Offshore Oil Drilling and the Oil Rig Disaster in the Gulf

[Lunican]

79 Percent of Recoverable Offshore Oil Is Open to Drilling. Currently 79 percent of America's technically recoverable offshore oil reserves are open for leasing, while just 21 percent are closed to drilling. [Minerals Management Service, 2006]

82 Percent of Recoverable Offshore Natural Gas Is Open to Drilling. Currently 82 percent of America's technically recoverable offshore natural gas reserves are open for leasing, while just 18 percent are closed to drilling. [Minerals Management Service, 2006]

[RiversideGator]

Easy, don't listen to RG. He has a knack for being completely wrong almost 100% of the time.

Head of Bush Administration's Energy Information Administration Said Offshore Drilling Would Have Little Affect on Gas Prices. "In response to record pump prices, Republican presidential candidate Sen. John McCain and President George W. Bush this month called for Congress to end its moratorium on drilling off the East and West coasts and in Florida waters, leaving it up to each affected state to decide where to permit drilling. However, Guy Caruso, who heads the federal Energy Information Administration, said consumers would see little savings at the pump. 'It would be a relatively small effect, because it would take such a long time to bring those supplies on,' Caruso said during a briefing at the Center for Strategic and International Studies on the EIA's new long-term international energy forecast. 'It doesn't affect prices that much.' Most energy experts say it would take five to 10 years to find oil in the closed areas and bring the crude to market. Caruso said the additional supplies would amount to only a couple of hundred thousand barrels of oil a day. 'It does take a long time to develop these resources, and therefore the price impact is muted by that,' he said." [Reuters, 6/25/08]

Well, Guy Caruso is wrong too.  Guy Caruso heads the Energy Information Administration which is part of the Department of Energy, an arm of the federal government.  He is part of the permanent bureaucracy there.  He is not Bush's guy and that was not an official Bush policy position.  Nice attempt at spreading misinformation though.   

By law, EIA's products are prepared independently of policy considerations. EIA neither formulates nor advocates any policy conclusions. The Department of Energy Organization Act allows EIA's processes and products to be independent from review by Executive Branch officials

http://en.wikipedia.org/wiki/Energy_Information_Administration

People who are actually involved in the business say something quite different.  Personally, I am going to go with the learned opinion of a guy who works in the oil business over some guy in Washington who works for the government.  Here is what the President of Gulf Oil says (and I can produce statements from other experts if you dispute this).  And, he has some good advice for both sides:

A Bipartisan Fix for the Oil Crisis
By JOSEPH PETROWSKI
July 10, 2008; Page A15

As president of Gulf Oil, New England's largest independent petroleum company, and as someone who has spent his life in and around energy markets, I find the tone and substance of the current debate about our energy policy to be profoundly disappointing.

Partisan sides are using a serious crisis to advance political agendas, create political attack sound bites, and launch hearings to "expose" the culprit. Pick your favorite: speculators, Big Oil, environmentalists, China, India, etc.

This is not leadership.

A fundamental misunderstanding of how markets work, and how an effective government can support the private sector, is delaying remedies that will bring down energy prices now. These remedies are to be found in both supply and demand â€" and both Democrats and Republicans need to demonstrate their command of this fact. Energy is too important a cornerstone of domestic prosperity and international stability to be used as a debating prop.

To Democrats:

Supply must be increased, and that will require more drilling.

We can responsibly drill. The technology to find, drill and recover oil has evolved tremendously, and careless drillers will fear tort lawyers more than government regulators. The claim that the oil companies are sitting on leases and not drilling defies all logic. With oil at $135 per barrel and drilling rigs renting at $300,000 per day, there are no idle rigs anywhere. Furthermore, economic decline â€" and war induced by basic resource struggles â€" are greater threats to the environment and American workers than drilling.

Your claim that any oil we drill for now will not come on line for five years or longer â€" and will thus have no effect on prices today â€" is incorrect. Unlike past oil crises, where the spot price of oil (that is, today's price) rose more than forward prices, the oil price for delivery in 2012 is trading at $138 per barrel. The market is sending a clear price signal that our problem is in the future â€" because we do not have the will to curb demand or increase supply.

How many houses would someone invest in if there were a future guarantee that the price would not decline? It is anticipation of ever-increasing prices that fuels the mania.

The oil market, however, has more than anticipation; it has a well-defined forward price signal. This is a key component of the added $25-$40 per barrel in current oil prices. Congressional hearings and "make it go away" legislation will not stop that. Demonstrate the national will to address the supply and demand issues now and it will.

As forward prices decline, watch how quickly the spot price comes down.

To Republicans:

Efficiency is a huge source of new energy. It is scandalous that we have let the mileage standards decrease over the past 25 years. Whether through mandates or tax policy, active government intervention is needed. Republicans have to stop acting as if the "market" is some pristine state of nature that is not subject to active shaping.

The latest farm bill, ethanol and sugar tariffs, the cost of the Iraq war and Bear Stearns all make that reasoning ring hollow. So when some "free marketeers" attack annual biofuel subsidies of $4 billion, fleet mandates, or government research and development expenditures, it is hard not to view this criticism as at best naïveté, and at worst hypocrisy.

Finally, can we stop with the nonsensical talk of "energy independence," the end of petroleum, and postured, ineffectual boycotts of Exxon Mobil? We cannot, should not and will not be independent in a global economy, and petroleum is not going to disappear.

A more accurate metaphor is the global energy market as a giant bath tub where more withdrawals (Chinese and Indian) are being made every day. The only consistent new supply to that tub is coming from periodically unstable and unfriendly places (Nigeria, Russia, Iran, Venezuela).

Our national interest is to add more energy, use it more efficiently, and diversify its source and type. This will serve to lessen the power of any one choke point (geography, nation or source).

Using market mechanisms and the private sector (admit it, Democrats) alongside an engaged, effective and focused government (admit it, Republicans), true leaders can solve this crisis decisively.

Mr. Petrowski is president of Gulf Oil.

http://online.wsj.com/article/SB121564783168740955.html?mod=opinion_main_commentaries

[RiversideGator]

Does anyone even realize that oil companies currently have 68 million acres of leased federal land permitted for drilling that nothing is being done on?

Why would we want to permit even more land?

This is a fine solution:  give leases where there is no oil and do not allow permits for drilling where there is oil.   

[RiversideGator]

The real truth is liberals want high oil prices.  They want these because they want society to be reoriented in ways that they prefer (more mass transit, denser development, to stop "global warming", etc) but that voters evidently do not want.  So, instead of going to the people and asking for a gas tax to raise oil prices to levels they prefer they do sneaky things like prevent drilling where known oil quantities are located, prevent the development of new refineries domestically, try to scare people, etc.  I think this is fundamentally dishonest and they should be ashamed of themselves.  I am personally all for denser development and more mass transit and less fossil fuel use but the shift has to be gradual and voluntary IMO.

[thebrokenforum]

Dear RiversideGator,

You are right. Everyone else is wrong and ashamed of themselves. The earth is also flat. 

Signed,

The Middle Ages

[Lunican]

It's comical that you cite economists (and wikipedia) as experts in global warming AND offshore drilling.

According to the Minerals Management Service, of all the oil and gas believed to exist on the Outer Continental Shelf, 82% of the natural gas and 79% of the oil is located in areas that are currently open for leasing.

A Special Report by the Committee on Natural Resources - Majority Staff - June 2008

[RiversideGator]

Dear RiversideGator,

You are right. Everyone else is wrong and ashamed of themselves. The earth is also flat. 

Signed,

The Middle Ages

Dear brokenforum,
     I suggest you read up on straw man arguments:

A straw man argument is an informal fallacy based on misrepresentation of an opponent's position.[1] To "set up a straw man" or "set up a straw man argument" is to describe a position that superficially resembles an opponent's actual view but is easier to refute, then attribute that position to the opponent (for example, deliberately overstating the opponent's position).[1] A straw man argument can be a successful rhetorical technique (that is, it may succeed in persuading people) but it carries little or no real evidential weight, because the opponent's actual argument has not been refuted.

http://en.wikipedia.org/wiki/Straw_man_argument

Signed,
The fact based community

[RiversideGator]

It's comical that you cite economists (and wikipedia) as experts in global warming AND offshore drilling.

According to the Minerals Management Service, of all the oil and gas believed to exist on the Outer Continental Shelf, 82% of the natural gas and 79% of the oil is located in areas that are currently open for leasing.

A Special Report by the Committee on Natural Resources - Majority Staff - June 2008

Source?  And, I find it comical that you are citing the Democrat staff members of a House Committee as proof of your contentions.  And, I see you have no response to my earlier post showing how drilling now will drop prices now.   

Here is the source of your quote:

The U.S. House Committee on Natural Resources, or Natural Resources Committee (often referred to as simply "Resources", as in "He's on Resources") is a Congressional committee of the United States House of Representatives. Originally called the "Committee on Interior & Insular Affairs," the name was changed to the Natural Resources Committee in 1993.

http://en.wikipedia.org/wiki/Committee_on_Natural_Resources

Oh and I just cited wikipedia for background information on government organizations.  I suppose I can dig further and find primary sources for such indisputable facts if needed.

[thebrokenforum]

River, I'm speechless. What else could I possibly say to that but congratulations on winning the internet. Again! Hooray! With your oh so clever, witty and condescending comebacks you have once again slayed the fire-breathing liberal dragon. Congratulations, guy.

Signed,

The Straw Man

[Lunican]

Yes, please post these indisputable facts. And try to stay away from Op-Ed pieces written by economists letting us know where the oil is.

Also, please post a graph showing the relationship between drilling permits and gas prices.

[jacksonvilleconfidential]

Hahahaha, winning the internet.

[RiversideGator]

Yes, please post these indisputable facts. And try to stay away from Op-Ed pieces written by economists letting us know where the oil is.

Also, please post a graph showing the relationship between drilling permits and gas prices.

I posted a piece by the President of Gulf Oil.  That pretty much settles the matter.   

[Lunican]

Yes, I'm sure he has your best interests at heart. He wants free oil for every man, woman, and child.

I guess that's all you can dig up? No graph?

[RiversideGator]

I havent yet found the cure for willful ignorance.   

[Lunican]

graph please.