Tuesday, July 15, 2008

"Drill Crazy After All These Years"

So, finally President Bush does something regarding the "new" energy crisis. (Of course there is nothing new about it - it's the same energy crisis we faced in the 70's). The President rescinded the executive ban on offshore drilling ordered by his father oh so many years ago when gas was a buck a gallon. The problem is, of course, it will take action by a congress led by Harry Reid and Nancy Pelosi to have any meaningful impact on the crisis. That won't happen until gas reaches $10 at the pump and the gas riots begin.

For all the people who come down on the side of "offshore drilling won't produce a drop of oil for 5 -7 years" (like, say, Barack Obama) I say, so what. What it will do is send a clear signal that the U.S. will not sit idly by and allow nationalized oil cartels to dictate our economics. A bump of 3 to 5 million barrels a day into the global market will bring down prices. And even if the Saudis reduce production to sustain high prices American oil will reach American markets by way of simple proximity.

Obviously drilling for domestic oil supplies is only part of the answer to America's energy woes. Simply put, the world is growing up and grownups need vast amounts of energy. The world is no longer dominated by the U.S. and Europe. Competing with the emerging nations for energy resources with one hand tied behind our back is part of the problem here. The U.S. is protecting the global movement of oil with our military for our benefit and for the benefit of all other energy users. This is expensive monetarily and politically. President Bush as well as all his predecessors have been burdened with this charge for decades without the benefit of being able to come right out and explain it in such blunt terms. The world economy depends on it. Well, I mean to tell you it is not enough anymore. The world economy is poised to collapse if this problem doesn't get turned around and soon.

Speculation is part of the problem leading to skyrocketing oil prices. This is why bold and decisive action is required by the leaders of the United States. Sending a clear signal to the world is exactly what is needed. Betting on this congress and/or Barack Obama to do it is a fool's wager.

The wail and cry that we need to focus solely on "alternative" energy is suicide for our economy. We need oil for the foreseeable future. Wind, solar, bio-fuels etcetera are all laudable and important goals. These are the future - but the future isn't ready just yet. We need oil!

By all accounts we have it - in Alaska, the outer continental shelf, the oil shale of the mountain west and in places we haven't even looked yet. Herein lies part of the problem - congress has passed laws prohibiting oil producers from even looking for oil in America's most promising places.

The federal Bureau of Land Management estimates the shale formation in western Colorado could yield as much as 1.8 trillion barrels of oil. That's trillion with a "T". Billions upon billions of barrels exist just off the east and the west coasts as well as much of the Gulf. But this oil will remain under the sea or locked up in shale for the foreseeable future. In May 2008, the U.S. Senate's Appropriations Committee voted 15-14 to kill a bill that would have ended a one-year moratorium on enacting rules for oil shale development on federal lands. Perplexing as that is in an of itself the swing vote on the appropriations committee Sen. Mary Landrieu, D-La. voted with the majority even though she actually opposes the moratorium. She obviously owed someone a favor. This is politics in America!!!

As it stands now global investors know that this congress will never allow the United States to develop its own oil reserves. With an Obama presidency it can only get worse. If they (the Dems) would end their objection to new drilling, it would immediately put downward pressure on the speculators in the oil futures markets.

What about McCain? Considering his attack on the oil companies his view of what oil companies should actually do is preposterous:

McCain said. "The point is, oil companies have got to be more participatory in alternate energy, in sharing their profits in a variety of ways, and there is very strong and justifiable emotion about their profits."

Does this man have a clue about free markets and what oil companies do?

Answering to the environmentalists is another huge impediment. Every mishap historically has had a disproportionate effect on American energy policy. Three Mile Island the Exxon Valdez and other incidents both minor and major have crippled our ability to progress in our own energy development. What if the space program shutdown after the first accident that claimed a life? It's simply preposterous to let one special interest group have so much power. The supporters of the environmentalists were the very same people who chided VP Dick Cheney for convening policy meetings on energy with, get this, energy producing companies! Special interest, special interest was the hue and cry. In the end no real energy policy was enacted.

So here we are - $4.00 a gallon and looking up.