Skip to main content

Obama and McSame are Both Wrong on Energy

(and both right, too.)

I guess it's too much to ask during the political silly season for a real discussion about what needs to happen regarding U.S. (and world) energy policy.

Offshore Drilling:
Obama is correct in asserting that this will have no immediate effect on prices. He is wrong, however to assert that opening up more offshore acreage is unnecessary.

McCain is correct in asserting that there are potentially large reserves that can be tapped in currently embargoed U.S. waters. He is incorrect to assert that tapping these will provide any immediate relief at the pump.

Long-term, the U.S. will need stable and local sources of hydrocarbons -- not just for energy, but for all the products that require it as part of the manufacturing process or as the base material.

Two reasons to open up more acreage for exploration: we need to find out what is there (and commercial) and it needs to be in the queue for eventual development. Once doesn't happen without the other.

Obama's surrogates point to the fact that there is still a lot of already available acreage on public lands that hasn't been explored or developed. They ignore several factors:

  1. Competition for exploration and development resources -- there just aren't enough drill ships and skilled people to put to work to bring these things online any time soon. It wasn't that long ago that most oil companies were laying people off and certainly not hiring. Drill rigs were idled, dismantled or sold overseas.
  2. Rising costs -- it used to cost between $100-$150K per day to run an exploration drill ship. That cost today is between $175K and $250K -- depending on how deep you're going. Deepwater wells routinely start at a water depth of more than 6000 feet -- and that's just to get to the ocean floor... they then have to go down another 3 - 4 miles to hit paydirt.
  3. Current crude oil prices at these levels are less than 3 years old... many of the prospects that are now looking okay wouldn't pass economic muster 5-8 years ago -- and it takes that long to get from discovery to development.
  4. The "public land" that they talk about also includes all the onshore acreage that has been sitting idle for years because (despite the hype) shale oil is still uneconomic.
  5. Environmental permitting for every phase is still a byzantine mess.
  6. Did I mention the technical complexity of doing all this under a mile of water -- on engineering marvels that cost more that $1B?

Does this mean that we can drill our way out of this? Absolutely not, but a comprehensive energy policy is going to have to include a long-term U.S. resource plan. (Until someone comes up with a wind-powered airplane...)

McSame's surrogates are equally fuzzy with their math... more on that in future posts.

Labels

Labels:

Comments

Post a Comment

Popular posts from this blog

Just Desserts: Double Peanut Butter Bars

This recipe takes the simple peanut butter cookie and "raises the bar"... with three layers: Peanut Butter Cookie on the bottom Rich peanut butter icing in the middle Topped with a chocolate shell Delicious and decadent! For the cookie base: Preheat oven to 350F.  Grease a 9x13 glass baking dish. 1 1/4 cup sugar 1 tablespoon dark molasses 1/2 cup creamy peanut buter 1/4 cup shortening 1/4 cup butter, softened 1 egg 1 1/4 cups flour 3/4 teaspoon baking soda 1/2 teaspoon baking powder 1/4 teaspoon salt Prepare peanut butter cookie dough (per normal recipe)  but do not refrigerate.  Instead, spread dough evenly on the bottom of the prepared baking dish. Bake for about 15-18 minutes.  Remove from oven and allow to cool completely.  For the middle layer: 1/2 cup butter, softened 1/2 cup creamy peanut butter 1 tablespoon milk 1 teaspoon vanilla 2 cups powdered sugar In a small bowl, beat the butter, peanut butter, milk, vanilla...
5 comments
Read more

Smoky Bacon Cheddar Dip

  This recipe combines creamy cheese, smoky bacon, a hint of sweetness, and a touch of spice for a delicious and addictive dip. Ingredients: 4 oz cream cheese, softened 3 tbsp mayonnaise 1/2 cup sharp cheddar cheese, shredded 1/2 cup cheddar cheese, shredded (variety like Monterey Jack or Colby for extra flavor, optional) 1/2 red bell pepper, diced 3 slices bacon, cooked and crumbled 1 tbsp apple cider vinegar 1 tbsp ketchup 1 tsp brown sugar 1/2 tsp smoked paprika 1/4 tsp cayenne pepper (adjust to your spice preference) 1/4 tsp black pepper Pinch of salt Instructions: In a medium bowl, cream together the softened cream cheese and mayonnaise until smooth. Stir in the shredded cheddar cheeses, diced red pepper, and crumbled bacon. Add the apple cider vinegar, ketchup, brown sugar, smoked paprika, cayenne pepper, black pepper, and salt. Mix well to combine all ingredients. Taste and adjust seasonings as desired. You can add more cayenne pepper for a spicier dip, or a squeeze of fresh...
Post a Comment
Read more

More On Energy: Supply, Demand and the Not-so-free Market

Speculators in the market have, rightly, been targeted for thier use of the Enron-loophole to basically compete (unfairly) in a market that is mixed between highly-regulated (see integrated oil companies) and unregulated players (see commodity brokers). This imbalance of power has led to the free flow of capital to a market from sources that a decade ago largely abandoned investment in oil companies -- in favor of the speculative bubble of the dotcom boom. That lack of capital infusion -- and the capital-intensive nature of the oil & gas business -- led to the mega-mergers of 1999 - 2001. Bear in mind that even with all that merger activity among the multi-nationals, their true competition is with national oil companies -- basically branches of their nation-state governments: Pemex (Mexico), Petrobras (Brazil), Pedevesas (Venezuala), Saudi Aramco (Saudi Arabia), Cinoco (China) ... you get the picture. On the one end, you have national oil companies -- either in OPEC or non-aligned ...
Post a Comment
Read more