4 Aug 2010

Radical Democratic Party Continues Its Ongoing “Jihad” Against Domestic Oil Production and Eventual Energy Independence

in Energy |

So let’s take a look at why America needs oil.

Every morning Americans need 20 million barrels of oil to get through the day . . . Ninety four percent of all daily commerce takes place because diesel and turbine engines deliver the goods. Two hundred and fifty million cars, tens of millions of trucks, thousands of planes and ships use only oil, with perhaps a drop of biofuels. If we wish to keep those vehicles in motion this year, next year and through their normal mechanical lives, we must have more oil. And since no alternative non-oil vehicles are ready are ready for market, at least not on a scale that makes a material difference in overall demand for oil anytime soon, we’d better get over our distaste at producing more oil.[i]

To improve the safety of oil and gas development in federal waters, provide greater environmental protection and substantially reduce the risk of catastrophic events such as the BP Deepwater Horizon oil spill, Secretary of the Interior Ken Salazar today called for aggressive new operating standards and requirements for offshore energy companies and ordered a six-month moratorium on deepwater drilling. He also canceled a pending lease sale in the Gulf of Mexico and a proposed lease sale off the coast of Virginia, and suspended proposed exploratory drilling in the Arctic . . . Secretary Salazar is ordering a moratorium on drilling of new deepwater wells until the Presidential Commission investigating the BP oil spill has completed its six-month review. In addition, permitted wells currently being drilled in the deepwater (not counting the emergency relief wells being drilled) in the Gulf of Mexico will be required to halt drilling at the first safe stopping point, and then take steps to secure the well.[ii]

This seems like a pretty official pronouncement, but was it necessary? Here is what some outside experts had to say about it.

When President Obama last month announced his six-month deepwater moratorium, he pointed to an Interior Department report of new ‘safety’ recommendations. That report prominently noted that the recommendations it contained –including the six-month drilling ban – had been ‘peer-reviewed’ by ‘experts identified by the National Academy of Engineering’ . . . In a scathing document, eight of the ‘experts’ the Administration listed in its report said their names had been ‘used’ to ‘justify’ a ‘political decision.’ The draft they reviewed had not included a six-month drilling moratorium. The Administration added that provision only after it had secured sign-off. In their document, the eight forcefully rejected a moratorium, which they argued could prove more economically devastating than the oil spill itself and ‘counter-productive’ to ‘safety.’[iii]

Not only was it not necessary, but the Obama Administration misrepresented its content to achieve their desire to “stop” drilling in the Gulf of Mexico. Look at this.

An Interior spokesman claimed the experts clearly had been called to review the report on a ‘technical basis,’ whereas the moratorium was a ‘comprehensive’ question. Obama environment czar Carol Browner declared: ‘No one’s been deceived or misrepresented’ . . . All of this matters because it offers proof the moratorium was driven by politics, not safety. The drilling ban was not reviewed by experts, and was not necessary to satisfy most of the safety recommendations in Mr. Salazar’s report. It was authored by political actors so Mr. Obama could look tough. A cynic might argue the ban was only added after review precisely because the Administration knew experts would refuse to endorse it.[iv]

Quite simply, the Obama Administration has unnecessarily struck a vicious blow at deepwater drilling in the Gulf of Mexico and the supporting economies of the Gulf Region.

Here are some more specific quantifications on the adverse impacts of the moratorium.

A six-month deep-water drilling moratorium imposed to protect the Gulf of Mexico may raise the risk of oil spills, some members of a U.S. Department of the Interior safety-advisory group warn.

The moratorium is also raising concerns that the gulf’s $124 billion offshore oil industry will suffer as 33 deep-water projects are on hold.

The delay could imperil as many as 38,000 jobs related to the projects as rigs leave for work in other parts of the world, the National Ocean Industries Association, a trade group, estimates . . .

They also say there is a risk in shutting down and re-entering deep-water wells, a risk that the moratorium will lead to the newest and most reliable drilling rigs leaving the gulf, and a risk of more tanker spills if domestic oil production declines . . .

‘We are looking at nine months before our rigs can go to work,’ Krenek said. ‘In the meantime, we will look for work outside the United States . . .’

Eight members of the group protested that they neither reviewed nor approved of the blanket six-month moratorium.[v]

The moratorium on deepwater drilling the Gulf of Mexico is destroying an entire ‘ecosystem of businesses’, lawyers from the oil industry seeking to overturn the ban told a court today . . .

Since the ban was imposed on 28 May – more than a month after the Deepwater Horizon accident – all 33 drilling rigs operating in the Gulf have been idled. The rig owners have warned they will tow them elsewhere if the ban remains in place.

‘Once these rigs move overseas and enter into long-term contracts, they not going to come back in six months and one day,’ he said. ‘That is the problems.’

The rigs directly employ around 7,000 people. But, according to Louisiana Mid-Continent Oil and Gas Association, each offshore job supports three more onshore, meaning a further 21,000 jobs are at risk. Rosenblum added: ‘It’s an ecosystem of businesses which are being harmed even now by this moratorium. . .’

‘Never before has the government with a stroke of a pen shut down on entire industry for six months,’ he said.

Deepwater drilling is vital to the regional oil industry, making up 80% of oil and 45% of gas produced in the Gulf.

After the explosion on the Deepwater Horizon rig, causing the worst US environmental disaster in history, the US government ordered a safety review of deepwater drilling in the Gulf. The regulator, the Mineral Management Services (MMS), inspected 29 rigs and found that 27 of them complied with regulations; there were minor infractions on the other two. It recommended 22 measures to improve safety and the interior secretary Ken Salazar ordered a moratorium on drilling until the safety improvements could be implemented and investigations into the Deepwater Horizon accident had concluded.[vi]

And the bad numbers keep piling up:

BP Plc’s oil spill may cost the U.S. Gulf Coast region 17,000 jobs and about $1.2 billion in lost economic growth by year-end even if the flow is stanched permanently next month, Moody’s Analytics said in a report. . . .

A separate, industry-funded report released today also warned of the impact of the moratorium on new deepwater drilling, saying it is ‘crippling the local economy’ and may cost the region 8,169 jobs and about $2.1 billion in economic losses in its first six months.

The study, commissioned by the American Energy Alliance, the advocacy arm of the Institute for Energy Research, a Washington-based research group, predicted that nationwide job losses will reach 12,000 in six months, costing the U.S. economy about $2.8 billion in lost activity and $219 million in tax revenue.

‘The moratorium could be more costly than the oil spill itself,’ Joseph R. Mason, author of the study and professor at Louisiana State University in Baton Rouge, said in a release accompanying the report. ‘By stifling one of the area’s primary economic engines, the administration is crippling the local economy and risking long-term consequences.’[vii]

Thirty-three percent of the nation’s domestic oil comes from the Gulf of Mexico. Eighty percent of the Gulf’s oil and 45% of its natural gas comes from operations in more than 1,000 feet of water, considered ‘deepwater.’[viii]

With this decision to enact a moratorium on deep water drilling in the Gulf of Mexico, the Obama Administration has threatened to constrain one of the most productive sources of energy in the United States. That is even if the moratorium lasts just six months. Just doing this will discourage the industry from wanting to invest in Gulf oil production because of an especially hostile regulatory regime.

And, who is to say that the moratorium will not be extended again for a much longer time with much greater negative consequences for the production of oil from the deep water of the Gulf.

The Obama Administration has proposed legislation that will drastically increase the costs of all domestically produced energy, so why wouldn’t the same administration consider a permanent decline of oil production in the Gulf to be a “good thing.” To get a more complete picture of the Democrat Party’s permanent bad attitude to domestic energy production, I refer you to page 237 of Chapter 11 (Most People Think We Have Hardly Any of This) of the “A Simple Guide:  How Liberalism, A Euphemism For Socialism, Destroys Peoples and Nations.” You will then have a clearer understanding of why a permanent moratorium might be just fine with them.

Now, I refer to another essay in this blog “Skimmers, Skimmers, Skimmers: Where are all the Skimmers.” The main point of the “Skimmers” blog is that with just a few days of the April 20, Deepwater Horizon explosion, the Dutch offered the Federal Government the use of four large oil skimmers that had a collective capacity to recover 146,000 Barrels of oil a day from the Gulf or 4,380,000 Barrels of oil a month. In spite of a long history, going all the way back to the Exxon Valdez oil spill, of being a first line and successful recovery technology, our federal government refused the Dutch offer. This is almost unbelievable in the light of the significant environmental damage much of which might have been avoided had the Dutch offer had been immediately accepted. This “crisis,” most of the damage of which was caused by floating oil, would have been substantially negated.

When you put the decision to enact an ill-considered deep water drilling moratorium against the background of the refusal to accept the Dutch skimmers, here are the relevant consequences:

• Environmental damage to the affected states;

• Economic damage to the entire Gulf Coast including tremendous job losses in the middle of a terrible recession;

• Elimination of increased deepwater oil production in our continental water resulting in a huge set back to our drive for energy independence; and

• A massive increase in the federal government’s control over the oil industry operating here. This is with an administration that seeks legislation to force artificially created increases in the costs of all energy production by legislation.

Why do you think the Obama Administration made these two self-evidently terrible decisions??

[i] Hoffmeister, John. “Get Over the Oil Spill.” The Daily Beast. June 23, 2010. Web. Accessed on July 7, 2010. <http://www.thedailybeast.com/blogs-and-stories/2010-06-23/john-hofmeister-on-bp-oil-spill-and-obamas-katrina/p/>.

[ii] Barkoff, Kendra. “Salazar Calls for New Safety Measures for Offshore Oil and Gas Operations: Orders Six Month Moratorium on Deepwater Drilling.” Department of Interior Press Release. May 27, 2010. Web. Accessed July 30, 2010.  <http://www.doi.gov/news/pressreleases/Salazar-Calls-for-New_Safety.>

[iii] Wall Street Journal. “Crude Politics.” P. A20. June 17, 2010.

[iv] Id. at A20.

[v] Olinger, David and Jaffe, Mark. “Critics say Moratorium on Gulf Oil Drilling could Increase Risks Rather than make Process Safer.” June 21, 2010. The Denver Post. Web. Accessed June 21, 2010. <http://www.denverpost.com/fdcp?1279730841306.>

[vi] Webb, Tim. “US Gulf oil Drilling Ban is Destroying ‘Ecosystem of businesses.’” The UK Guardian. June 21, 2010. Web. Accessed July 30, 2010. <http://www.guardian.co.uk/business/2010/jun/21/oil-bp-oil-spill/print.>

[vii] Bloomberg Businessweek. “Gulf Oil Spill May Cost 17,000 Jobs, Moody’s Says.” Bloomberg. July 19, 2010. Web. Accessed July 23, 2010. <http://www.businessweek.com/news/2010-07-19/gulf-oil-spill-may-cost-17-000-jobs-moody-s-says.html.>

[viii] Governor Bobby Jindal. “Gov. Jindal Blasts Drilling Moratorium at Rally for Economic Survival.” Office of Governor. July 21, 2010. <http://www.gov.louisiana.gov/index.cfm?md=newsroom&tmp=detail&catID=2&articleID=2352&navID=12.>

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