come to a standstill without it.

There are almost 4,000 oil rigs in the Gulf of Mexico that have been operating for years without an accident of this magnitude. This event is a clear outlier in an industry that has done a remarkable job with safety.

The usual argument I read at some liberal blogs is that we need to reduce our consumption of oil so that we don't have to drill as much. I find it astonishing that anyone could believe that this is possible with a growing population and a growing (I hope) economy. Even Denmark which is held up as a wind-mill utopia by liberals has INCREASED its off-shore drilling aggressively and its IMPORT OF COAL in order to meet rising demands. Additionally the Danes have to live with some of the most expensive gas and electricity prices in the world. And that's with very little population growth (just slightly above zero) compared to the U.S. Between 1998 and 2008, the Danish population grew by just 200,000 people. During the same time period, the U.S. population grew by 33 million people. So, I find it shocking that anyone would believe that we could "conserve" our way to less oil consumption.

Trust me, if the U.S. stops its off-shore drilling, countries like Denmark, Norway, Brazil, the U.K., China and others, are going to continue to expand and to be aggressive with their off-shore programs and we will have to depend on them to supply us and the rest of the world.

Run out of oil, eh?

Shell discovers a large oil reserve in the Gulf of Mexico. Don't build those bunkers yet.

Salazar and Off Shore Drilling take center stage

Will it be possible for environmental groups and the oil industry to find a middle ground to pave the way for exploration off the coasts of the U.S.? We are going to find out soon enough. Interior Secretary Ken Salazar is opening up the debate for the next six months and I expect the usual rhetoric from environmental groups who detest any drilling whatsoever; they will claim, as usual, that not enough is being done to encourage alternative fuels and development of already-leased federal lands--all which is a bunch of crock. Democrats will invariably find a means to subsidize "renewable" energy by taxing the oil companies if they are allowed to drill under new leases. And as we found out last year, some leased lands or off shore parcels aren't worth drilling because of the high cost or there is little oil to extract.
I have a wait and see attitude on this because I remember how last year the Democrats led by Nancy Pelosi released a 290-page bill on "off shore" drilling--they pushed it through less than 24 hours later, 236-189. "Closed" rules prohibited the GOP from offering alternatives. And the bill was a porker with little prospects of any real off shore drilling. I wonder what this administration up to? I'm suspicious.

I received an e-mail from the intrepid Jane Van Ryan over at the American Petroluem Institute informing me that Secretary Salazar will be in my neck of the woods--San Francisco, California--on Tuesday, April 16th to hold a public hearing on offshore drilling. Oh boy, I expect the protests to be colorful and cartoonish. Here is an excerpt from Jane's informative e-mail:

To give you some background, the Minerals Management Service (MMS) – the federal agency responsible for administering the offshore oil and natural gas program – considers the size, timing, and location of the areas to be considered for federal leasing, and it bases its recommendations on the public’s comments. Although a five-year plan approving increased offshore drilling was released in January, Sec. Salazar directed Interior Department scientists to produce new reports on how much oil and gas might be found off the Atlantic and Pacific coasts and extended the public comment period to September. Regional hearings like the one in San Francisco are part of that public comment period.

We expect that anti-drilling groups will mobilize their members to make up the majority of comments at the San Francisco hearing, but I wanted to let you know that you and your readers can submit comments to MMS electronically, if desired. This link will direct you to a page on our Web site where you can learn more about the MMS five-year plan and click-through to submit a public comment. In addition, the page has several resources for bloggers, including a blog badge and an interactive widget that will allow you to identify your Congressional representatives, find them on Facebook, Twitter and YouTube, or simply send them an e-mail.

So, if any of you are interested in making your voices heard on this issue, this is a good forum to exercise your viewpoint. This country is going to need more energy to power its economy as time goes on--wind mills, solar panels, and bio-fuels will certainly not replace fossil fuels anytime soon. We need to use the resources we have available to us in our own country to keep energy inexpensive and to create jobs. Now is the time to make your voice heard.

Offshore drilling ban due to expire?

I heard about this in the afternoon and I was simply incredulous: The Democrats are going to let the offshore drilling ban expire. Hmmm, we’ll see.

Pelosi's Energy News Conference Gets Overwhelmed by Pro-Drilling Americans, Then She Hops in an SUV

HT:Americans for Prosperity

Alternative Energy Sham!

You hear it all the time from Democrats, Progressives, and environmentalists --They want more (government and corporate) investment in renewable and alternative energy. And they are always lambasting energy companies, oil companies, and Republicans for not facilitating enough research and development to move our country forward regarding energy. We’ve been hearing it for years now. In yesterday’s WSJ editorial section (subscription may be required), it turns out that what these groups say they want and how it is to be achieved are at odds:

In this year's great energy debate, Democrats describe a future when the U.S. finally embraces the anything-but-carbon avant-garde. It turns out, however, that when wind and solar power do start to come on line, they face a familiar obstacle: environmentalists and many Democrats.

To wit, the greens are blocking the very transmission network needed for renewable electricity to move throughout the economy. The best sites for wind and solar energy happen to be in the sticks -- in the desert Southwest where sunlight is most intense for longest, or the plains where the wind blows most often. To exploit this energy, utilities need to build transmission lines to connect their electricity to the places where consumers actually live. In addition to other technical problems, the transmission gap is a big reason wind only provides two-thirds of 1% of electricity generated in the U.S., and solar one-tenth of 1%.

Only last week, Duke Energy and American Electric Power announced a $1 billion joint venture to build a mere 240 miles of transmission line in Indiana necessary to accommodate new wind farms. Yet the utilities don't expect to be able to complete the lines for six long years -- until 2014, at the earliest, because of the time necessary to obtain regulatory approval and rights-of-way, plus the obligatory lawsuits.

In California, hundreds turned out at the end of July to protest a connection between the solar and geothermal fields of the Imperial Valley to Los Angeles and Orange County. The environmental class is likewise lobbying state commissioners to kill a 150-mile link between San Diego and solar panels because it would entail a 20-mile jaunt through Anza-Borrego state park. "It's kind of schizophrenic behavior," Arnold Schwarzenegger said recently. "They say that we want renewable energy, but we don't want you to put it anywhere."

California has a law mandating that utilities generate 20% of their electricity from "clean-tech" by 2010. Some 24 states have adopted a "renewable portfolio standard," while Barack Obama wants to impose a national renewable mandate. But the states, with the exception of Texas, didn't make transmission lines easier to build, though it won't prevent them from penalizing the power companies that fail to meet an impossible goal.

Now, does this all sound reasonable to you? These are the same people that do not want any domestic off-shore drilling or nuclear power plants. We will severely hamstring our economy and our well-being if we continue to let radicals dictate our national energy policy.

Obstructionist by any other name

Pelosi and the Democrats are beholden to the radical environmentalists in their party. Hence, we get the obstruction and the usual straw man arguments regarding drilling for domestic oil supplies.

HT: Jimmy Cardoza at Liberty Pen

Environmentalists want higher gas prices just like oil companies, speculators, Wall Street robber barons...

As gas prices have started to quietly descend over the last couple of weeks, I wondered what must be the chatter be going about in “Greenie” blogs and websites ? What are their assessments and their strategy regarding lowered gas prices? Environmentalists have always wanted higher gas prices--just like in Europe, they would say--usually through a higher gas tax. The theory being that higher gas prices would force the general public into mass transit or smaller fuel efficient cars. Thus, saving the environment from unwanted carbon dioxide and shepherding new investments in clean alternative energy. You must admit, there has been a lot of schadenfreude and hand wringing hoisted on those souls who drive around in those hated SUV’s. High gas prices must have really cockled the most inner environmentalist in every Liberal and Progressive. It must have felt so good to be morally vindicated.

But what happens when gas prices go up so fast that Americans struggle to make ends meet? And then the average American starts to figure out that they can not afford to have expensive energy for the sake of environmentalist goals. Leaving billions of gallons of crude oil sitting idle off our shores has all of a sudden started to seem unreasonable.

The Democrats’ reply to domestic drilling was the same as was heard many years before—“It will take decades to get oil from off shore drilling,” “It won’t matter much to current prices,” and there is the usual, “speculators are the cause of higher oil prices.” None of these straw man arguments have dissuaded the American public however.

This is a curious development. If the prices are low, we go back to consuming more gasoline. This means less incentive for clean alternatives and more pollution but perhaps less public outcry for more domestic drilling. Higher gas prices mean…well, you know.

It seems that environmentalists and their political enablers have positioned themselves into a nasty little corner. The illogical goals of obstructing the development of proven and reliable sources of energy--particularly when those energy prices are very high and may be high for some time now or in the future--just doesn't make sense to the average person. Environmentalists and Democrats seem to want Americans to live with higher prices because that moves them closer, in their estimation, to their stated goals of clean alternative energy. Even as those supposed alternatives are far, far from being a reality; probably farther than their claim that off shore drilling will take to make a difference. Their goal is going to be mighty expensive and Americans may not be interested in their utopia.

If gas prices continue to drop, look for a call to a higher gas tax in the name of developing alternative energy or to dissuade people from driving.

American Energy Freedom Day

Will it come to pass?

HT: Andrew Roth

Posts of worth and note…

Alan Caruba writes about the possibility that the U.S. may lose out on the enormous amount of gas and oil reserves in our Artic territory due to an intra-national treaty with the U.N. or in any case the U.S. would have to pay taxes to the U.N. for extracting resources in our own territory.

HT: The Bobo Files

Jim Cardoza at Liberty Pen neatly summarizes the off-shore drilling debate.

The world is running out of oil?

From FT.com

The Arctic holds as much as 90bn barrels of undiscovered oil and has as much undiscovered gas as all the reserves known to exist in Russia, US government scientists have said in the first governmental assessment of the region’s resources.

The report is likely to add impetus to the race among polar nations, such as Russia, the US, Denmark, Norway and Canada, for control of the region.

The US Geological Survey believes the Arctic holds 13 per cent of the world’s undiscovered oil, while 1,669,000bn cubic feet of natural gas is equivalent to 30 per cent of the world’s undiscovered gas reserves.

With large findings in the Caspian Sea, Brazil, and all the untapped reserves in the U.S.-- and now the Artic--somebody needs to challenge me on my theory that the world is not running out of oil; At least not anytime soon.

Here is another news link for this story

Around The Horn--Posts on Oil

Posts worthy of note and your time:

The Bobo Files has a petition to sign for those that want Congress to lift the moratorium on off-shore drilling.

Domestic oil myths are covered by The Historian at The Real World.

Shaving Leviathan comments on the controversial drilling at ANWR.

"Al Gore is our savior!"

Al Gore called for congress not to overturn a federal ban on offshore drilling recently. If congress had any collective wit about them, they should immediately dismiss his comments as the rantings of an unrealistic lunatic.

Mr. Gore seems to be living in a parallel universe where the average American can afford to chuck over $4 and more for a gallon of gasoline for lord knows how long--I guess until the miracle of “alternative energy” comes along full bore in 10, 15 years or more? Mr. Gore is a multi-millionaire with nary a worry about the effects of paying higher prices for energy. If ushering the era of a carbonless economy means bankrupting middle class Americans, then so be it: To indirectly suggest that Americans must sacrifice in order to usher in his radical vision of the new era--the “green” nirvana--strikes me as callous arrogance. Mr Gore suffers from a misplaced messianic complex.

Oil is discovered in Caspian Sea

So, it looks like a Swedish firm has made a nice find of oil in Russia’s north Caspian Sea. Try and guess how long it’s going to take them to start drilling. Do you think that it will take 5 years? Or perhaps it will maybe take 10 years? Nope. Try the end of September of this year. The Russians aren’t squeamish about putting their resources to work, that’s for sure.

BTW, with a major oil find off the coast of Brazil, this finding in the Caspian Sea and all the untapped potential in North America, the talk by people that constantly rail about oil running out very soon or how far past the world is from Hubbard’s Peak is sheer conspiracy babble.

Bush acts on drilling, challenging Democrats

Bush has lifted the moratorium on off-shore drilling. The ball now falls on the Democrats’ court.

The idle oil field fallacy

When the Democrats tell the public that oil companies are sitting on oil leases that they have willfully not developed in order to push the price of gas higher, they fail to tell the full story. From the WSJ

A company bids for and buys a lease because it believes there is a possibility that it may yield enough oil or natural gas to make the cost of the lease, and the costs of exploration and production, commercially viable. The U.S. government received $3.7 billion from company bids in a single lease sale in March 2008.

However, until 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.

On NIMBY elitists…

One of the best written synapses I have read of the off-shore drilling debate is from Tom Rants:

So, apparently President Bush and Senator McCain are both listening to reason on offshore drilling. The political deal with the devil that Bush made to push drilling in Alaska, where it's politically popular, and not off the shores of the lower 48, where local politicians opposed drilling in their backyard, may turn out to be the biggest mistake of his Presidency. Unfortunately at the time, environmental extremists owned the ANWR issue because they made it about greedy oil companies and greedy Alaskans trying to hurt the lichens. You can't be a much more defenseless underdog than a lichen. With oil prices at $1 a gallon, it was hard to sell the American people that drilling mattered much and, with little to focus public concern, it was easy for the elites to push the idea that preventing US drilling in the Arctic was the best way to protect the Arctic environment. (Read More)

What about those “unused leases” that Democrats keep talking about…

One of the talking points used by Democrats against off-shore drilling is that the oil companies are sitting on thousands of leases that are not being pumped for oil. They accuse oil companies of sitting on millions of barrels of oil and that oil companies should drill from those leased lands instead of opening up new areas for drilling.

Well, one of the best counter arguments I have read that trumps the Democratic response against offshore drilling and their claim that oil companies are sitting on unused leases was made by Bobo over at the Bobo files:

What they also have failed to inform the general public about these leases is that many of them cannot be drilled because there is no oil in them. The government makes these oil companies purchase these leases before they are allowed to survey them. The company geologists then survey, find there’s nothing in there, and now the big oil companies are stuck with these leases that they can’t do anything with..and…who pays the cost for those non-productive leases? We the people do as a pass through expense. It’s just another scam by the government and something they don’t want everyone to know about.

I couldn’t have said it better myself.