The recent spike in the price of gasoline reignited voter demand for more oil drilling and production.  Obama doesn’t want more production because greater oil supply would drive down prices which would, in turn, make his beloved “green alternatives” even less competitive.  So, even as he reminds us that we’re too dependent on oil imports he tries to plant the impression in the minds of uninformed voters that oil production is already “high,” that lack of supply is not the reason for high prices.

On May 6 Obama made a campaign speech at Allison Transmissions in Indianapolis, Indiana.  This excerpt from his speech was copied directly from an article on the White House web site about Jobs and energy:

I want everybody to remember that if people ask — because sometimes I get letters from constituencies saying, why aren’t we just drilling more here?  We’re actually producing more oil here than ever.

More oil than ever? The data for this chart came from the government’s Energy Information Administration (EIA), an agency of the executive branch, run by the President.

American oil production has dropped 45% since 1985.

Not only was the President – to put it politely – exaggerating when he said “more oil than ever,” the EIA predicts a decline in oil production this year and next year due to the restrictions imposed by the Obama Administration.

It should be obvious, even to Obama/Democrat partisans, that if the government had not blocked them over the past three decades, and oil companies were permitted to produce as much as they were willing and able to produce, there would be much larger domestic supply of oil and gasoline at the pump would be cheaper.

As we’re all painfully aware, higher oil prices caused by the termoil in the Middle East have driven up gasoline prices in America.  Since it’s first month in office the Obama Administration has pursued policies that were intended to reduce domestic production in order to gradually drive up the price of oil, natural gas to make the high cost of the President’s beloved “green energy” more competitive with conventional fuels.

Predictably, Americans have become anxious and angry as recent termoile in the Middle East accelerated the price of oil toward Obama’s goal.  In his March 30 speech on energy at Georgetown University President Obama tried to dodge accountability for higher gasoline prices:

Now, last year, American oil production reached its highest level since 2003...

This chart puts the President’s claim in perspective:

While it’s true there was a slight uptick in production in 2009 and 2010, after a 45% decline from 1985 to 2008, the President can’t take credit for the increase.  As anti-drilling voices often remind us, there is a long lead time from the the beginning of exploration to the actual production of oil.  The increase in 2009 and 2010 results from several years of renewed exploration and drilling, permitted by the Bush and Clinton Administrations.

As the chart shows the same agency that reported the recent increases now projects decreases this year and next year due to the restrictions put in place by the Obama Administration.  Those restrictions include:

February 4, 2009: On the 16th day of the Obama Presidency, his Interior Secretary withdrew 77 oil and natural gas leases on federal land that had been put out to bid two months earlier.

February 10, 2009: Interior Secretary Salazar announced a delay in implementing a five-year plan for oil exploration and development on the outer Continental Shelf.  The Interior Dept. had  been working on the plan for several years and had finalized it only a few weeks earlier.

February 25, 2009:  Interior Secretary Salazar ordered a delay in oil shale research, demonstration, and development (RD&D) leases that would help advance American technology and create high-tech jobs in Colorado, Wyoming and Utah.  Private companies were ready to invest their own resources until the government blocked the project.

October, 2009: In a “final report” Secretary Salazar reissued only seven of the 77 oil and gas leases that were withdrawn on February 3.

August, 2009: Congress passed new law to close 1.2 million acres of the Wyoming Mountain Range to oil exploration and drilling.

September, 2009: Secretary Salazar extends for at least three more years a de facto ban on off shore drilling.

October, 2009: Secretary Salazar imposed new restrictions and barriers on extracting oil and natural gas from shale.

January, 2010: Secretary Salazar announced indefinite delay and possible cancellation of previously approved oil and gas leases off the coast of Virginia, over the objection of Virginia’s governor.

February, 2010: The new Obama budget calls for $40 billion in tax and fee increases on domestic oil producers.

March, 2010: Secretary Salazar withdrew 61 previously approved oil and gas leases in Montana.

March, 2010: Secretary Salazar withdrew 4,400 acres in Monongahela National Forest from a previously approved oil and gas leas sale.

December, 2010: Secretary Salazar reinstated a moratorium on offshore drilling, placing the entire Pacific, the entire Atlantic, the Eastern Gulf and parts of Alaska off limits to exploration and drilling for oil or natural gas.

…part of the reason oil companies are drilling a mile beneath the surface of the ocean – because we’re running out of places to drill on land and in shallow water.

Well, there are plenty of places to drill on land.  One is ANWR in Alaska.  Drilling at ANWR would generate hundreds of millions of barrels of oil.  It would provide tens of thousands of American jobs while reducing oil imports, something the President keeps saying he wants.

But due entirely to deceptive propaganda from the environmental lobby most Americans are misinformed about ANWR.

The inconvenient truth is revealed in these winter and summer photos of ANWR’s barren, coastal plain, the section originally set aside by Congress in 1980 for oil drilling.

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Using modern technology to explore for, and extract oil from a barren, frozen plain looks like this…

In 1980 legislation called the Alaska National Interest Lands Conservation Act (ANILCA), Congress designated part of ANWR a wildlife refuge, part a wilderness area. Congress also designated the Coastal Plain, the northern-most 8% of ANWR, an oil exploration and drilling zone, which is now called the “1002 Area,” named for the section of ANILCA.

The Coastal Plain/1002 area is completely flat and barren with no trees, hills, or mountains. Most of the year it’s covered with snow and ice and shows virtually no life. During the six week “summer” the coastal plain is dotted with thousands of lakes and is covered by boggy tundra on permafrost (permanently frozen ground).

The yellow portion at the northern edge of ANWR is the Coastal Plain, or “1002 area,” the zone that Congress set aside for oil exploration and drilling in 1980.

Barack Obama attacked the McCain campaign for making jokes about his claim from last week that if only you and your fellow drivers would properly inflate your tires you would save as much oil as could be produced through additional drilling. His exact words were…

If everybody in America inflated their tires to the proper level, it would actually …probably… save more oil than all the oil that we’d get from John McCain drillin’ right below his feet there, wherever it is that he was gunna drill.

He went on to complain about the tire gages the McCain campaign has been passing out, and then bellowed:

[Republicans are] making fun of a step every expert says would absolutely reduce our oil consumption by three to four percent. It’s like these guys take pride in being ignorant!

Liberty Works has looked into Obama’s claim that tire pressure alone can “reduce our oil consumption by three to four percent.” We’ve done the research and the math so you won’t have to. We wanted to see who was “being ignorant.” We assumed Senator Obama would consider the folks at EPA to be “experts.” So we started with this bit of information from the EPA website

Under-inflated tires can lower gas mileage by 0.4%

for every 1 psi drop in pressure of all four tires.

From the Energy Information Administration we learned that about HALF the crude oil that enters the refinery system emerges as gasoline for cars and trucks. The other half becomes a variety of other products including aviation fuel, kerosene-type jet fuel, lubricants, waxes, and propane.

Nobody, least of all Barack Obama, knows how many of us are driving around with under-inflated tires. So any calculation has to be based on reasonable hypothetical assumptions. Our hypothetical assumption was

• Half of all gasoline is consumed by cars and trucks whose tires are under-inflated by an average of 5 PSI.

We believe this assumption probably overstates the problem, considering that professionally managed fleets of cars and trucks are driven many more miles, using many times as much gasoline as family vehicles, are checked often and kept at proper pressure.

Based on our assumption and the EPA’s formula above, half of cars and trucks would be wasting 2% of the gasoline they consume. Or, one-percent of all gasoline consumed by all cars and trucks would be wasted.

Because half of America’s crude oil consumption is in the form of gasoline, that would mean that approximately one-half of one-percent of oil consumption is wasted by under-inflated tires. Obama’s claim, 3% to 4% of all oil consumption is preposterous.

Is Senator Obama hoping we’ll believe that lifting all the bans on domestic drilling would produce a less than one-half of one percent increase in production?

Obama has tried twice to convince us that pumping up our tires would save more crude oil than could be produced through off shore drilling!

Since Senator Obama has chosen to repeat, reinforce and exaggerate his tire pressure solution to high gas prices, we assume we should take him seriously, and we challenge him to answer a couple of questions:

• Is he telling us that as President he would maintain the bans on additional domestic oil production until he was satisfied that we were all keeping our tires inflated?
• If so, how does he propose to force every driver to keep every tire fully inflated?

Perhaps President Obama would open a Department of Pressure Education & Enforcement (PEE), with enforcement officers to patrol the nations streets in a fleet of gas burning vehicles to hunt down you negligent slugs with too little air in your tires.

Today, in a Michigan speech, Obama spoke at length on energy but apparently forgot about how important tire pressure was last week. But some helpful folks from the McCain campaign reminded the audience by passing out customized tire pressure gages.

Today, we’ll comment on two excerpts from Senator Obama energy speech. First Excerpt:

…in the short term, as we transition to renewable energy, we can and should increase our production of oil and natural gas. But we should start by telling the oil companes to drill on the 68 million acres they currently have access to but haven’t touched. And, if they don’t use it they should lose it -we shoudld require them to give up their leases to somebody who will do something.

Here at Liberty Works we’ve done considerable research into this latest ruse by the Democrats to resist making off shore oil fields available for drilling – the claim that big bad oil companies already have access to “68 million acres” but instead of drilling they whine that they need more.

The existing lease process already includes a ten year time limit. If the company doesn’t produce oil in ten years it loses the lease. The idea Obama and his friends in Congress are trying to sell, that oil companies would spend Billions to lease sections of ocean floor for ten years and then make no effort to recover their investment by producing oil is preposterous.

Some of those acres have been drilled and depleted once. The government leased them a second time to drillers with new technologies to see if they could pump out more oil. Some of the leased acres have been explored and found not to contain any oil.

But the biggest barrier to actual drilling comes up right after an oil company leases a section of the ocean floor, paying Billions of dollars. The company must then navigate years of bureaucratic permitting processes and sometimes years of litigation, before they can legally begin exploration and drilling.

Why is that, you ask? If a company is granted a lease to explore and drill for oil, then shouldn’t permission to explore and drill be automatic? Of course! Only in the alternative reality of the Bureaucratic/Administrative State would it not be. If the all-knowing Federal Government clears a section of ocean floor for drilling, shouldn’t Congress ban lawsuits that are brought for no other reason than to delay drilling and make it more costly?

Congress can quickly pass legislation that forbids lawsuits when the government has sold leases, and requires the Department of Interior to include in the lease permission to explore and drill. Further, Congress can require the leasing/permission process to take no more than a couple of months.

Second excerpt:

We should invest in the technologies that can help us recover more from existing oil fields.

The private sector already has invested, and continues to invest, in such technologies. There is no need for Obama’s “WE”, which in this context apparently means the government, to hurl Billions in taxpayer money, and cause more years of bureaucratic delay, to help “US” recover more oil from existing fields.

Government could help by simply getting out of the way, or at the very least, by streamlining permitting processes. Here’s an example:

The PXP Company operates the Inglewood oil field in the Baldwin Hills of West Los Angeles. Oil was discovered here when Standard Oil drilled a test well in 1924. It took Standard Oil only one year to develop a full-blown oil field with dozens of wells, producing 90,000 barrels of oil per day. Since then some 1600 wells have been drilled. Today, only a few of the wells are still operating, pumping about 7,000 barrels per day.

I grew up about a mile from the perimeter of the Inglewood oil field and as a child I rode my bike on the oil field roads. After 84 years as an active oil field, it’s covered with winding roads, wells, pipelines, tanks and sundry oil field infrastructure. It’s a dirty, ugly place. But it’s already there, and most of it is out of sight of surrounding homes and businesses.

PXP has the technology and the financial resources to extract a lot more oil from this existing oil field, by drilling new, deeper wells. Sounds pretty good, huh? New oil production without touching any new site! Just keep drilling in the same place, a place that’s already degraded from almost a century of oil and natural gas production.

But this isn’t 1925. Before PXP can drill new wells it must apply to and receive blessings from all of the following:

• California Environmental Protection Agency
• Los Angeles County Department of Toxic Substances Control
• California Air Resources Board
• California State Water Resources Control Board
• South Coast Air Quality Management District
  
• California Department of Conservation
• California Geological Survey
• California Division of Oil, Gas and Geothermal Resources
• City of Los Angeles Environmental Affairs Department
• Baldwin Hills Community Standards District
• Los Angeles County, Department of Regional Planning

PXP has invested years and millions of dollars in bureaucratic processes, with no guarantee that permission can be secured, or that lawsuits won’t stall the project. Nobody yet knows if this additional oil will be produced.

Obama is dishonest when he speaks as if more oil from existing oil fields could be had if only “WE” – government – would “invest” your money. In truth, a lot more oil could be produced in this country without spending a single taxpayer dollar. The only barriers are political.

to repeal it’s bans against drilling for oil on

American territory and in American waters.

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From the Democrat leaders in the House and Senate came the usual insipid response that “Bush policies” caused high gas prices. As always, they were unable to identify or describe the bad “policies” or explain cause-effect connections between policies and gas prices.

On the campaign trail Barack Obama announced that YOU could save more oil than the oil companies can produce if allowed to drill more. How? Inflate your tires and get a tuneup! Here’s the video!

In reality, $4 gas and massive dependence on imported oil result from a “policy” enacted into law by Congress twenty years ago, that bans new exploration and drilling for oil almost anywhere on US soil or in US waters. Also banned, is extracting oil from shale, even though America has the world’s largest shale oil deposit. The Bush Administration produced an energy report in April, 2001 that called for lifting some of the bans but the Democrats condemned it as “written by big oil” and refused to consider it.

So, the bans stayed in place and now, here we are, once again, enduring the tediously familiar Washington dance: finger-pointing, incoherent debate and stonewalling against resolution of a crisis.

The anti-drilling politicians cloud the issue with the misplaced use of “we-ours-us.” They talk about how “we” must not drill for oil because “we” must instead use “our” resources to invest in alternative energy sources.

Politicians introduce ambiguity, confusion, and deception, when they use the we-ours-us terms to describe decisions that, in a society built on the principles of individual liberty, should be private and not under government control. The misplaced use of we-our-us leads, over time, to a sort of numbed popular acceptance of the notion that nothing can happen unless government authorities first do the thinking and then provide official blessings and release funds.

The we-our-us rhetorical device obscures the truth: if permitted to drill, the oil companies will invest their own, not “our” or government’s resources into growing their own business – and create tens of thousands of new American jobs along the way. It isn’t necessary for “us” – meaning politicians and regulators in Washington – to choose between investment in drilling and investment in alternatives.

At the same time oil companies, if permitted, invest their resources to produce more oil, other companies are investing and will continue to invest their own resources in research and development of oil-alternatives and fuel saving technologies. General Motors has invested heavily in hydrogen fuel cell powered cars, including buying a stake in fuel cell researcher Quantum Technologies. At this moment a fleet of GM fuel cell cars is undergoing long term testing by “regular people” in New York, Washington D.C. and Los Angeles. Honda has also developed fuel cell prototypes and has put a test fleet on the streets of Los Angeles.

Other companies are researching wind, solar and other exotic alternatives. There is no reason for the big “we,” meaning politicians and bureaucrats in Washington, to decide which research should or should not be conducted, or to pick research projects to fund, or to subsidize some forms of energy and penalize others. Politicians and regulators have no track record that would demonstrate them qualified to pick winners and losers in advance, before all research and development has been completed.

The best thing for government to do is remove the barriers and get out of the way. Government should allow individuals, groups and companies to do which ideas are most promising and do as little or as much research and development as they wish, without any political interference. Government should allow oil companies to produce as much oil as they can sell.

America would not be in this critically urgent situation if the activists and lobbying groups – who always use the we-our-us cloud to confuse and deceive us – had not persuaded Congress to overstep its Constitutional authority, banning production of oil and natural gas and nuclear power and thus creating a shortage energy and high priced gasoline.

The politicians should solve the energy crisis they created in Washington by stepping back, removing politically motivated barriers, and allowing liberty to work!

The inconvenient truth is revealed in these winter and summer photos of ANWR’s barren, coastal plain…

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Using modern technology to explore for, and extract oil from a barren, frozen plain looks like this…

ANWR is a wildlife refuge because of politics, not because God or an infallible natural law made it so. In a 1980 law, the Alaska National Interest Lands Conservation Act (ANILCA), Congress designated part of ANWR a wildlife refuge, part a wilderness area. Congress also designated the Coastal Plain, the northern-most 10% of ANWR, an oil exploration and drilling zone, which is now called the “10-02 Area,” named for the section of of ANILCA.

The Coastal Plain/10-02 area is completely flat and barren with no trees, hills, or mountains. Most of the year it’s covered with snow and ice and shows virtually no life. During the six week “summer” the coastal plain is dotted with thousands of lakes and is covered by boggy tundra on permafrost (permanently frozen ground).

The sliver of yellow at the north edge of ANWR is the Coastal Plain, or “10-02 area,” the zone that Congress set aside for oil exploration and drilling in 1980.

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]]> http://libertyworks.com/anwr-the-inconvenient-truth-part-1/feed/ 0 http://libertyworks.com/gas-pump-jive-part-ii-obscene-windfall-profits/ http://libertyworks.com/gas-pump-jive-part-ii-obscene-windfall-profits/#comments Tue, 24 Jun 2008 21:29:34 +0000 BoomerJeff http://libertyworks.com/gas-pump-jive-part-ii-obscene-windfall-profits/ For decades government imposed laws and regulations have made exploration and drilling for oil here in America almost impossible.

Politicians, especially Democrats, but including some Republicans, have long submitted to lobbying by anti-liberty leftists who invoke “the environment” to justify forbidding domestic energy production.

The political elite rejects reasoned debate and rational policy for insipid slogans like “we can’t drill our way out of this,” and “Americans are addicted to oil.” Instead of permitting liberty to work Senators and Congressmen use the power of government to prevent people from producing more oil and natural gas while they chant vacuous catchphrases about “alternative” or “renewable” energy sources that aren’t yet technologically feasible, and may never be.

The market forces of supply and demand explain the entirely predictable result of politcally driven bans on domestic energy production: Global demand for petroleum products has risen faster than the global supply of oil. The result has been continuously increasing oil prices, and continuously increasing gasoline prices.

With the pump price surging past $4.00, formerly indifferent, uninformed citizens demand an explanation. The politicians who, when most citizens weren’t paying attention, caused the artificial scarcity and resulting price spike now seek to divert the blame away from themselves. Some are blaming the companies who produce gasoline for realizing too much profit.

OilCo profits have increased recently because they are selling a commodity that Congress has deliberately made scarce! If Congress hadn’t banned domestic oil production there would be greater supply, lower prices, and probably, less profit!

Senator Richard Durbin, Number 2 Democrat in the Senate said last week:

“The oil companies need to know that there is a limit on how much profit they can take in this economy…we’re going to find ourselves in a deep recession.”

Mr. Durbin should try to explain how recessions are caused by profits. In reality, falling profits are a contributing cause of recessions, and rising profits signal the end of recessions.

In a June 20 video, placed on Youtube by the Obama Campaign, the Senator acknowledges gas prices as “a crushing burden on working families.” But rather than put the blame where it belongs, on Congress for not allowing liberty to work, and forbidding oil produciton in the US and in US waters, Senator Obama says his plan is…

“…taxing some of the record, multi-billion dollar profits of the oil companies and using some of that money to pay for a thousand dollar middle class tax cut that would go to 95% of all families.”

Based on recent IRS data, it would cost approximately $127 Billion dollars to issue a $1,000 tax credit to 95% of families. Could an additional tax on oil profits fund it?

The Table above shows federal taxes already paid by, and the after tax profits earned by the eight largest American oil producers.

Obviously, Senator Obama is either uninformed or deliberately trying to deceive listeners he hopes won’t take the time to look into the facts. Obviously, taxing “some of the profit” and “using some of that money” would not begin to fund $127 Billion in tax credits.

On the other hand, the taxes these companies already pay would fund those tax credits with $74 Billion left over!

We haven’t heard any of the politicians who caused the recent spike in pump prices admit that government profits from gasoline sales much more than oil companies. By the way, the tax figures in this table don’t include state taxes paid by local gasoline retailers, that probably exceed $50 Billion.

Next, we’ll compare oil industry “obscene” profits, with those of other sectors.

Readers comments invited