More oil production means lower prices at the pump.

I like that.

The free market is for suckers. Real men need subsidies.

Texas "T" made Clampett a millionaire. These days it's more a matter of free market forces taking effect. ( Ho, ho, ho )

Give me oil or give me death!

More oil production means lower prices at the pump.

Also more oil production in the Gulf of Mexico means America is less dependent on oil from Islamofascist countries like Iran. Liberals say they support energy independence so they should support more drilling. They're just being hypocritical by being against oil drilling in the Gulf of Mexico.

Al-you are indeed stupid. We should buy all the oil Iran will sell us and ship them our worthless currency. When it is all gone, THEN we open up the domestic fields.

Republicans--no strategic vision whatsoever. None. Nada. Zip.

Clearly, finding and selling oil just doesn't make enough money, without taxpayers coming up with more to make it all worth while. If only Exxon were more profitable on its own, we could afford universal health care.

Real men don't need no stinking universal health care. They dare to subsist on subsidies from their Republican buddies.

Tpmmuckraker collecting data on Bush's suppression of reports and data that would be embarrassing to them.

The article reports that (1) the oil companies still pay 40% in royalties and taxes (which seems fairly significant to me) and (2)the oil companies have lower royalties due to a drafting error made during the Clinton administration -- "Companies that signed leases in 1998 and 1999 enjoy an unintended loophole that entitles them to royalty-free oil and gas regardless of how high prices climb."

Usually I don't have this complaint, but I gotta say... Kevin's take on this article is just plain misleading.

- The "incentives" Kevin is talking about come in the form of lower government shares of oil revenues. No money's being "funneled" to oil companies by the government here, it's just NOT being funneled the other direction.

- Yes, the US taxes oil production less than other countries. On the other hand, we also tax a hell of a lot of other things less than other countries. I suspect our oil taxes are closer to Britain's than our income taxes are...

- This isn't an issue with most types of offshore drilling, because those contracts have an "escape clause" that means that royalties increase when the price of oil exceeds a certain amount (a bit more'n half of today's price, naturally.) There are only two types of oil wells that don't have these escape clauses.

- The first type are with leases signed in '98 and '99, when for reasons unknown, the administration issued a bunch of leases with no escape clause by accident. You'll note that the Bush administration still referred to the government of Texas at that point; even if we're assuming that this was an error and not the Clinton administration giving away the proverbial house, it's hardly Bush's fault.

- The other kind has to do with natural gas exploration in "deep wells" - in other words, not with oil at all.

- The article isn't clear exactly how much extra production would be generated. It says "less than 1%", but is that to US production or world production? The latter would be HUGE. Is that 300 million barrels a total sum for 40 years of production? If so, that amount's pretty minuscule. But we don't know what it is, because the article doesn't put its figures forward clearly.

- The basic point of the report is that we don't need to incentivize oil production because, while prices are so high right now, most of the extra production that the incentives are pushing would have happened anyway. Finally, a good point! Except that a significant amount of the incentives are, er, already written - the article states that the '98 contract mistakes will cost the government $5 billion over the next 5 years (taking out the amount due to the "deep gas" wells, which are indeed a Bush innovation.) Hm... average of $1 billion per year, and the net cost over 40 years is... $40 billion. (Doubtless this isn't completely fair, as all those '98/'99 leases won't still be in production 40 years from now. But it gives you an idea of how big a goof that was, doesn't it just?)

- If we're really serious about increasing the domestic oil reserve, we have two big ol' coasts that aren't being drilled at all. If you want to talk about oil supply, open up the east and west coasts for offshore drilling!

Avatar,

I respectfully disagree and have to defend Kevin, in that his point is that the very group who are always crowing about "free markets" being the best and "lifting the heavy hand of government regulation" are really not being honest with themselves or the American people. If free markets work so damn well, why do we have to give one nickel to oil companies in incentives? Further, by opening publicly-owned areas to private drilling, we are squandering the commons, not to mention putting vast swaths of marine flora and fauna at risk. These are not traditional conservative values.

By the way, opit, Jed Clampett got rich on "Texas Tea". Get it?

TCD

Avatar (2:49 AM) eviscerated Kevin Drum. Ouch!

Ah, the final scene.

Kevin and Rick walk off the tarmac talking about their budding friendship.

Jett Rink as Avatar attempts to rally the remaining baggage handler.

Texas Tea, indeed.

Just remember next time you're filling your tank with $2.50/gallon gas:

1. In 2000, gas was running about $1.50/gallon. And the Republicans were complaining that it was Clinton's fault that gas prices were so high. (Indeed, Tom DeLay led hearings in 1996 because oil hit $22/barrel, and that OBVIOUSLY was due to some malfeasance on Clinton's part).

2. During the campaign, both Bush and Cheney made numerous statements about how their vast experience in the oil and gas business would allow them to guide America's energy policy to lower prices from the "scandalous" levels under Clinton.

3. Cheney entered office with $120 million in deferred compensation pending from Haliburton (he collects cash and stock when he leaves office), while Condi Rice, Don Rumsfeld, Steve Hadley, and a bunch of other administration insiders all have long-standing big financial ties to oil (hell, Condi has a tanker named after her).

Funny thing is that I filled up on November 7, here in Portland, at $2.25 per gallon and today, I'll fill up at $2.59 - The extra 34 cents must be so the "Re-elect Pubs" campaign can be repaid.

"Avatar (2:49 AM) eviscerated Kevin Drum. Ouch!"

Sure, if "eviscerated" means "brayed at by a jackass", then yeah.

He did some nice cheerleading for the oil companies, though. Those poor, downtrodden underdogs.

This administration just lives to deceive the citizens. Cover up, cover up. Their unity of purpose, no doubt. Just more systemic abuse, stalling, denying reality and hoping it will go away.

Sure, if "eviscerated" means "brayed at by a jackass", then yeah.
Posted by: Locutre

Emits an unladylike snort of appreciation. Good 'un, dear heart.

AVATARDO - If we're really serious about increasing the domestic oil reserve, we have two big ol' coasts that aren't being drilled at all. If you want to talk about oil supply, open up the east and west coasts for offshore drilling!

Evidently Avatar hasn't been to Huntington Beach, California. Home county of Kevin Drum.

Hopefully Kevin won't eviscerate you over this massive flub.

This is one of those things that ought to unite honest conservatives with others opposed to today's Republican party. Aside from theories of governance, etc., there are these very important matters of dishonesty of method, corruption, etc. BTW Avatar, getting to pay less in taxes than others in the same economic circumstance is the definition of a subsidy - whether you really have a net gain from the government, or just pay that much less than others do.

One day we're going to break our dependence on petroleum. I don't know when, it might take a couple of decades, but it will happen. And when it does, everything changes. Everything. Best of all, it will allow us to tell all the tinpot dictators and extortionists sitting on pools of oil that they can drink it for all we care.

bobbyp: We should buy all the oil Iran will sell us and ship them our worthless currency. When it is all gone, THEN we open up the domestic fields.

Exactly. This has been one of my hobby horses for some time. We should let others use up their resources first and use ours when oil is scarce, not just moderately expensive. When only 4 or 5 countries in the world are pumping oil, we will very glad we are one of them.

Think of it as conservation of resources rather than dependence on foreign oil. The same thing applies to lumber. Let Canada cut down its forests instead of us cutting down ours.

Alternative energy sources mean, no domestic drilling, and no relying on Islamofascists who support terror for oil.

But since "alternatives" is a Liberal idea, we can't have that.

We should let others use up their resources first and use ours when oil is scarce, not just moderately expensive.

What we've done is exactly the opposite.

US Oil Production peaked in 1973, and has been on a decline ever since.

We need to phase out the burning of all fossil fuels -- not only oil but coal and natural gas as well -- as rapidly as possible. If we fail to do so, human civilization will not last beyond the 21st century.

- The "incentives" Kevin is talking about come in the form of lower government shares of oil revenues. No money's being "funneled" to oil companies by the government here, it's just NOT being funneled the other direction.

The incentives are the elimination of the royalties for oil drilled from public lands.
(Then there is the whole "targeted" tax cuts issue.)

Other industries that use public lands pay fees and royalties. If the oil industry was drilling on private land they would be expected to compensate the owners. Why should it be any different for government owned land ?

It's a subsidy any way you slice it

The point of the article is that domestic production has increased very little and foreign
production (in those high tax socialist countries that hate the US) has increased a great deal.

"Other industries that use public lands pay fees and royalties."

Oh, not really, not in this country. In general those public land using industries, and other resource extractive industries are heavily subsidized.

Poor red county people just can't get buy without regular checks from the federal government.

My uncle the farmer gets 30k a year on average, for example.

Yeah, having worked on the rigs, that description of a "tight hole" is spot on. Knew the person was not talking about some down at the Belly-To-Belly Sports Bar.

err, by not buy

As Jett Rink, played by James Dean in Giant, while wallowing in the oil, would say, "Hey, I'm just a poor boy; I need all the help I can get"

J. Paul Getty on becoming rich: "Rise early every morning. Work hard all day. Find oil."

Most Americans fail to grasp how incredibly substantial our oil/gas deposits were and how insanely they were pissed away when we were the world's leading petroleum exporting state.

OPEC was modeled on the Texas Railroad Commission by a Venezuelan economist educated here.

1971 not 1973 marked the peak.

The Democrats Clean Edge Act proposes to reduce some subsidies and eliminate others. If that sounds like a good idea to you, now is a good time to write your Democratic senator and representative to urge that the Democrats introduce the Clean Edge Act as soon as possible. Like the Republican bill of 2005, it has its flaws, but it is a step forward. the sooner they introduce it, the sooner they can debate and pass it. Then in 2008 when its good effects are obvious, they can take credit for it.

TCD,

Thanks for the polite comments. I'm afraid too many posters here are used to yelling at Al and have let their debating skills go flabby, heh.

No, actually, I have to agree with your main point - and the point of the report, for that matter. If the price of oil has changed such that the market is accomplishing the same aims as the subsidy supports, and the subsidy has little additional effect, the subsidy should indeed be eliminated. (Where possible, which means not retroactively, unfortunately, so all those '98/'99 leases are still going to be subsidized.)

The administration does have a point that increasing production does have a disproportionate effect on prices, so in that sense, every little bit really does help. (Oil's priced on the margin; increasing the world production of oil by 1% will cause prices to fall sharply, not just by a few pennies.) But yeah, if we're talking a million barrels a year, that's not too much; if we're talking wells that the oil companies would dig anyway, there's no reason to eliminate the royalty.

My main contention wasn't with the report, just Kevin's characterization of the report.

Awt, actually, I'm not familiar with California offshore oil production. A quick search in Google informs me that there are indeed 24 rigs off the California shore, so I stand corrected there. (All 24 seem to be right off the LA coast.)

Here's what that "black gold" is going to buy us.

Oceans Warming and Rising
by Julio Godoy
December 22, 2006
Inter Press Service

Ocean levels will rise faster than expected if greenhouse gas emissions continue to rise, a leading German researcher warns.

Using data from the U.S. National Aeronautics and Space Administration (NASA), Stefan Rahmstorf, professor of physics of the oceans at the University of Potsdam near Berlin estimates that sea level could rise 140 cm by 2100.

Rahmstorf, member of the German Advisory Council on Global Change, is considered a leading European researcher on global warming and its effect on oceans.

"The semi-empirical model we used to process NASA data showed a proportional constant sea level rise of 3.4 mm per year per degree Celsius," Rahmstorf told IPS. "Then we applied this constant proportionality to future earth surface warming scenarios of the Intergovernmental Panel on Climate Change (IPPC), and came to estimate that by the year 2100, sea level could rise between 50 and 140 cm above the level measured in 1990."

Through the 20th century, global warming led to an average 20cm rise in sea level. But most computer models of climate change used at present significantly underestimate sea level rise, Rahmstorf said. "Future projections of sea level based on these climate models are therefore unreliable."

Currently, sea level is rising at three cm per decade, faster than projected in the scenarios of the IPCC Third Assessment Report, Rahmstorf added.

The IPCC, an intergovernmental team of scientists carrying out a wide range of research related to climate change, was established in 1988 by the World Meteorological Organisation and the United Nations Environmental Programme. The IPCC aims to assess scientific, technical and socio-economic information relevant for understanding of climate change, its potential impact, and options for adaptation and mitigation.

Scientific research has found that industrial activities have produced greenhouse gas emissions considerably higher than levels observed before the industrial revolution.

Concentration of carbon dioxide (CO2), the most potent of greenhouse gases, has risen from about 280 parts per million (ppm) in the atmosphere in the year 1750 to about 380 ppm today.

This rise is primarily due to the burning of fossil fuels, and to a lesser extent, deforestation. Scientists estimate that if the present emissions trend continues, the atmosphere could heat up by about five 5 degrees Celsius by 2100.

Studies by the Potsdam Institute for Climate Impact Research suggest that this would roughly be the temperature difference between an ice age and a warm stage. But while the rise of average temperatures by some five degrees between the last great ice age and today took 5,000 years, the new global warming would need only 100 years.

Rahmstorf acknowledged that forecasts of global warming and its effects on sea levels continue to be marked by uncertainty. "The fact that we get such different estimates using different methods shows how uncertain our sea level forecasts still are," Rahmstorf told IPS.

A major reason for the uncertainty is the behaviour of the large ice sheets in Greenland and Antarctica.

A likely consequence of a massive melting of the ice masses on the North Pole could be the breakdown of the North Atlantic Current (NAC). The NAC is the northern extension of the Gulf Stream, and constitutes a warm water current flowing between Britain and Iceland. This has considerable impact in moderating the North European and Scandinavian climate.

"One critical factor for the continuation of this current is the amount of fresh water that enters the Northern Atlantic region in the future," Rahmstorf said. "This will depend in large part on the speed at which Greenland's ice sheet melts."

Rahmstorf, who earlier this year co-authored a research paper titled 'The Future Oceans -- Warming Up, Rising High, Turning Sour' said that reliable prediction on the risk of a total stoppage of deepwater formation in the Northern Atlantic is not possible given present knowledge.

But he pointed out that experts have evaluated that risk at more than 50 percent if global warming is between three and five degrees.

Rahmstorf said greenhouse gases emissions are also increasing the acidity of oceans. "In the atmosphere carbon dioxide does not react with other gases, but in the ocean it dissolves, contributing to the acidification of seawater," Rahmstorf said. This acidity is a serious threat to marine biodiversity.

"There is a good chance to avoid such dangerous climate change if global warming caused by human activities is limited to two degrees in the coming decades," Rahmstorf said.

CO2 emissions are not decreasing. They are increasing. In fact, they are accelerating ... while the US government is subsidizing the extraction of oil, and the official position of the Bush administration is that US emissions of greenhouse gases will continue to increase, indefinitely.

clean edge act here:

http://democrats.senate.gov/energy/cleanedge/

MatthewRMarler wrote:

clean edge act here:
http://democrats.senate.gov/energy/cleanedge/

Thanks for the link. Looks good to me.

I think we need to be -- and could be -- even more aggressive than this plan suggests, but this would certainly be a big step in the right direction.

Compare and contrast it with the plan set forth by Amory Lovins et al in Winning The Oil Endgame, or the Apollo Alliance plan.

Any or all of these initiatives would be a drastic improvement over the status quo business-as-usual.

Al you are an ass.

The U.S. pays the world market price for oil. U.S. domestic production doesn't effect domestic prices at all. If there is "unstability" in oilgeria or petroleumstan and the market "panics," American consumers pay higher prices.

Did you know that Alaskans pay some of the highest gasoline prices in the U.S.?

Only if the U.S. was an autarky--that would mean the U.S. extracted enough oil to satisfy domestic demand; and didn't export--would Americans be insulated from external price variations.

I'm surprised you didn't know, but the U.S. has a semi-free market economy. Apparently, you nor the Republicans who advocate more drilling seem to realize this fact.

Btw, autarky is Greek for "self-sufficiency." But what of Ricardoesque comparative advantage. Oh, wait. When the commodity is oil, that changes things?

What's more, why, in a free market economy, should the government have to pay oil companies to drill for oil. Isn't that the business they are in? Don't oil companies sell the oil for, er, MONEY?

>>Did you know that Alaskans pay some of the highest gasoline prices in the U.S.?

Yeah, Allen. But I also know that every single Alaskan receives a substantial royalty check every year, too.

'In the post-carbon age, growth will be anathema. We can start with population. The United States is already the third most populous nation in the world behind India and China, both of which have long since understood that infinite population growth is the road to the poor house.

Three hundred million Americans, which is more or less our present size, are already using oil at a rate that cannot be sustained. The American Dream is a petroleum dream, a high-energy dream, an oil dream, a gas dream, an electric dream and, of course, a carbon dioxide nightmare. " - Life in a Post-Carbon World/Nicholas von Hoffman
****
"Among the five basic food, energy and industrial commodities -- grain and meat, oil and coal and steel -- consumption in China has eclipsed that of the United States in all but oil." Lester Brown, Earth Policy Institute

the very group who are always crowing about "free markets" being the best and "lifting the heavy hand of government regulation" are really not being honest with themselves or the American people

And in other news, water is wet.