Editore"s Note
Tilting at Windmills

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June 18, 2008
By: Kevin Drum

MORE DRILLING....A reader asks:

I'd be interested in your take on what impact extra drilling would have on gas prices and on our dependence on foreign oil.

The short answer is: not much. The immediate, direct impact would, of course, be zero, since it takes years to bring new oil sources online. But what about the indirect impact that new drilling permits might have on perceptions of future supply? Might that help lower oil prices in the near term?

Maybe, but it's unlikely. Take ANWR first. A recent EIA study took a look at the impact that drilling in ANWR would have, and they concluded that it would probably reduce oil prices by 75 cents a barrel in 2025. A change that small two decades in the future almost certainly wouldn't have any effect on commodity traders today.

Offshore drilling is a little harder to get a handle on. Offshore reserves are larger than ANWR, which means their impact on oil prices would also be larger. The problem is uncertainty: even if the federal ban on offshore drilling were rescinded, that doesn't automatically mean there would be any additional offshore drilling. It just means individual states would get to decide what to do. California and Florida are unlikely to allow much offshore exploration, and other states on the Atlantic and Pacific coasts are question marks too. So the question is: how would traders react to a highly uncertain new source of oil that would come online a decade in the future? Answer: there are already lots of uncertain new sources of oil that might come online a decade from now, and oil is selling for more than $130 a barrel anyway. One more uncertain future source of moderate size probably wouldn't have a big effect.

Bottom line: opening up new drilling both offshore and in ANWR would produce more oil and result in modestly lower oil prices once production ramped up a decade from now. You can decide for yourself whether you think the environmental costs are worth it, but the likelihood of this having any impact on oil prices today is tiny.

CORRECTION: Offshore oil reserves affected by the federal ban are estimated at 18 billion barrels, which is indeed larger than ANWR. However, EIA projects that offshore production rates would be about half of ANWR production rates, which means that lifting the ban on offshore drilling would probably have an even smaller effect on future oil prices than ANWR's 75 cents a barrel in 2025. In other words, "tiny" was probably the wrong word in my concluding sentence above. "Minuscule" is more like it.

Note also that over half of that 18 billion barrels is off the California coast and wouldn't be available for drilling unless the California legislature approved it. That's pretty unlikely. (Though given California's continuing epic financial meltdown, anything is possible.)

Kevin Drum 6:09 PM Permalink | Trackbacks | Comments (75)

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Comments

Report from Democratic Rep. Courtney has some interesting information

http://courtney.house.gov/UploadedFiles/Natural%20Resources%20energy%20report.pdf

Posted by: GP on June 18, 2008 at 6:17 PM | PERMALINK

Not that I'm promoting drilling, but seems to me its greatest positive effect would be on our balance of payments.

Posted by: penalcolony on June 18, 2008 at 6:28 PM | PERMALINK

Head over to Salon, The Way The World Works.

The short answer is that recovering all the possible oil from domestic sources would mean nothing. First of all, it wouldn't be available for 5-7 years. By then, the price of oil from known reserves already producing will have doubled.

The time of oil as a fuel source is over. The only hope is finding a substitute in the next decade so that the remaining oil can still be used for the manufacturing of plastics and lubrication. It will actually take a lot longer to develop substitutes for those two uses.

Posted by: Jeff II on June 18, 2008 at 6:30 PM | PERMALINK

Actually Jeff II, it might not take as long as you think to find substitutes for oil based plastics and lubricants. Most plastics are still carbon based and in theory, could be built up from CO2 (but energy intensive) or even from the switch grass on Dubya's ranch. Research in tribology is showing that silicon based oils do quite a fine job.

Posted by: optical weenie on June 18, 2008 at 6:36 PM | PERMALINK

It'll take years before those wells would be productive. The oil companies already have land leased in the U.S.A. they don't use, so what's the push for this? Do you really think this will lower the price of oil? Who would the oil companies charge for the equipment, drilling costs, overhead, and whatever else they can think of to pull another few cents over to their side?

Posted by: taxpayer on June 18, 2008 at 6:43 PM | PERMALINK

If oil companies were held liable for all of the environmental destruction they create, how much would that add to the cost of a barrel of oil?

Posted by: Brojo on June 18, 2008 at 6:48 PM | PERMALINK

A friend suggests that the easiest way to make more oil is to conserve gasoline and diesel fuel by reducing the speed of traffic to 55 mph. Sound familiar? Your Ford Excursion could get, instead of 8 or 9 mpg, perhaps 13 or 14 mpg. All vehicles are much more efficient at 55 than 75 because wind resistance, power requirements, and fuel consumption increase exponentially as speed increases.

Traffic enforcement departments could strictly enforce this speed limit and, at least at first, make enough on traffic tickets to pay for any foreseeable gasoline prices and keep their officers
on the roads.

This benefit only takes a law to enact and no wildlife will be threatened. Commuter trains could be built that will pass vehicular traffic like it's standing still. And almost everyone will take the train.

Posted by: slanted tom on June 18, 2008 at 6:48 PM | PERMALINK

Actually Jeff II, it might not take as long as you think to find substitutes for oil based plastics and lubricants. Most plastics are still carbon based and in theory, could be built up from CO2 (but energy intensive) or even from the switch grass on Dubya's ranch. Research in tribology is showing that silicon based oils do quite a fine job. Posted by: optical weenie

Then there are the plastics that can be produced from soy protein (don't go there!) and crustacean shell.

Of course substitutes will be found, but they're going to be expensive even when compared to oil.

Posted by: Jeff II on June 18, 2008 at 6:52 PM | PERMALINK

"Not that I'm promoting drilling, but seems to me its greatest positive effect would be on our balance of payments."

This is true. But even that will be minimal. We will still have to import huge amounts of oil. And leases that go to foreign oil companies won't help the trade balance at all. I'm sure Royal Dutch Shell, British Petroleum, Total Fina Elf, and India Oil will all want a piece of the action.

Posted by: fostert on June 18, 2008 at 6:53 PM | PERMALINK

Depends on where they drill, it if was in shillary's @ss, there is the potential to unleash an unlimited amount of gas and other highly combustible substances.

Clearly, she does not belong in the White House, but instead in a natural gas field (along with her racist, ignorant supporters).

Posted by: on June 18, 2008 at 6:54 PM | PERMALINK

Conserve. First and foremost. Reregulate the markets. Didn't we learn anything from Enron? You trade oil, you take delivery. As if the oil market benefits from speculation. Give me a break.

Posted by: ahoyhoy on June 18, 2008 at 6:57 PM | PERMALINK

A friend suggests that the easiest way to make more oil is to conserve gasoline and diesel fuel by reducing the speed of traffic to 55 mph. Sound familiar? Your Ford Excursion could get, instead of 8 or 9 mpg, perhaps 13 or 14 mpg. All vehicles are much more efficient at 55 than 75 because wind resistance, power requirements, and fuel consumption increase exponentially as speed increases. Posted by: slanted tom

The other savings, for what it's worth, is lower traffic fatalities. Insurance companies liked this last time around.

Then there would be raising the national driving age to 18. Anyone want to open that can of worms?

Posted by: Jeff II on June 18, 2008 at 6:59 PM | PERMALINK

With regard to offshore energy resources, according to a 2005 report entitled A Framework for Offshore Wind Energy Development in the United States, sponsored by the US Department of Energy, Massachusetts Technology Collaborative, and General Electric, there is as much wind power potential (900,000 megawatts) off the US coasts as the current capacity of all electric power plants in the United States combined.

And that doesn't include the onshore wind energy potential -- other studies have found that the commercially exploitable wind energy of a few midwestern states could also provide as much electricity as the entire country consumes.

Yet other studies have found that concentrating solar thermal power plants installed in the deserts of the American southwest could likewise supply more electricity than the entire USA currently consumes. And that doesn't include the solar energy potential from millions of distibuted photovoltaic systems.

What is McCain's response to the fact that fully exploited wind and solar power can provide more than twice as much electricity as the entire country uses -- with existing technology that is already in commercial production, which can be deployed safely and quickly (three years or less to put up a solar thermal power plant or a wind farm)? Why, build more nuclear power plants of course.

Posted by: SecularAnimist on June 18, 2008 at 7:06 PM | PERMALINK

Drill for more oil at the same time we have to get off petro to stop global warming? Regardless, if the Republicans insist on making this a campaign issue, the Democrats should present a bill that includes offshore drilling in selected areas with a WHOLE PROGRAM of R&D and tax subsidies for solar and wind power, public transportation in urban areas, and anything else relating to alternative energy sources. See the bet, and raise it.

There is no political downside to this. The public is mighty fed up with business as usual, sick of the oil companies and the Republican cosiness with them, and NOBODY believes this is going to reduce the price of oil, or the need for more wars to secure it, for more than a few moments.

Similarly, McCain is asking for more nuclear power plants, and the public should be reminded of the original government expenditure on the development of nuclear, and the enormous indirect subsidy the industry still receives in the form of the Price-Anderson Act releasing them from having to carry full liability insurance for an accident. There is absolutely no reason not to subsidize, say, solar thermal generating plants to the SAME dollar amount.

Now is the time to move on all of this.

Posted by: Lee A. Arnold on June 18, 2008 at 7:08 PM | PERMALINK

There is a real benefit to offshore drilling. To Republican candidates looking to change the subject from their failed economic, energy, and foreign policies. No one else, however.

It is farcical. By the time these wells came in, the dollar will be worth 3-percent of the Euro. Which is the point. Supply is all right. The dollar also sucks right now in competing for the supplies of oil from the greedy cartel that controls prices worldwide. I say nationalize the oil companies. If only for spite.

Posted by: Sparko on June 18, 2008 at 7:10 PM | PERMALINK

While I don't claim to be an authority on the subject, to the best of my knowledge, tapping ANWR and maximizing offshore drilling would give us ~ 4 years worth of oil at our current rate of consumption.

This oil wouldn't materialize until a good decade from now, long after all sane folks realize that a move beyond an oil based economy is in order!

We can pretend that our adventures into the heart of the Arab World will yield us decades of oil, but at this moment the costs associated with doing so are becoming more and more prohibitive (both monetarily and socially).

I propose a Manhattan type project to research and develop a spectrum of alternative energy sources.

Who knows, maybe the deep earth microbes that we have recently discovered might be harnessed to make "oil" by means other than "fossil." As in, weeks versus millions of years. Genetic engineering might bear fruit with ethanol producing bacteria that use woodchips (saw grass, sugar cane waste, etc.) as their foodsource.

Offshore drilling is akin to relying on the telegraph in an era of WIFI!!!!

Posted by: Tom Nicholson on June 18, 2008 at 7:11 PM | PERMALINK

The Thom Hartman show this a.m. was all about this topic. The former Naval Reserve [now the Federal Reserve?] is where the oil companies have permits to drill, but have chosen not to do so.

Any guesses as to why the oil companies would set on known reserves?

Posted by: bobbywally on June 18, 2008 at 7:14 PM | PERMALINK

I propose a Manhattan type project to research and develop a spectrum of alternative energy sources. Posted by: Tom Nicholson

It's already been done, sort of, and is languishing in congress (but under the Apollo name brand).

http://www.house.gov/inslee/issues/energy/new_apollo_energy_act.html


Posted by: Jeff II on June 18, 2008 at 7:19 PM | PERMALINK

The actual impact on prices is pretty much as outlined here. The thing I fear is the potential political backlash against the Democrats if they can be painted as obstructionist here. Offshore should be a no-brainer, you can remove the federal restrictions, and the state governments will almost certainly say NO. So lets be seen as unobstructionist here -and as Lee advocates above, we might even be able to extract some concessions on renewables, and conservation. Opening these up *might* paradoxically reduce demand, as the distraction from the constant cries of "if only they'd allow them to drill" would be reduced.

Posted by: bigTom on June 18, 2008 at 7:20 PM | PERMALINK

Probably more energy is created by the black top parking lots in Phoenix this afternoon than all the oil in ANWR, but no one utilizes this free energy source.

Posted by: Brojo on June 18, 2008 at 7:25 PM | PERMALINK

Whenever I hear ANWR and offshore drilling discussed, I never hear anybody talk about how much the federal government should charge for the oil that we own.

Who owns the oil off California's coast, the state of California or the federal government? As a non-Californian I don't think that Californians should be able to decide whether or not we can drill for our national oil off of our national coast.

Posted by: on June 18, 2008 at 7:31 PM | PERMALINK

Probably more energy is created by the black top parking lots in Phoenix this afternoon than all the oil in ANWR, but no one utilizes this free energy source. Posted by: Brojo

Nothing pisses me off more with this topic than the fact that they didn't phase in solar everything in desert SW. Probably half the country could reap huge benefits from solar. But it's the thoughtless and unchecked growth of cities like Las Vegas and Phoenix that I find particularly maddening. At least they don't any longer permit artificial lakes in the former or lawns in the latter.

Posted by: Jeff II on June 18, 2008 at 7:33 PM | PERMALINK

(It's already been done, sort of, and is languishing in congress (but under the Apollo name brand).

http://www.house.gov/inslee/issues/energy/new_apollo_energy_act.html)

Sort of doesn't cut it. And this is not a "Manhattan Project" given that there are way too many earmarks, tax credit gibberish etc.

No, massive (secret?) research on a massive scale is the only way to wean ourselves from oil.

I propose releasing 25% of the cost of the Iraq war towards such an endeavor. That'd be ~ 600 brazillian dollars!

:-)

Posted by: Tom Nicholson on June 18, 2008 at 7:38 PM | PERMALINK

To bobbywally.. I suspect you're being rhetorical but an answer to your question is pretty much laid oout in this video Titled "The Energy Non-Crisis" :

http://video.google.com/videoplay?docid=3340274697167011147

"Frightening - How did a missionary in Alaska predict $4 gas two years ago?!"

Posted by: Daro on June 18, 2008 at 7:46 PM | PERMALINK

"modestly lower oil prices..."

$0.75 per barrel in twenty years? Shouldn't this read "negligibly" lower or "minutely" lower or "imperceptibly" lower??

Posted by: deacon on June 18, 2008 at 7:58 PM | PERMALINK

Can anyone tell me why there is a ban on drilling offshore? I'm not being glib. I'd really like to know. We already drill offshore in certain areas, why not in these others? Also, I agree with a previous commenter. I fear this could really bite the Dems in the ass. Why not put together a nice package of progressive energy policies as outlined above, that includes lifting the federal ban in these areas, and let our Commander in Chief veto it?

Posted by: Andre D'Elena on June 18, 2008 at 8:21 PM | PERMALINK

I think this should be stressed: The oil companies already have thousands (millions?)of acres and tens of thousands of oil drilling permits, which they have chosen NOT to pursue at this time. As I understand it, there is NOT a ban on offshore drilling, there is a ban on leasing new land and/or any more new permits to drill.

To say that Democrats are obstructing is a purely political ploy but one that could really resonate, with the high gas prices.

I heard Rep. Peter Defazio (D, OR) on a radio show this AM talking about it. The industry apparently says they aren't pursing what they have already because of a shortage of drills, equipement, crews.

It isn't clear why they need more, since they are utilizing a minute fraction of what they have.
Or maybe they've just found their hotbuton issue of the 2008 election.
I wonder what the "liberal media" will report??

Posted by: on June 18, 2008 at 8:35 PM | PERMALINK

Funny thing is that Bush obstructed drilling off Florida when JEB was trying to get the NIMBY vote in 2002...How short of a memory span do they think we have anyway?

Posted by: Jet on June 18, 2008 at 9:05 PM | PERMALINK

Watch, in the run-up to the election the GOP will dump a butt load of oil stock on the market so the PTT will intervene and artificially [Taxpayers foot the bill] drive gas prices down.

Posted by: Jet on June 18, 2008 at 9:08 PM | PERMALINK

The only people that will benefit from opening drilling and relaxing environmental standards on refineries will be oil companies.

Posted by: ChrisS on June 18, 2008 at 9:40 PM | PERMALINK

And as if on cue: Bush Says Dems to Blame for High Gas Prices ABC News

We should all note that gasoline was a LOT cheaper before the invasion of Iraq.

It's like Harry Reid says: "Whatever Bush says, believe the exact opposite."

Posted by: Me-again on June 18, 2008 at 9:46 PM | PERMALINK

A few thoughts...

* A faster way to reduce the price of gasoline in the US would be to build a few more refineries. None have been built in the US since, I believe, the Ford administration.

* An earlier poster suggested lowering the speed limit back to 55 MPH. Another step has a similarly dramatic effect on car MPG: proper tire inflation. Most tires should be inflated to ~ 35 PSIG; lower, and it takes more gasoline to move a car at any speed.

* The longest-term part of the car equation is the gradual replacement of fuel-inefficient cars in the US fleet (hello, Suburban Earth Rapers) with more fuel-efficient ones. Fewer HUMMERS, more Focuses (Foci?).

Combine these three, and you probably get a net savings of oil which easily exceeds the total amount of oil available in both ANWR and offshore-drilling. Indeed, I've seen it mentioned elsewhere that merely making sure that tires are properly-inflated saves more oil than every drop in ANWR, and in far less than 20 years.

-Z

Posted by: Zorro on June 18, 2008 at 9:57 PM | PERMALINK

Don't forget, if we still need oil for cars and planes in anothre 10 years, we are screwed in many ways!

And if other countries continue to develop, then demand will far outstrip any increase.

Posted by: lilybart on June 18, 2008 at 10:05 PM | PERMALINK
Then there would be raising the national driving age to 18. Anyone want to open that can of worms?
I got a swiss army knife, an electric opener, a churchkey, and 3 different kinds of hand-crank openers. You have a preference as to which I use? How about 21? If fewer kids are growing up expecting to have or use a car regularly in their teens, they'll be less dependent on them as adults. Lower the drinking age to, or below, Selective Service registration age. Expand public transportation and increase planning around it. Beef up enforcement even more - encourage people to use mass transit or carpool occasionally (out of fear) and they'll be easier to convince to use it when they're not drinking. Make plans to fund more alcoholism treatment and prevention, while you're at it, 'cause we're gonna need to. There will almost certain be some ancillary effects that aren't intended. but if you have to choose between increases in cirrhosis and CO2(and other GHGs) - which has the greater measurable short- and long-term impacts? Eh, I guess it's a way to push conservation, not as pleased with the idea after seeing it it on the screen.

Speed limits? How about we set a curve - high efficiency vehicles permitted to travel faster? On a motorcycle, that 1-2 mpg gain (my data, not speculation) at 55 translates into less than 5% - and I'm already over 43 mpg at higher speed. Drop that Excursion to 45 and it'll get closer to 18.
I have a feeling, though, that in this case, the invisible hand is already goosing people.
I've noticed that traffic on the highways and to a lesser extent, secondary roads, is moving a little slower in the metro-Boston area, where a year ago the same traffic conditions would see higher speed ranges in the faster lanes. Not a lot, but if it that's what I'm actually seeing and it continues, lowering the speed limit may not be necessary from a conservation standpoint.

Posted by: on June 18, 2008 at 10:07 PM | PERMALINK

Don't fall for that we need more refineries crap. A couple of years back new US refineries would have made refining more competitive (i.e. refiners were making big big profits), that is no longer the case. Current refinery utilization is low, for two reasons, demand is less than capability, and Europe is refining a lot of oil to get diesel, which is in short supply, and shipping their surplus gasoline to the US. The only refinery capability that would help is for heavy sour crude. This capability is being build mostly in the mideast. Until this capability is ready the world can't consume all the heavy oil available. By the time this capability is ready, expect depletion of light oil to be strong enough to make up for the additional heavy oil capability. This means scarcity pricing should get worse with time.

Posted by: bigTom on June 18, 2008 at 10:43 PM | PERMALINK

If these were an example of peak oil - the gas price of $ 4.00 would have put enough of a dent in supply that is should have created more oil on market - but it didn't - IT IS NOT PEAK OIL. IT'S Price gouging = A term for a seller pricing much higher than is 'fair'. Congress won't do anything about it, won't really investigate big oil because big oil owns congress. When ever big oil shows up on capital hill, the CEO's never have be under oath.

Bush is just letting his friends charge whatever the hell they want, free of windfall taxes, free of even of taxes at all until just recently. And the example of the corruption is these unbid contracts way KBR is able to OVER-CHARGING in Iraq. All the unbid contractors are over-charging in Iraq.

Bush and Cheney have broken their oaths of office with torture, with wiretapping and LYING about the energy crisis. Bush and Cheney lied about the reasons for this war in Iraq because it was never about anything but getting control of that oil in Iraq, and it has become really evident. Yet Nancy Pelosi won't take impeachment of the table.

WHY THE HELL NOT? How bad does it have to get?

Posted by: Me-again on June 18, 2008 at 10:49 PM | PERMALINK

I have a great idea to get some more oil on the market.

Why don't we find a way to get those Iraqi's to quit blowing up all their oil hardware and let the rest of us bath in the spoils?

Posted by: says you on June 18, 2008 at 10:50 PM | PERMALINK

A faster way to reduce the price of gasoline in the US would be to build a few more refineries.

Right, it's a control factor.

AND divide up the oil monopolies.

Posted by: Me-again on June 18, 2008 at 11:00 PM | PERMALINK

OK. So by 2025 drilling in ANWAR will reduce the price of oil by $0.75 per gallon, and by drilling offshore the oil actually lifted will be half the ANWAR amounts. So neither will be effective in reducing the price of gasoline.

But let's look at off-shore drilling. The real problem with that is the danger of oil spills destroying Florida's or California's beaches. In California's case that's bad. But Florida?

Florida is also sitting in the direct route of Hurricanes. They are a target for hurricanes. So every time a new one hits they expect the whole damned U.S. to pay to rebuild their Florida society, and the reason so damned many people live there is the warm weather and the beaches!

Perhaps we should encourage drilling off-shore off Florida, and heavily report all oil spills and damage to the beaches! People might be encouraged to actually move out of the way of Hurricanes, and it would certainly lower the value of property destroyed by hurricanes! Insurance companies would love it. Only Florida Realtors would be hurt, and they can always move to better markets.

Florida does seem to be unique, but those of us currently paying $4.00 a gallon for gasoline and expecting more should applaud their sacrifice by allowing off-shore drilling. There is no real downside. It's not like Alaska where Polar Bears may become extinct from ANWAR drilling. Every little bit helps the rest of us.

This is just a modest proposal for dealing with the current high price of gasoline. Florida should sacrifice its beaches and offshore environment.

Posted by: Rick B on June 18, 2008 at 11:41 PM | PERMALINK

All vehicles are much more efficient at 55 than 75 because wind resistance, power requirements, and fuel consumption increase exponentially as speed increases.

Just wondering if this is alway true…Sorry, it’s the OCD math chemistry geek in me.

Wouldn't you also need to factor in gear ratios, rpm, and tire size? How about the flow dynamics of fuel delivery in the intake manifold? The effect of the combustion chamber shape? Also don't equal length headers have a pulse effect at higher rpm that increases efficiency? Is fuel consumption linear, geometric, exponential or something else??? I seem to remember it is a curve related to the hp and torque curves measured at the wheels. It’s been a while since I thought about this. But, the more I think about it the more interesting the problem becomes. Maybe a truck is more efficiencant at 65 than 55? I am just asking...

Any Physics or Engineering guys out there?
Guess nepata is right and mental ability diminishes with age. :-)

Posted by: MLuther on June 18, 2008 at 11:47 PM | PERMALINK

The Committee on Natural Resources produced a special report this month called "The Truth About America's Energy: Big Oil Stockpiles Supplies and Pockets Profits. Page Five has an excellent graph showing how drilling permits and the number of wells drilled has risen precipitously, and yet so has the price of gas.
URL: http://resourcescommittee.house.gov/images/stories/Documents/truth_about_americas_energy.pdf

Posted by: John on June 18, 2008 at 11:56 PM | PERMALINK

You want to know the REAL reason we are at the mercy of foreign (and hostile) oil producing countries? The Republicans. It has been their unswerving, paid alligence to Big Oil and Coal and conspiracy to back-burner and trivialize clean and renewable energies like solar and wind every step of the way. It's a scandal of the first order. We never should have been in this predicament. People have been calling for clean alternatives for decades now but Congress, in bed with Fat Cat CEOs, have done all they could to favor Oil and Coal by giving them huge subsidies and tax breaks while simultaneously roadblocking R&D into renewables. Why? Because de-centralized alternatives would mean no longer being dependent on a large central corporation to provide one's energy needs. A population with their own solar panels or wind turbines etc. would OWN their energy and not have to continually pay for it and they simply couldn't have that. Frankly, it's just insane.

One would think that with the sudden spiking of gas prices recently, though, they would remember their supposed role of looking out for the American people and would realize that we should be investing in renewables - but you’d be wrong.

“Separately, Democrats also failed to get Republican support for a proposal to extend tax breaks for wind, solar and other alternative energy development, and for the promotion of energy efficiency and conservation. The tax breaks have either expired or are scheduled to end this year…. The oil companies could have avoided the tax if they invested the money in alternative energy projects or refinery expansion. It also would have rescinded oil company tax breaks — worth $17 billion over the next 10 years — with the revenue to be used for tax incentives to producers of wind, solar and other alternative energy sources as well as for energy conservation.”

http://www.huffingtonpost.com/2008/06/10/republicans-block-extra-t_n_106282.html

http://www.ens-newswire.com/ens/jul2002/2002-07-19-09.asp#anchor2

http://findarticles.com/p/articles/mi_m1525/is_4_85/ai_63127627

When Bill Clinton tried to make it fairer again the Republicans put the breaks on anything that could lead to a switch away from dirty energy (oil, coal, nuclear).

http://clinton4.nara.gov/WH/new/html/Tue_Oct_3_130025_2000.html

Posted by: Byron on June 19, 2008 at 12:14 AM | PERMALINK

You want to know the REAL reason we are at the mercy of foreign (and hostile) oil producing countries? The Republicans. It has been their unswerving paid alligence to Big Oil and Coal and conspiracy to back-burner and trivialize clean and renewable energies like solar and wind every step of the way. It's a scandal of the first order. We never should have been in this predicament. People have been calling for clean alternatives for decades now but Congress, in bed with Fat Cat CEOs, have done all they could to favor Oil and Coal by giving them huge subsidies and tax breaks while simultaneously roadblocking R&D into renewables. Why? Because de-centralized alternatives would mean no longer being dependent on a large central corporation to provide one's energy needs. A population with their own solar panels or wind turbines etc. would OWN their energy and not have to continually pay for it and they simply couldn't have that. Frankly, it's just insane.

One would think that with the sudden spiking of gas prices recently, though, they would remember their supposed role of looking out for the American people and would realize that we should be investing in renewables - but youd be wrong.

Separately, Democrats also failed to get Republican support for a proposal to extend tax breaks for wind, solar and other alternative energy development, and for the promotion of energy efficiency and conservation. The tax breaks have either expired or are scheduled to end this year. The oil companies could have avoided the tax if they invested the money in alternative energy projects or refinery expansion. It also would have rescinded oil company tax breaks worth $17 billion over the next 10 years with the revenue to be used for tax incentives to producers of wind, solar and other alternative energy sources as well as for energy conservation.

http://www.huffingtonpost.com/2008/06/10/republicans-block-extra-t_n_106282.html


Since this site doesn't allow more than one or two links, more to follow.

Posted by: Byron on June 19, 2008 at 12:18 AM | PERMALINK

http://www.ens-newswire.com/ens/jul2002/2002-07-19-09.asp#anchor2

http://findarticles.com/p/articles/mi_m1525/is_4_85/ai_63127627

Posted by: Byron on June 19, 2008 at 12:19 AM | PERMALINK

When Bill Clinton tried to make it fairer again the Republicans put the breaks on anything that could lead to a switch away from dirty energy (oil, coal, nuclear).

http://clinton4.nara.gov/WH/new/html/Tue_Oct_3_130025_2000.html

Posted by: Byron on June 19, 2008 at 12:21 AM | PERMALINK

Brojo

Small countries whose primary export is oil are almost always authoritarian governments until a socialist government takes over (see Venezuela and Hugo Chavez.) The reason is that power belongs to those with control of the money coming into the nation. Remember, that control is given by the oil companies until the government gets strong enough to kick them out, and from then on the control of power and national income belongs to the government. It is invariably the case that the government will sacrifice the rights of its population to keep the money that gives them power rolling in.

The opposite case is an economy where most international income comes from a variety of sources like all industrial nations. Such nations have to depend on their own people for the power the government wields, and that is the definition of democracy. The American democracy was based on the well-known yeoman farmer in the north and the slave-owning plantation owners of the South.

In all cases, the government belongs to the source(s) of its revenue. When the money comes from oil or another primary resource (like copper or Gold) in international trade, then the government becomes an authoritarian one, whose responsibility is controlling the population so that the source of its income is not damaged. That's because the government has to cater to the money suppliers, and if those suppliers are a monopoly, cartel, or close oligopoly, then the government has to be authoritarian to deal with them effectively.

The result is that almost all small country oil exporters with most of their national income from oil have authoritarian governments. Nations that have a varied set of exports tend to be democracies. (That's long term. It looks good for democracy in China, but not soon.)

Posted by: Rick B on June 19, 2008 at 12:40 AM | PERMALINK

All vehicles are much more efficient at 55 than 75 because wind resistance, power requirements, and fuel consumption increase exponentially as speed increases.

Just wondering if this is alway true…Sorry, it’s the OCD math chemistry geek in me.

Wouldn't you also need to factor in gear ratios, rpm, and tire size?
-MLuther

----

Use the trip computer in your car if you have one and check your real-time mpg at different steady speeds on flat stretches of the same highway under the same conditions. I don't have one of those unfortunately. The last time I did this experiment was with an '87 Chrysler LeBaron 2.2L Turbo Coupe. It got the best mileage at 62mph and then it fell very rapidly after that. There wasn't much difference between 55-62 though.

My parents had a HUGE '73 Chrysler Newport with a 400V8 and we got 22.7 mpg following a moving van at 50 mph in 1975. I had a '71 Chevy 1/2ton pickup with a 350V8 and got 19mpg at 50 mph (it would get about 15 mpg at 65mph.

Posted by: Doc at the Radar Station on June 19, 2008 at 12:54 AM | PERMALINK

OK, Kevin, I'm going to bash you over the head again over your dumb-ass ANWR post from a few days ago.

If ANWR drilling would only lower oil costs by 75 cents/bbl, why would you use ANWR as a "bargaining chip"? Why would you claim that environmentalists don't really care about energy issues? Why would you set up straw men like you did in that post?

Ladies and gentlemen, the Flip-Flop Blogger™ strikes again!

Posted by: SocraticGadfly on June 19, 2008 at 1:04 AM | PERMALINK

Secular Animist, I really don't get Schmuck Talk pushing nuclear inasmuch as Arizona would reap a jobs bonanza from solar power.

Posted by: SocraticGadfly on June 19, 2008 at 1:08 AM | PERMALINK

Doc,

Wouldn't you also need to factor in gear ratios, rpm, and tire size?

Those don't matter. You can assume them away by assuming that to the extent gas mileage is an important factor, drives will already be maximizing those easily controlled factors.

The real issue is those systemic factors individual drivers have no personal control over. The sharp drop in value of low gas mileage SUVs and the closing of SUV plants by GM is an example of why rpm and gear ratios are not important in the current calculus. Those things are already being pushed to their maximum.

Posted by: Rick B on June 19, 2008 at 1:22 AM | PERMALINK

Drilling in ANWR, or even the existing oil fields in Alaska might make a difference if the oil companies involved stopped exporting the oil to other countries. But since the oil companies won't do that, I see zero reason to allow drilling in ANWR.

Posted by: Tangurena on June 19, 2008 at 1:27 AM | PERMALINK

Drilling in the Refuge will likely have no impact (even in 10 years) on oil prices. The marginal production will not be in Alaska, it will still be in Saudi Arabia. It is the marginal level of production relative to demand that determines the price of oil.

Posted by: oregonj on June 19, 2008 at 1:34 AM | PERMALINK

It may all be moot if these guys can get online fast enough:

http://www.ls9.com/about/

Yes, it will take a decade or more to scale up, but reports of the death of oil and oil-based infrastructure may be greatly exaggerated.

Posted by: tbeutel on June 19, 2008 at 2:16 AM | PERMALINK

Jeez, Byron, next you'll be telling us that Jimmy Carter was 30 years ahead of his time, and that the Reagan administration and their fellow-travelers got us into this mess.

Posted by: kenga on June 19, 2008 at 8:39 AM | PERMALINK

RickB, That's 75 cents a barrel, not gallon.

Significant sacrifices for moderate or insignificant gains in supply ain't the answer.

The oil party is coming to a close. Time to figure out the next step. Conservation, urban planning, and mass transit, etc. is the easiest and most effective first step.

I know for a fact that laying under the paved roads of most rust belt cities are rails from the street car days of the 1920s.

Posted by: ChrisS on June 19, 2008 at 9:05 AM | PERMALINK

kenga, yes, that's about the size of it. But say this to your average flag-waving American Patriot is liable to get you an earful of invective.

Allow me a slight paranoia. Since W & Co. have been in office there have been some disturbing but coincidental tragedies and other bad news that seem to result in neo-con policies that turn out to be just what they wanted all along. 9/11 resulted in an invasion of Iraq which we now know was what they planned even before that day.

In the case of oil, hard line conservatives have tried just about every trick in the book to obtain drilling in ANWR, National Parks and offshore but have been consistantly stymied by environmentalists and the general populace. Now that W has just months left in his reign suddenly oil prices are shooting up (it does seem rather sudden, and apparently the price of gas has been manipulated in the recent past with the help of the Saudis.

http://money.cnn.com/2004/04/19/news/international/election_saudi/

http://www.democracynow.org/2004/4/20/did_bush_cut_secret_oil_deal

Posted by: Byron on June 19, 2008 at 9:55 AM | PERMALINK

Predictably Bush and the neo-cons are using the present price hikes as an excuse to demand that drilling.

http://www.whitehouse.gov/news/releases/2008/06/20080609-1.html

Another example is the current world food price crisis which seemed to come out from nowhere. Europe has steadfastly refused GMOs despite the fact that the US has been trying for years to ram it down their throats. But now with this sudden crisis they are being almost forced to accept it.

http://www.nytimes.com/2008/04/21/business/21crop.html?pagewanted=print

It's the suddeness and timing of these events that has got me suspecious. Brother, can you spare a dime?

Posted by: Byron on June 19, 2008 at 10:00 AM | PERMALINK

Jimmy Carter was an engineer and consequently what he said about energy and the environment were pretty much based on reality. His understanding of the treachery of world politics were blinded by growing up in a nice place with good people everywhere. He didn't understand the dark side because he wasn't exposed to it growing up in rural Georgia.

The neoCon noise machine conflates these aspects at every chance to prevent us from doing the right thing with respect to energy and environmental issues by saying Jimmy Carter was the worse president ever. I say Ronald Reagan was the worse president ever because he took JFK's famous "Ask not what your country can do for you. Ask what you can do for your country." and made them into:

Ask not what you can do for your country. Ask instead what your country can provide to your rich corporate friends and some will trickle down on you.

Bush, Cheney and McCain are saying the same.

Posted by: slanted tom on June 19, 2008 at 10:15 AM | PERMALINK

His understanding of the treachery of world politics were blinded by growing up in a nice place with good people everywhere. He didn't understand the dark side because he wasn't exposed to it growing up in rural Georgia. Posted by: slanted tom

Nonsense. Carter attended the U.S. Naval Academy, served for a number of years, and was in the state legislature in Georgia before his term as governor before running for president. You make it sound like he went straight from his farm in Plains to the White House.

Carter's fault was that he thought too highly of the American public. He saw the long term energy situation for what it was and understood that some sacrifices would be required in the short run before solving the energy situation. We vapid Americans had lived pretty cushy lives for too long and didn't want to change our high consumption lifestyle. Carter didn't fail America, America failed Carter.

Posted by: Jeff II on June 19, 2008 at 10:48 AM | PERMALINK

Face it, folks, crude is just too fucking valuable to indefinitely continue to burn it up in cars and trucks. There's no magic wand to wave over this issue and make it go away. We've built our whole economy and way of life on the premise of permanently cheap oil and that's frelling over.

But OTOH this is completely unacceptable:

As William Engdahl/"The Real Reason behind High oil Prices" (Global Research): http://www.smirkingchimp.com/thread/15347 "A conservative calculation is that at least 60% of today’s $128 per barrel price of crude oil comes from unregulated futures speculation by hedge funds, banks and financial groups using the London ICE Futures and New York NYMEX futures exchanges and uncontrolled inter-bank or Over-The-Counter trading to avoid scrutiny. US margin rules of the government’s Commodity Futures Trading Commission allow speculators to buy a crude oil futures contract on the Nymex, by having to pay only 6% of the value of the contract. At today's price of $128 per barrel, that means a futures trader only has to put up about $8 for every barrel. He borrows the other $120. This extreme “leverage” of 16 to 1 helps drive prices to wildly unrealistic levels and offset bank losses in sub-prime and other disasters at the expense of the overall population."
Posted by: MsNThrope on June 19, 2008 at 11:07 AM | PERMALINK

The Committee on Natural Resources produced a special report this month called "The Truth About America's Energy: Big Oil Stockpiles Supplies and Pockets Profits. Page Five has an excellent graph showing how drilling permits and the number of wells drilled has risen precipitously, and yet so has the price of gas.Posted by: John

While this may be true, it has nothing to do with the gradual increase in consumption world-wide. Oil is not just an American problem. Our consumption continues to climb, but more important is the fact that oil consumption remains high in Japan and is climbing in India and China. While an overnight increase in refining capacity might marginally affect the price of oil, the supply out of the ground has probably peaked. Any increase in supply at this point will be at a much higher recovery cost than currently exists for the overwhelming bulk of world production, so price will not decline.

Posted by: Jeff II on June 19, 2008 at 11:18 AM | PERMALINK

The cause of current high gasoline prices is not because of inadequate supply - it is excessive demand and a weak dollar, caused by the moutain of bad checks that George W. Bush has written.

This push to drill more by McCain and Bush is a smoke screen to make the knuckle-dragging rubes who listen to Rush Dimbulb believe that those evil environmentalists are to blame. Sadly - it is working.

HERE IS THE TRUTH:
(1) U.S. oil refineries aren't even operating at capacity, so why do we need to build more?
(2) American oil companies have more offshore and Alaskan land under lease currently that they aren't drilling in now, so why do they need more? Look - THEY DON'T WANT MORE SUPPLY TO COME ON-LINE BECAUSE PRICES WOULD THEN GO DOWN!

Progressives need to get on TV and radio and come straight at these lying liars and point the finger squarely where it belongs - AT THE BORROW AND SQUANDER POLICIES OF GEORGE W. BUSH THAT HAVE BANKRUPTED THIS COUNTRY AND LEFT OUR CHILDREN A MOUNTAIN OF DEBT THAT THEY CAN NEVER, EVER REPAY!!!!

Posted by: The Conservative Deflator on June 19, 2008 at 11:31 AM | PERMALINK

Check out Dean Baker on this topic.

Oil vs. the Environment: What is the Tradeoff?
http://www.prospect.org/csnc/blogs/beat_the_press

[snip]

Well, one piece of information that might be relevant is how much we expect the potential oil production to lower prices. After all, we probably wouldn't destroy a nice city park for a 0.1 cent reduction in the price of a gallon of gas, while some folks would destroy Yellowstone, the Everglades and everything in between to cut gas prices by $1.00 a gallon, so what are we talking about here?

I haven't seen any analysis of the tradeoffs in the reporting thus far. After all, why use numbers when we can say that this is just a question of values -- the environment or cheap energy?

Well, here's my quick back of the envelop calculation. According to the NYT, the Energy Information Agency estimates that the total amount of oil in the offshore zone in question is about 16 billion barrels. If we assume that it would take about ten years from the day of authorization to get to peak production and that most of the oil is pumped out over 30 years, this would translate into a bit over 1 million barrels of oil a day.

That would be equal to about 1 percent of world production in a decade. If we assume a long-run demand elasticity of 0.3, this would imply a drop in world prices of approximately 3 percent. In today's prices, we would be looking at a drop in the price of a barrel of oil from around $135 to $131. If this were passed on one to one in gas prices (this is long-run story), we might expect to see a drop in the price of a gallon of gas from around $4.00 to around $3.92 a gallon.

[snip]

'The Fed's effort to foil market self-correction by pumping unneeded liquidity to cure a widespread crisis of insolvency is misguided. A more fundamental solution lies in the need for the Fed to recognize that its conventional wisdom on the causes of inflation is faulty and that in an overcapacity economy, rising wages are not automatically inflationary but are needed to boost demand to restore the current supply-demand imbalance.' Henry C K Liu /The Fed and the strong dollar policy http://www.atimes.com/atimes/Global_Economy/JF18Dj05.html


Posted by: MsNThrope on June 19, 2008 at 11:35 AM | PERMALINK

They want to drill for depletion allowances, to offset profits on easy-to-find Saudi oil. The tax break alone is worth more than the cost of drilling.

Posted by: aatos on June 19, 2008 at 11:41 AM | PERMALINK

Kevin, it is not ANWWWARRR. ANWAR is the name used by the oil boys that want to develop a frozen wasteland on the North Slope of Alaska.

The Arctic National Wildlife Refuge is the name we use for a NATIONALLY recognized REFUGE for extraordinary WILDLIFE in Amereica's ARCTIC. Call it the ARTIC REFUGE for short.

Never use the rightwingnut frames which just reinforce their radical ideas.

Posted by: Ed in Montana on June 19, 2008 at 11:55 AM | PERMALINK

As long as you have no problem with the trade deficit, holding on to US reserves and using up the ROW's reserves is OK with me. However, you really shouldn't then complain about high gas prices today, or tomorrow.

Posted by: Yancey Ward on June 19, 2008 at 2:04 PM | PERMALINK

Tangurena wrote:
"Drilling in ANWR, or even the existing oil fields in Alaska might make a difference if the oil companies involved stopped exporting the oil to other countries. But since the oil companies won't do that, I see zero reason to allow drilling in ANWR."

Uhmmm, hello ... It really helps to know what you are talking about. NO Alaska oil is being exported ... none at all.

From 1977 (when the Trans-Alaskan Pipeline was built) until 1996, all Alaskan oil was sold domestically under a provision of the law that authorized North Slope drilling. In 1995, Congress removed the restriction that mandated that practice.

So from 1996 through 2000, it was legal to export from Alaska. But only about **seven** percent of Alaskan crude was exported during that period.

In 2000, President Clinton reinstated the ban on Alaskan exports because of allegations made against BP (basically that the company exported some of its Alaskan oil to prop up crude prices in California). Since that time, no Alaskan oil has been exported.

Read all about it yourself in the Congressional Research Service's report at

Posted by: Texas Yankee on June 19, 2008 at 2:31 PM | PERMALINK

Hmmm ... it cut off the link ...

Read all about it yourself in the Congressional Research Service's report at http://www.ncseonline.org/NLE/CRSreports/06jun/RS22142.pdf .

Posted by: Texas Yankee on June 19, 2008 at 2:33 PM | PERMALINK

"Whenever I hear ANWR and offshore drilling discussed, I never hear anybody talk about how much the federal government should charge for the oil that we own."

Federal leases are handled pretty much the way any other oil/gas lease is negotiated. The leasee gets paid a negotiated leasing fee that is dependent on the amount of acreage involved. The leasee also gets paid royalties on any production actually results. The US government and many state governments have earned billions of dollars over the years from production on government owned land.

"Who owns the oil off California's coast, the state of California or the federal government? As a non-Californian I don't think that Californians should be able to decide whether or not we can drill for our national oil off of our national coast."

It depends on how far offshore you are. There are separate categories -- state waters and federal waters. State waters are typically defined as those within three miles of a state's coast line. [Exceptions include the state of Texas and the west coast of Florida where 9 miles is the limit of state jurisdiction). Federal waters start where the state waters end and extend out to 200 miles.

Posted by: on June 19, 2008 at 2:49 PM | PERMALINK

Texas Yankee,

No crude. But your link says "during 2005 only about 243,000 bd of petroleum were exported from PAD District 5..."

So a fair bit of "petroleum" was exported?

x

Posted by: x on June 19, 2008 at 4:16 PM | PERMALINK

X,

PAD 5 includes more than just Alaska. It is Washington, Oregon, California, Nevada, Arizona, and Hawaii as well.

California has always been able to export crude and refined products. Even back during the 4 year period when the ban on Alaska exports was lifted, California exported four or five times more petroleum than Alaska.

Posted by: Texas Yankee on June 19, 2008 at 6:00 PM | PERMALINK

JeffII: BINGO on Carter vs. America.

MisNThrope: Wrong. While I agree that commodities speculators have had SOME influence on prices, just as the king of speculators, George Soros has said, I also agree with Soros that Peak Oil is the primary driver. You are one of the American people still failing Jimmy Carter if you want to just blame "conspiratorial speculators" rather than looking at buying a hybrid, driving less, and otherwise conserving oil.

Deflator: Huh? No, refineries may not be at "100 percent," but they consistently run in the mid-90s as far as percent of capacity.

Posted by: SocraticGadfly on June 19, 2008 at 7:13 PM | PERMALINK

Excuse me!

You are one of the American people still failing Jimmy Carter if you want to just blame "conspiratorial speculators" rather than looking at buying a hybrid, driving less, and otherwise conserving oil. - Gadfly.

You happen to be talking to someone who's been pounding the drum on falsely cheap energy and the wasteful and polluting infrastructure arising from these policies since 1970. You can probably look back on my postings and find where I've said on more than one occasion that Jimmy Carter was freaking right and deploring the stupidity which launched the Reagan dream world.

There IS speculation to the tune on hundreds of billions, of dollars inflating commodities across the board however. It's just one of a number of factors driving the current bubble.

cfs - in a huff.

Posted by: MsNThrope on June 20, 2008 at 9:42 AM | PERMALINK

Some day we may see leadership that will produce a realistic and holistic energy policy. It is not an either/or decision, but one that will take advantage of small and incremental pieces of conservation and production. For example if we put solar collectors on every light pole and building in the U.S. individually they would not be producing much, but collectively they would be great; replace all new buildings and replacement of existing hot water systems with on-demand hotwater (flash) versus hot water tanks we primarily use today; require higher levels of insulation in all new building. Continue to push for additional petro resource development, but research alternatives for energy, lubrication, and thermal control.

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