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Kill, baby, kill April 2, 2010

Posted by Jamie Friedland in Congress, Offshore Drilling, Politics.
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8 comments

***This post has become much more relevant since the BP oil spill began.  For a complete list of offshore drilling/oil spill questions and answers, click here.***

On Wednesday, President Obama unveiled a proposal to open vast swathes of American coastlines to new offshore drilling.  I have never opposed one of the President’s decisions more strongly than this, which makes sense because this move was made purely as a concession to congressional Republicans.  Conservatives would have you believe that science is a political debate, but there are some things that just cannot be spun.  Offshore drilling is one of them.

Below, I will demonstrate that there is literally no good reason to increase our offshore drilling.  Not one.  …Unless you’re an oil company.

Domestic drilling CANNOT lower oil or gas prices. Just last year, the U.S. Energy Information Administration (EIA) analyzed what would happen if we fully opened our coasts to offshore drilling.  Their conclusion: by 2020, gas prices remain unchanged. By 2030, US gas prices would be $0.03/gallon lower. That’s it.  And it’s easy to see why:

We just don’t have enough oil to make a difference. We, the US, represent 25% of world oil demand and <3% of the world’s supply.  The price of oil, as a global commodity, is determined on the global market.  We produce so little of the global supply that we simply can’t affect prices from the supply side. The only exception to this is when regional refining capabilities are temporarily decreased (as in the wake of hurricanes), but this scenario can only raise local prices above the global market price, not lower them.  Additionally, since OPEC is a cartel, even if we were miraculously able to significantly affect prices, OPEC could simply reduce their supply to negate that effect.

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

As of 2009, the US consumed approximately about 1.5 million barrels of oil per day. So even in a recession, we use roughly 8 billion barrels of oil per year.  According to the EIA, the federal drilling moratorium only blocked drilling for 18.17 billion barrels of offshore oil (a little over 2 year’s worth) out of an estimated 59.09 billion barrels offshore in the Lower 48 states, with most of that unavailable oil off of California, which is wisely united in bipartisan support against offshore drilling.

Oil companies already have access to about 34 billion barrels of offshore oil that they have yet to develop. When you take into account realistic production rates, the fact that this oil would have to be extracted over the course of many decades and the scope of the current proposal, we are talking about displacing from imports just 1-1.5% of our annual consumption.  That DOES NOT make us more energy independent or secure.

Offshore drilling is still a dirty, dangerous risk. Just last year, an oil rig off the northwestern coast of Australia sprung a leak that couldn’t be plugged for nearly 3 months.  An estimated 9 million gallons spilled into the ocean, covering more than 9,000 square miles of ocean. The drilling rig and platform in question were all the newest technology, having been built in the last 3 years, and they caused a spill nearly as large as Exxon Valdez.  Offshore drilling poses a grave threat to our nation’s beaches, oceans and wildlife.  Not to mention billions of dollars and millions of jobs in sustainable tourism and fishing industries along the nation’s coasts.  We risk so much to obtain so little.

This is the new, modern oil rig that spilled oil for almost 3 months just last year, causing an oil spill big enough to be seen from space. And this exact thing could happen off of any of our beaches here in the U.S.

Drilling is a long-term proposition. Any politician who touts offshore drilling as an immediate fix for gas prices (or anything, for that matter) is flat out lying to you.  Even if we opened the continental shelf and/or ANWR tomorrow, oil wouldn’t begin to flow for at least 10 years, and maximum production wouldn’t be achieved before 2027. Only THEN could we get our prices lowered by mere cents per gallon.

“American” oil doesn’t help America. 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 huge, privately owned companies that span the globe and act solely in the interest of their stockholders.  It is true that freeing ourselves from our dependence upon unstable, unfriendly countries for their oil would be better for America.  But offshore drilling does almost nothing to accomplish this.

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.

And just for the record, oil companies already have access to about 34 billion barrels of offshore oil that they have yet to seriously develop.

“All of the Above” is not a solution. Whether we’re talking about federal dollars or private investment, money is limited.  Every dollar spent on a needlessly dangerous and unsustainable fuel source like oil could be more efficiently and effectively spent on renewable energy for our future.

So why did Obama do it? On the surface, the political calculus is there: combined with his recent concession on nuclear power, offering conservatives another of their major energy objectives could pave the way for a comprehensive climate/energy bill.  But this really doesn’t do it for me.  Only a handful of Republicans were “in play” for climate change anyways, and this doesn’t appear to have convinced anyone else.  Indeed, most congressional Republicans angrily panned the plan as “job killing” because it doesn’t jeopardize every last beach in America.  The most moderate Republicans offered only tepid praise for the plan as “a good first step.”  It has been suggested that this centrist tack removes this issue from the upcoming midterm elections amidst the inevitable higher gas prices of summer, but as long as any coast remains protected, I think that talking point remains (and John Boehner clearly agrees).  I really don’t have a good explanation for this.

Sen. Lautenberg put a more accurate spin on the omnipresent conservative mantra proposed by the President today: “kill, baby, kill,” because offshore drilling threatens not only marine wildlife but also coastal economies and jobs that rely on clean beaches and healthy oceans.   The day after this unfortunate announcement, the President released his long anticipated tougher gas mileage standards for cars.  This move will save 1.8 billion barrels of oil over the life of the program.  That’s 1.8 billion barrels of oil we don’t have to drill for or buy, and we can achieve these savings without sacrificing the Chesapeake Bay, North Carolina’s gorgeous Outer Banks, or that beach you go to that you love so much.  These are the solutions we need.  Drilling just isn’t the answer.

This graphic shows the new areas that would be open to drilling in President Obama's new proposal.

One final point worth mentioning:

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 conservatives 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.

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

Posted by Jamie Friedland in Congress, Offshore Drilling, Politics.
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4 comments

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.