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Obama Negotiates with Himself on Oil. Again. May 16, 2011

Posted by Jamie Friedland in Media, Offshore Drilling, Politics.
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President Obama’s position on oil has been one of the most disappointing and incoherent facets of his administration to date.   On Saturday, this trend continued as the President announced a series of shifts to increase domestic oil production.

Pundits say he had to respond to high gas prices (which presidents do not control).  This maneuver is political capitulation in the face of a mismanaged narrative in the public discourse.  For years, this “debate” about gas prices has been dominated by flat out lies and misinformation in one of the more disgraceful displays of unaccountability in contemporary American politics. 

I have attempted to clear the air (pun intended) on this topic a number of times.  For a fuller explanation, please see this previous post.

Here’s the short version: conservatives claim that high gasoline prices are caused by liberal overregulation stifling domestic oil production.  That just isn’t the slightest bit true.  Oil is a global commodity, so its price is determined on the global market.  We, the United States, represent 25% of world oil demand and about 3% of world supply.  The point here is that we simply don’t have enough oil to affect global supply and thus prices.  And the kicker is that even if we could, OPEC is a cartel; they could/would effortlessly decrease their production to offset any impact we could have. 

Here’s another inconvenient truth: domestic oil production is already up 11% under Obama and was down 15% under Bush.  That reality doesn’t match this GOP argument.  Increased domestic drilling cannot lower gas prices.  Period.  Don’t take my word for it, read for yourself – even the mainstream media have finally caught on recently. 

Domestic oil production does not drive gas prices.

So back to Obama.  After failing to enact a single piece of oil-spill legislation, the President was finally starting to sound like a progressive on energy again.  In an earlier address he even pointed out the supply/demand reality I described above, although he inexplicably refused to take it to its logical conclusion that drilling cannot be a solution.  To now increase drilling as a response to gas prices validates the baldly fabricated GOP narrative.  Much like the current deficit focus, we’re conceding not only the point but adopting their frame as well.  No good can come of that.  It just doesn’t make any sense.

Recall that last year, right before the Congressional energy debate, the administration unveiled a plan to dramatically increase offshore drilling.  For which it asked nothing in return.  Rational negotiators might reward unilateral compromise.  A GOP party that miraculously resurrected itself by vociferously opposing any- and everything Obama does would of course do no such thing.  So we gave away a bargaining chip for free [that most progressives would have rather kept] and no energy bill was passed.  Also, this episode occurred just one month before the BP oil spill, which prevented the administration from using that catastrophe as a catalyst for needed change.

In both cases, the only rationale I can see is political maneuvering.  We know the Obama campaign prizes the supposedly undecided independents and what moderate Republicans still exist “in the middle.”  They think that carving out GOP territory for Obama will undercut Republican attacks.  But even if they pick up some independents, if they sell out progressives to do it that is not a net gain.  Additionally, the GOP won’t care that oil production is up – more than they want these policy objectives, they want to keep their base angry.  Have Obama’s oil moves blunted their attacks on this president as anti-oil or trickled into the Fox Newsiverse?  No. 

Obama’s tactics seem to operate from a flawed premise on bipartisanship about which I have previously written, and I am concerned about this plan.

Drill, baby, drill is political welfare for Big Oil, plain and simple.  It does not help America, it helps oil executives.  If we’re going to cave on offshore drilling, leverage it for a coherent energy policy.  If we’re going to increase domestic oil production, call it the compromise that it is and justify it as job creation (with a side of pollution and risk); don’t validate their lies.  I can stomach a certain amount of political compromise, but I can’t start defending the Fox News reality as truth.  

Offshore Drilling: They’re Lying. September 17, 2008

Posted by Jamie Friedland in Congress, Offshore Drilling, Politics.
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Yesterday the House of Representatives passed the “Comprehensive American Energy Security & Consumer Protection Act.”  This bill has a lot of good policies in it, such as renewable tax credit extensions, repealing oil company subsidies, and establishing a national renewable energy standard.  It also compromises a lot (read: bad policies).  The most notable of these is the opening of the outer continental shelf (OCS) to oil companies.  In light of this development, I have decided to write my long overdue post on offshore drilling.

Over the last few months, offshore drilling has been all over the media, largely is response to a major propaganda push by the GOP.  Republicans would have you believe that science is a political debate, but there are some things that just cannot be spun.  In this post, I will attempt to clearly explain why this gimmick will not help our country both to help clear up any uncertainties and, with any luck, to arm you with the facts to help explain this to people you know.  Because we need to talk about this – the Republicans certainly are.  And they’re winning.  So we begin:

1) Domestic drilling cannot lower oil prices.  We, the US, represent 25% of world oil demand and <3% of the world’s supply (EIA International Energy Outlook 2004). Oil prices are determined on the global market, and we produce so little that we simply can’t affect prices from the supply side. Gas price fluctuations in response to regional disruptions in refining capabilities (such as we see in the wake of hurricanes) are an exception, but they just raise prices even higher and cannot drop prices below the floor set by the global market.  And since OPEC is a cartel, even if we were miraculously able to significantly affect prices, OPEC could just reduce their supply to negate that effect.

Energy Information Administration, Annual Energy Outlook 2004

We don't have enough oil to drill ourselves out of this problem.

2) Drilling won’t lower gas prices.  Even if we were to tap all of our resources, including OCS and the Arctic National Wildlife Refuge (ANWR), according to Bush’s own EIA and EPA, drilling would not have a significant impact on prices.  We’re talking gas prices lowered by about 4-6 cents/gallon in 2030.

If you listen to what Bush, Gingrich, McConnell, Boehner, and now McCain/Palin, are actually saying, they even admit that increasing supply can’t bring down oil prices. They are saying things like “the market signal will ease pressure on gas prices.” What that translates to is “drilling won’t bring down prices, but we’re hoping people are stupid enough to believe that it will and stop speculating oil futures so high.”  Which won’t work for long if at all.  They are choosing their words carefully, but even the biggest drilling advocates tacitly admit this is a political gimmick.

3) Drilling is a long-term proposition.  This is not at all a short-term idea (I refuse to use the word ‘solution’ in this context). Even if we opened ANWR and the continental shelf tomorrow, oil wouldn’t begin to flow for 10 years and maximum production wouldn’t be achieved until 2027. Only THEN could we get our prices lowered by less than 6 cents/gallon.

4) We don’t have nationalized oil companies. In many other countries, oil companies are government-run.  A country taps its own resources and distributes them as the government sees fit.  That, for better or for worse, does not happen here.  “Our” oil companies are giant, private companies that span the globe and act in the interest of their stockholders.  Just because American companies get oil does not mean we do.  Does anyone else find it suspicious that the oil companies tell us we just need to increase supply in the same year that American petroleum exports reached a record high?

Our oil companies are exporting record amounts of petroleum products.  But really, we just need more supply.  They swear.

"Our" oil companies are EXPORTING record amounts of petroleum products. But really, we just need more supply. They swear.

Industry front groups try to set up cost-benefit analyses to show us how much money we save/earn by drilling domestically, but the American people (who do not own stock in Exxon) don’t benefit from US oil company profits.  We still pay the same money for the same gas.  I’m not endorsing foreign oil, I’m just saying that US oil companies are not our saviors or even our friends.  They are just companies trying to make as much money as they can.

5) Big Oil profits from our suffering. With soaring gas prices in recent years, the oil companies have been posting record profits while the American public has struggled.  The fanatical support oil companies enjoy from the rank and file Republican is sadly ironic as these companies profit at the expense of regular people.  While they do contribute handsomely to campaigns, these companies do nothing for the everyday people who champion their cause.  It really is a testament to the expertise with which the GOP and industry advertising/lobbyists manipulate the public.  And to add insult to injury, the Big 5 are spending most of their profits on buying back their own stock.  They are spending under 4% of their profits on exploration for new oil and even less on research and development.

This makes me pretty angry, but I’ve had people tell me “well, they’re private companies making a profit.  Good for them.”  Just because I am a Democrat does not mean I automatically begrudge businesses for their success.  This is different for one fundamental reason: the oil industry is very heavily subsidized.  Oil companies receive millions and millions of taxpayer dollars and tax breaks each year.  If they are going to continue to be supported by the American people, they must act on our behalf.  Their expenditures clearly indicate that they do not.

6) They can increase supply without offshore drilling. There is plenty of oil available to oil companies even without this new bill.  There are millions of acres across the country currently available for purchase or not being utilized.  Furthermore, there is a great deal of oil still sitting in the ground beneath tapped wells.  Conventional drilling techniques by no means empty a reservoir; there are numerous Enhanced Oil Recovery (EOC) techniques that could help us get more oil out of our existing wells right now (for example by injecting steam into the ground to increase pressure in the well and draw oil out of the surrounding rocks).  But the industry rarely employs them.  Some of these techniques could even sequester carbon underground (click the EOC link above) and help us fight global warming even while we make the most of our current drilling infrastructure.  If the oil companies really wanted to increase supply they could; this is a last ditch land grab before Bush leaves office.

Conclusion

So there it is: offshore drilling is not the answer.  It just isn’t.  There is no substantive debate on the issue.  In fact, more drilling isn’t even part of the solution.  The “All of the Above” scam the GOP is pushing is terrible for so many reasons it would require its own post.  So what IS the solution?  A comprehensive strategy of clean energy in conjunction with increased efficiency and conservation.  It may not be sexy, but that’s what we have to do.  The Natural Resources Defense Council outlines the plan in this fact sheet and the graph below shows how such a plan could actually help us in the short term and dwarf the “benefits” of increased drilling in the long term.