Oil: Part II

Yesterday, while browsing among the Internet news sources, I came upon a story about Senator Stabenow (D) and the Democratic proposals for a new energy policy. Saying the policies of the Republicans have created a crisis, she (and they) propose that the following policies be implemented:

"...— Ending billions of dollars in tax breaks for big oil companies.

"— Forcing the oil companies to do their part by investing some of their profits in clean and affordable alternative energy.

"— Protecting the American people from price gougers and greedy oil traders who manipulate the market.

"— Temporarily stopping the diversion of oil to the national Strategic Petroleum Reserve, which is already 97 percent full.

"— Standing up to the Organization of Petroleum Exporting Countries and other oil-producing nations that are working together to keep oil prices high....."

While I catch my breath, let me get into a personal disclosure. My first real job as a teenager was in the oil fields. After law school, I spent over 20 years associated with the oil and gas industry, as a lawyer and as an independent operator. I have direct experience in all aspects of the business but refining and marketing. Most of that time, I was an active Democrat. I know a little about the subject of oil and gas.

Having caught my breath, let me ask one question: How many barrels of oil, mcf of natural gas, or kilowatts of electricity will any or all of the Democrats' energy plan bring to the market?

Take your time.

It's not really difficult.

OK. Time's up.

The answer: none, zero, nada, zip....ad infinitum.

In fact, the proposals would, at least in the longer run, reduce the supplies.

Even the liberal New York Times understands the realities better than the Democrats. In an article today, they point out:

"...No industrialized economy is as reliant on oil, or as obsessed with gasoline prices, as the United States, the world’s biggest consumer of oil. But the oil market is largely immune to Washington’s machinations, and prices have more than quadrupled over the last six years for reasons that are increasingly disconnected from what happens in the United States.

"The reality is that oil is a globally traded commodity, and Americans must pay international prices to get their share. And those prices reflect the fact that global supplies are stretched and struggling to meet a booming demand that is being driven by growth in developing countries, notably China and India. This has left the world with a very slim cushion of extra production....."

The Democrats are caught demagoguing, again. They just want to detract attention away from the real reasons the United States is running short of energy, and therefore paying high prices for it.

Let us look at some things that should be done, many of these decades ago.

Oil is a scant commodity in some ways. It is hard and very expensive to find and get to market. So for energy, we need to develop some alternatives, and have needed to for decades

First and foremost is nuclear energy. This is a forty plus year old technology that has been used safely in every country in the world, except once in the Former Soviet Union, for over three decades. The US builds new nuclear reactors all the time for naval vessels. But we have not built a new one to supply electricty in the US for 30 years. This at a time when the French have been using nukes for most of their electrical generation.

Another question" Why?"

Because the Luddites of the Democratic left erected too many barriers to their construction.

There are other alternatives: coal is one. The US has huge reserves of coal, but, of course, coal doesn't have a good emissions profile. Some kinds do have much better than other, but the world class deposit of clean burning coal that we have was locked up forever by Bill Clinton as he was stealing away from the White House. The remaining will require much more expensive technology to clean up.

Wind is currently being subsidized (even at the current high price of oil it is not economical as an alternative). Out in West Texas we have thousands of large wind generators, but Ted Kennedy can't have them at Hyannisport.

Strides are being made all the time to develop solar energy, but we are far away from having the efficiency and storage capacity for that to be of much hope.

There are some other alternatives...oil from coal and from the western oil shale deposits, but those are far from being economical, and the environmental costs might be too high, anyway.

And there is always the hope of fusion energy...maybe for our grandchildren. Or not.

Most of the above, if we started now, would not make a short term impact, but will take years to implement. Why not start now? Ask your local Congressman, or your US Senators.

In the meantime, what can we do to increase supply?

First, we can permit limited drilling in the ANWR. In 1998, Congress passed a bill allowing that, but it was vetoed by Bill Clinton. If that bill had been permitted to become law, we might be very close to having an extra two or so million barrels of oil per day coming onstream. Senator Stabenow won't mention that, of course.

Second, we can permit drilling off Florida, the Pacific Coast, and the Atlantic Coast. Those areas are off limits now, even to preliminary exploration. But we can estimate that there are tens of billions of barrels of oil and hundreds of trillions of cubic feet of natural gas to be found in those areas. No one in the states affected want to risk oil development offshore even though there has not been an offshore oil spill from a drilling or production platform since the one at Santa Barbara, California in 1969, the spill that started this. Technology has marched on, but the Luddites are still among us.

A third thing we can do is repeal the provision in the new energy bill just passed by Congress that makes the Canadian Oil Sands deposits "non-conventional oil", which makes it virtually unusable in the US because of various restrictions.

Many of you have not heard much about the oil sands, but Canada has a deposit with reserves larger than those of Saudi Arabia up there, and it is now being developed. Pipelines were being studied to bring huge amount of the oil down to the US. Now the Congress, in it's infinite wisdom, has put a halt to it. The Canadians don't care. The Chinese are already trying to buy it up. With our money, to boot.

So where do we go from here? The Democrats appear to only want to pin it on the Republicans for the lack of an energy policy, without offering up anything that would really help. The Republicans have proven to be almost as bad as the Democrats, and apparently none from either side cares about it except how it might affect the next election. Meanwhile, we are suffering the high gas prices with little to show for it.

There is more...a lot more. But this is getting too long again, so I will close.

Before I do close, though, I want to make an apology. In the last blog post about oil, I compared Democratic Senators to morons. I am deeply sorry for being so offensive to the morons of the world. I was just trying to sugar coat it a little bit. They are, of course, worse than morons.