Wednesday, March 31, 2010

Obama Taps New Off-Shore Oil Fields

On a scale of 10, I would award President Obama an 8 for opening new off-shore oil and gas exploration off the Atlantic, eastern Gulf and northern Alaska in a speech on energy security today.

He missed a Bo Derek 10 because by the time any of this might happen.the president, 48, will be drawing Social Security.

As outlined, Obama's plan is the best common-sense approach towards energy independence from foreign oil cartels in generations while at the same time preserving environmental safeguards. It provides a bridge until our country is released from relying so strongly on fossil fuels from the Organization of  Petroleum Exporting Countries (OPEC).

It falls short of the chants heard at the 2008 Republican National Convention of "Drill, Baby, Drill," plays into Republican House Minority Leader John Boehner's call for "all of the above" national resources of energy to tap and slaps down the wing-nuts on the left who oppose all off-shore drilling.

Studies will be conducted by the Interior Department for the oil and gas reserves off the Atlantic seaboard from Delaware to Florida, the rich basin within 125 miles off shore in the Gulf of Mexico and the Arctic. Off limits will remain from New Jersey north in the Atlantic, California to Washington in the Pacific and Alaska's Bristol Bay. The earliest lease sales by Interior could be held no earlier than 2012.

However, exploration by oil companies set on drilling these waters will depend whether it is economically worth their trouble. Decisions will be judged on the anticipated price of crude oil and natural gas which for the past year have been driven higher by Wall Street oil commodities speculators.

In his speech at the Joint Base Andrews Naval Air Facility Washington, formerly Andrews Air Force Base, the Washington Post reported:

Obama pledged that new technologies would be employed to reduce the impact of oil exploration.
"We'll protect areas vital to tourism, the environment and our national security," he said. "And we'll be guided not by political ideology, but by scientific evidence. That's why my administration will consider potential new areas for development in the mid- and south-Atlantic and the Gulf of Mexico, while studying and protecting sensitive areas in the Arctic. That's why we'll continue to support development of leased areas off the North Slope of Alaska, while protecting Alaska's Bristol Bay."
He said his announcement "is part of a broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies more on homegrown fuels and clean energy."
Obama called on the nation to "move beyond the tired debates between right and left, between business leaders and environmentalists, between those who would claim drilling is a cure-all and those who would claim it has no place."
He lamented that "while our politics has remained entrenched along worn divides, the ground has shifted beneath our feet," with other nations investing heavily in new ways of producing and saving energy.

Reaction from environmental groups was mixed.

Marilyn Heiman, the Pew Environment Group's U.S. Arctic program director, lauded the administration's decision to ban drilling in Bristol Bay. The bay is "the home of the world's largest wild sockeye salmon run and the nursery for Bering Sea fisheries that provide 40 percent of our nation's seafood," she said.

The Sierra Club's executive director, Michael Brune, said last week that his group remained opposed to offshore oil drilling, even in the context of an overall climate bill that places a price on carbon.
"It is not a mechanism that actually fights climate change," Brune said in an interview. "You don't make the problem worse in order to solve it."

Jacqueline Savitz of the environmental group Oceana said:  “We’re appalled that the president is unleashing a wholesale assault on the oceans. Expanding offshore drilling is the wrong move if the Obama administration is serious about improving energy security, creating lasting jobs and averting climate change.” 

Last week senators from 10 coastal states said the were "very concerned" that new drilling would provide a threat to their beaches and the tourist industry.

Dan Weiss, a senior fellow at the liberal Center for American Progress think tank, noted that a federal analysis last year suggested that converting unexplored areas on the Outer Continental Shelf to productive sites "will require considerable time, in addition to financial investment." He said drilling under Obama's new policy "may not be as economically attractive as available resources in the Gulf."

The fact that the average field off the Pacific and Atlantic coasts is smaller than those in the Gulf of Mexico, the report added, suggests that some of the areas subject to drilling under Obama's new policy "may not be as economically attractive as available resources in the Gulf."

Not if oil speculators have the final say. In a report by, U.S. demand for oil has dropped but the price has increased about a $1 per gallon in the past year.

The answer, according to oil analyst Peter Beutel at Cameron Hanover, is that investors are driving the price of oil — not the people who use it. 

“The sovereign wealth funds, college foundations, union pension plans — all this big vested money has been sold on the idea that your investment portfolio is not complete without 10 percent in commodities,” Beutel said.

The trade experts believe Obama's announcement today will only drive the price higher in an expected stampede from more investors. That's not good for motorists and people heating their homes, but it would make it more profitable for oil companies to buy the leases and start drilling.

Readers comments are welcome as long as they remain civil. We reserve the right to delete any comments that are vulgar, libelous and totally irrelevant to this posting. -- Jer 

1 comment:

GreenDreams said...

The idea was never sound, but rallied the GOP base. The problems?

1 – oil companies aren’t exploring 45 million acres of their current leases
2 – they have made no commitment to drill new leases (Remmers admits this “However, exploration by oil companies set on drilling these waters will depend whether it is economically worth their trouble.”)
3 – even if they do it will take a decade to produce any oil from them
4 – we lack the refining capacity for more
5 – oil companies aren’t interested in building new refineries here
6 – the oil companies have never pledged to sell American oil to Americans
7 – only a fraction of current Alaska production goes to the USA. Most goes to Asia
8 – we have very little, a drop in the ocean, in terms of global resource
9 – no one predicts it will reduce prices or free us from dependence

Take a look at the real situation here.

The federal government has offered 229 million acres of public and private land in 12 western states for oil and gas drilling, an area greater than the combined size of Colorado, New Mexico and Arizona

Despite access to more than 200 million acres of public land over the past 15 years (1989-2003), the oil and gas industry has produced enough energy from this land to satisfy only 53 days of U.S. oil consumption… This rate of production amounts to an
average of 3.6 days per year of oil…

Get it? In 15 years of access to a HUGE chunk of America to drill, they’ve produced 53 days of oil for us. Oh yeah. Remmers also admits that opening up these leases will INCREASE oil prices, not decrease them.