Friday, July 18, 2008

Drill here, drill there, or drill anywhere

I hate politics, I really do. The vote yesterday on opening up more drilling in the US is a good example of how stupid our elected officials can be.

Let me see if I have this straight: Republican position is to open up everything to drilling, so what about the externalities. A local republican running for congress in my district just spent a weekend in Alaska and says the people there want drilling (here). All Alaskans or just the ones he met? Apparently some Alaskans support no drilling in ANWR So, the republican solution is to open up no drilling areas, such as ANWR and the near coastal areas of the Atlantic and Gulf of Mexico, while the Dems want to protect those areas but accelerate exploration on the areas that are open but not yet explored. And open up an area of Alaska that was set aside in the 1920s for national security reasons (you;ve got to be kidding, as long as it takes to get the oil pumping, I can't imagine what National Security purposes it would hold).

So, the Repubs only solution is to open up these no drill areas, something they have been after for a very long time and are now just using this "crisis" (I don't see any gas shortages, just high prices, not like 1973) to open up Alaska and the coasts, because why? they despise any regulation of any kind.

Dems, well, they seem to be trying to actually solve the problem. A use the lease or lose it, I don;t follow President Bush's veto threat at all on that one (except to block any movement whatsoever).

The White House expressed a similar view in issuing a veto threat against the bill. “By blocking some firms from competing for new leases, this legislation would further increase gasoline prices that already exceed $4 per gallon and result in unintended consequences due to litigation,” the White House said

My understanding of the bill is that it would not allow firms to sit on leases and not explore them. Let those companies who want to explore do it:

Democrats said they were calling the bluff of Republicans on their persistent demands for more domestic production. “Drill on the leases you have or let somebody else do it,” said Representative Steny H. Hoyer, Democrat of Maryland and the majority leader.

But is the problem just the high cost of oil? Oil is actually coming down in price....will that lead to any relief at the pump? Not if the capacity to refine gasoline isn't increased, and I dont hear either party discussing that. Nothing dramatic or seemingly quick solution to that problem to score political points.

Here is what I want to know: if we open up everything, including my backyard to drilling, and next year when prices are even higher, what explanation will be given to the American people then? What dumb bunny solution will Congress offer then?

And what about that deep water find in the Gulf of Mexico from two years ago? It was purported to be, quite possibly a bigger find than the biggest fields in Saudi Arabia. Here is an article on that find, a year later, just about a year ago.

Deep water exploration is seen as the immediate future of the oil exploration business. but it is the article and see why. In another place, the deep water stuff accounts for over 70% of our offshore drilling amounts. But, again, it is expensive to do this. Assembling just the rig to do the drilling is over a half billion dollars and the cost is in teh hundred millions to keep it going. Here is a telling quote however:

Even as Chevron and other oil giants earn record profits, they also face record expenses. For example, the company has commissioned two new deep water rigs that will be able to drill 40,000-foot wells. But at more than $600 million each, they can't exactly be snapped up on "The costs of developing a new oil or gas project are about 65 percent higher today than 30 months ago, and the greatest escalation of costs has been offshore," says Daniel Yergin, chair of the consulting firm Cambridge Energy Research Associates. At today's oil prices of $70 a barrel, the current exploration makes sense. But if oil drops below $40 a barrel, Yergin says, the cost of exploring this high-risk frontier will become prohibitive

Remember this was about a year ago. At $70 a barrel this makes sense...why then at $140 a barrel the oil companies are not going whole hog for it? If capital is a problem, let the government provide the loans or loan guarantees. The technology will develop there, too.

Instead we squabble for the cameras, and deceive the public into thinking that if we open up these set aside areas, which have competing econonmic value that could easily be DESTROYED by an environmental accident (the Exxon Valdez wasn't supposed to happen either) and gas prices are going to come down so we can continue to guzzle gas at an exorbitant rate driving around in Stupid Useless Vehicles.

Addendum. This is a good piece of new media journalism here. This is more like it, real reasons why Congress failed to pass anything yesterday and why the easier things to do, such as conservation measures, aren't pursued.

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