Getting Serious About Domestic Oil Exploration
Yesterday President Bush dropped the executive branch’s moratorium on offshore drilling. Today crude oil futures dropped by more than $9 a barrel. Coincidence? Economist and syndicated columnist Larry Kudlow doesn’t think so.
One of the Democrat Congress’ more oft-repeated excuses for not allowing off-shore drilling is the notion that it will take at least ten years to begin producing oil from offshore sources and at least that long for oil prices to come down as a result.
Instead, oil companies haven’t even fired up their drills and oil futures for next month have dropped 6.3%. President Bush, Senator McCain and the responsible members of Congress have come out in favor of offshore drilling and the price of oil is dropping - that price drop can only continue when the rest of Congress finally feels the heat, sees the light, and lifts their ban on offshore drilling. Once that happens, Wall Street researchers predict it’ll take less than a year to start pumping oil from beneath the shallow oceans off the coast of California.
We have to get a jump on domestic oil production to see a sustained drop in oil prices - but as President Bush proved today, simply showing that we are serious about domestic production is enough to get the prices headed downward.
Tags: drilling, gas prices, McCain, oil
July 17th, 2008 at 9:12 am
This can also serve as a reminder of McCain’s good energy policy. He has a firm policy that will help us battle oil independence and also seek alternative energies. Where has Barack Obama been on any of this? All him and his Democratic buddies can come up with is to take from the reserve.
July 17th, 2008 at 1:03 pm
Mike, that’s really not true at all. Obama has had a comprehensive forward thinking energy policy since last october. McCain came out with his just a month ago, and to say that he will “also seek alternative energies” is just wishfull thinking. McCain opposes the PTC/ITC, has no position on a national smart grid, revenue decoupling, clean tech venture capital, or federal research investment. Obama, of course,
McCain’s policy is 1) Offshore drilling 2) Lift the gas tax 3) $300 million battery x-prize, 4) $5000 zero emissions vehicle tax credit 5) subsidies for new nuclear plants and 6) $2 billion for clean coal technology 7) cap-and-give (with caps that McCain doesn’t realize are mandatory.
We can discuss the merits of each of these proposals, but the brief version is 1) very minor impact on supply 2) Meritless pander 3) harmless pander 4) Not helpful (plug in hybrids not eligible; we’re not anywhere near a H economy 5) helpful, but not a magic bullet, and has non-negligible downsides 6) More subsidies for fossil fuel 7) Better than most Republicans, but still weak tea and clearly not his priority.
Meanwhile Obama is proposing a significant investment in a green economy, using market mechanisms and green industry supported measures.
Before you dismiss Obama’s proposals, it would be helpful if you acquainted yourself with them.
July 17th, 2008 at 2:38 pm
Obama’s energy plan is contradictory in and of itself. It claims to be forward thinking but actually offers a short sighted view that reflects on his lack of understanding in other areas that are very much related to this issue.
Regarding Oil Independence…
Oil independence will take decades to achieve. Not drilling is short-sighted and naive. He’s simply pandering to the environmental left. Oil has become a matter of national security and extends far beyond that of just a simple plan for future energy.
Regarding Oil Tax Relief…
I’ll give some leeway here. I’m not a huge fan of this. However, this is the only idea that gives us some immediate relief. None of Obama’s plans even offer a small amount of relief to the middle class voters he so desperately needs.
Regarding CAFE Standards…
Strict CAFE standards do not equal oil independence. Petroleum is used for far more than just gasoline production.
Regarding the $300 million battery prize…
You claim this is pandering from McCain, yet Obama’s website says:
“Deploy Cellulosic Ethanol: Obama will invest federal resources, including tax incentives, cash prizes…”
So prizes are OK in this instance?
July 17th, 2008 at 4:14 pm
FormerDem, I want to respond specifically to the idea of offshore drilling being any kind of relief, but briefly regarding your other points: I assume that your “leeway” is an acknowledgement that McCain is pandering on a stupid idea with demonstrably harmful impacts. That’s a start. CAFE standards go a LONG way towards reducing oil consumption because transportation fuel is a huge component of petroleum end use. Sure, it’s not everything, but you know as well as I that it’s a big part, and CAFE standards are relatively low-hanging fruit. As for the “Battery Prize,” x-prize type incentives are optimal for situations when the economic incentive for the early innovators is suspect, or dwarfed by the required investment (ie private spacetravel). A revolutionary battery has HUGE domestic and global market potential, and the market incentive dwarfs $300 million. In short, there are MANY actors in the marketp place already pursuing energy storage R&D, and the $300 million dollar prize is a gimmick.
Regarding offshore drilling, however, as this post was about, your arguments hold no water. Please observe the report from the Energy Information Administration (EIA, a division of the DOE). This report is from 2003, but appeared in the 2007 Annual Energy Outlook because the underlying numbers haven’t changed much. Allow me to quote from this non-partisan, Bush administration DOE report:
“The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017. Total domestic production of crude oil from 2012 through 2030 in the OCS access case is projected to be 1.6 percent higher than in the reference case, and 3 percent higher in 2030 alone, at 5.6 million barrels per day. For the lower 48 OCS, annual crude oil production in 2030 is projected to be 7 percent higher—2.4 million barrels per day in the OCS access case compared with 2.2 million barrels per day in the reference case (Figure 20). Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.”
Isn’t it amazing that people actually study these things so that when people like us argue, we can root our arguments in facts established by neutral experts? Let’s read this part again:
“The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.“
And mind you, that assumes that the state of California would allow offshore drilling, which the bi-partisan politics of the state assure us they will not. Furthermore, this 2003 report has actually overestimated domestic production rates since 2003, so this is an optimistic case.
July 18th, 2008 at 10:39 am
There should not even be an issue with an increase domestic oil production. Increasing demand for oil globally has caused policy to be reconsidered and debated, all while gasoline prices are crippling the U.S. Economy. While McCain’s energy plan is not perfect, it is far more desirable than the all alternative energy plan offered by Obama. I honestly cannot see how there even is a question about McCain’s proposals, especially offshore drilling.
First off, I’d like to address your perceived faults with McCain’s plan. Offshore drilling may not be the entire solution but it will help and that is the issue. No politician, not even the glorious Barack Obama has a silver-bullet plan to eliminate America’s dependence on oil. In ten years, the American economy will still rely on oil. The demand for it is simply not going to disappear in the next decades and the positives from increasing supply far outweigh any negative impact. It is naive and frankly ignorant to figure that we could be free from all needs of oil in the next twenty years. Environmentally, offshore drilling operations have staggering low incidences of oil contamination. Since 1975, drilling in the ‘Exclusive Economic Zone’ off the U.S. coastline has reported a 99.999 percent safety record, with only .001 percent of the oil being produced reaching the environment. A study conducted by NASA and the Smithsonian reported that offshore drilling is actually the LOWEST cause of oil contamination in the ocean - nearly four times less oil enters waters due to drilling offshore than does through natural seepage. Domestic production of oil has fallen since the embargo and crisis of the 1970s, now only making up about one fourth of our supply. Even if increased exploration won’t provide a significant impact on oil, there are no valid reasons for it not to be tried, and that being said, finding oil through other means. The affects of drilling in ANWR are terribly overstated as well and I won’t even begin to start with that subject.
Our oil shale deposits in the Rocky Mountains are staggering - in the Great River Basin of Colorado, Utah and Wyoming, estimates of the equivalent of 800 billion barrels of recoverable oil exists in shale deposits and oil sands. In the past, it was not economically viable to produce oil from these sources, as it costs about $70 a barrel to produce. Now, with oil far surpassing that price on commodities markets, $70 is a bargain by any standard.
I personally agree that alternative energy proposals should be implemented. McCain’s idea for constructing new nuclear power plants is something I’ve been waiting to hear for years. I live approximately twenty miles from a nuclear power station and the local benefits of high paying jobs for maintenance, operations and construction alone are reason to be building more nuclear facilities. Not only that, but in doing so we can better meet the growing electrical consumption demands, all while removing oil power plants from the equation.
The lifting of the gas tax could offer immediate relief but it is in no way a permanent solution. McCain’s advocacy was for the period between Memorial and Labor Day in the summer driving season, not a broad repeal and not a gimmick.
The battery x-prize is far from a gimmick either. It is unlike what anyone has proposed before and like the rest of McCain’s plan, is not a complete solution. Innovation has always driven the American economy and our leadership role in technology should not be ceeded to other nations. A $300 million incentive is very appropriate for encouraging corporate research into new technology.
You cited in an early post that hybrid plug-ins would not be eligible for the proposed credit on zero emissions vehicles. I agree with your facts entirely. As you may know, plug-in hybrids are not zero emissions vehicles due to their gasoline engine. The intent of this is to encourage all electric vehicles, like the upcoming Telsa WhiteStar sedan, planned for release within the next five years, costing about $60,000. In 2012 they plan to release an entry level model the “BlueStar,” aimed at costing the consumer $30,000. They’re not the only company with all-electric vehicles on the drawing board either.
Your admission that we are no where near hydrogen sustainability is in total conflict with your support for Obama’s clean energy initiatives. Along with Harry Reid, Obama seems to feel that wind, solar and ethanol are the only answers. It is widely regarded that E85 and increased devotion of food crops towards producing fuel is at best a distraction, at worst, a huge threat to the American economy. When the ethanol programs were started, the impact on food prices was an afterthought. The benefits of E85 vehicles are negated due to limited infrastructure and negligible cost and performance numbers. While solar and wind energy offer promising returns, they should not be the only solutions. Most analyst doubt that solar and wind energy could even amount to more than 10% of our energy needs, even with complete development, commercialization and implementation.
Obama works well at painting a rosy picture at how wonderful it will be to have an economy completely powered by alternative energy, the next president will have come and gone before we are even near to that ambitious goal. In the mean time we have to focus on bridging the gap from where we are at now to where we wish to be in the future. McCain is offering viable options - building new nuclear facilities, encouraging industry development of new and green technologies to work towards an alternative energy economy, increasing domestic oil supplies in the meantime to offer relief to sky-high gas prices, and doing so while keeping environmental concerns in check. Conversely, Obama’s alternative energy goals are lofty and at best, wishful thinking. I should probably chalk this up to his inexperience in government but far sweeping reforms of energy policy, or any policy do not happen when government is involved. Look at the federal mandate to digital television broadcasts - that process began in 1996 and will not be fully implemented until 2009. This issue is far less sensitive to our national security or economy than energy ever has been. If it takes the Federal government 13 years to complete a transition to digital television tuners - and I might add the increased CAFE standards on automobiles don’t fully apply until 2020.
My biggest fault with Obama’s energy policy… which narrowly outranks, but relates to his staunch opposition to increased domestic oil production, is the windfall profit taxes on oil companies. Aside from the apparent negative impact of having this tax passed on to consumers which is no less than certain, windfall taxes on oil companies would negatively affect the millions of Americans (just about 1/3) who have holdings either directly in stocks and mutual funds, or rely on pensions and retirement plans that have assets related to oil companies.
July 18th, 2008 at 10:59 am
Wow, Eric, what an excellent post. Easily one of the best descriptions of the energy policy debate I’ve read.
I seriously doubt our buddy John will even attempt to answer your post. He’s only content on swooping in and making a half-assed point by using a lot of words to say very little, then leaving.
July 18th, 2008 at 11:17 am
“Most analyst doubt that solar and wind energy could even amount to more than 10% of our energy needs, even with complete development, commercialization and implementation.”
I’d love to see where you get that number. I thought I respected you guys by directing you to a credible source for the claim that offshore oil is a drop in the barrel.
The American Wind Energy Association contends that wind has the capacity to provide ~20% of national energy needs. Notice that the referred to study factors in excluded land and only considered class 3 or higher wind, thereby excluding small wind power and community wind projects.
Solar is currently a micro-player in the domestic market, but has significant potential both in CSP plants in the southwest and distributed PV nationwide. Add in the technological advances in thin film and DSCC solar, and there is substantial generation capacity out there.
I really don’t understand why McCain won’t support the PTC and ITC. GE financial services did a study and concluded that the PTC for wind energy is actually revenue positive, to the tune of $550 million of revenue for every $500 million in tax credits. He supports subsidies for oil, coal, and nuclear, but not renewables? How does that make any sense at all?
Eric, you write “Obama’s alternative energy goals are lofty and at best, wishful thinking.”
Perhaps you didn’t realize this, but Obama is not proposing a centrally planned energy platform. He’s not telling industry or the public what to invest in. He’s providing market driving mechanisms that the renewable energy industries are asking for to help them compete with older, more heavily subsidized industries.
It’s just silly for you to dismiss out of hand serious proposals without backing up your claims. It’s pretty obvious to me that you’re just toeing the party line, and you’re not really interested in the respective merits of Obama’s and McCain’s proposals.
July 18th, 2008 at 11:21 am
“I seriously doubt our buddy John will even attempt to answer your post. He’s only content on swooping in and making a half-assed point by using a lot of words to say very little, then leaving.”
FormerDem, that’s a curious thing for you to say! I thought I provided you with a succinct and credible rebuttal to your claims that offshore drilling could be a major component of any energy policy.
You haven’t acknowledged the EIA report I referred you to, much less explain to me what I’m missing.
You guys are funny, but one can only explain things to a brick wall so many times before one gets bored and leave. I’m nearing that point.
July 18th, 2008 at 12:49 pm
What kind of response to your article are you looking for? The report does nothing to convince me that we should not drill.
1) We will not under any circumstances be oil independent in 30 years. It simply will not happen. Obama can’t make it happen, and neither can McCain. It’s naive and overly optimistic to think so.
2) The promise of increased supply does impact the market. Especially in a market where analyst account for 40% or more of the cost due to market speculators driving up the price. Your report takes none of this into account.
Again, we’re assuming that the report numbers about oil extraction timelines remain unchanged. But the oil companies suggest the numbers have changed. The major domestic oil suppliers have stated that they can have oil out of the ground in 10 years, and possible sooner, depending on where the oil discovery is made.
To say that drilling has no merit is incredibly naive. What action do we take should we not come close to our mark of oil independence in a 50 year timeline. What happens if foreign affairs cause major disruption to oil supplies in 10-15 years. What reason could you possibly give for not allowing drilling as a contingency to secure ourselves.
You’re arguing from a standpoint we’re against alternative fuel when the fact of the matter is that republicans and democrats agree in a move toward alternative energy sources(even if they disagree in how to get there or which ones should prevail). You’re completely missing that oil-drilling is a great contingency plan and possibly a strong and viable export option for future economic growth as global demand continues to rise. This is true even if we assume it will take 10-20 years to extract the oil.
July 18th, 2008 at 1:23 pm
Oh and your point about ‘explaining things to a brick wall’. I understand you want out of this argument because you simply can’t justify the democratic stance against oil drilling, we get that. So we fully expect you to just up and leave at some point.
July 18th, 2008 at 1:25 pm
I’ll bite on the CAFE standards.
The problem with CAFE standards is that they are not a true solution just a band-aid.
1. CAFE standards do not equal innovation.
Automakers simply bring down their average MPG by offering smaller vehicles at the bottom of their lineup.
2. CAFE calculations are flawed and in some cases penalize automakers despite improvements.
Here is a direct quote from heritage.org.
“CAFE is not calculated on the basis of fuel efficiency improvements model-by-model, but rather on the average efficiency of all autos sold. (The averaging method currently used by the EPA counts low-mpg cars more heavily than high-mpg cars, making it even harder for manufacturers to achieve their fleet-wide targets. Thus, if two cars are sold, one of which gets 20 miles per gallon and the other 40 miles per gallon, the average for the two is not 30 under the EPA method but 26.7 See Insurance Institute for Highway Safety, Status Report, Vol. 25, No. 8 (September 8, 1990) p. 5.) As a result, changes in customer choices can place a manufacturer in violation of the CAFE standards even though every car in its fleet may be more fuel- efficient than the year before.”
3) Americans that buy more fuel efficient cars tend to drive more thus nullifying the increased MPG savings.
American commutes have gotten longer, and we’re more likely to drive than fly to our destination points. Significant conservation would require us to buy increasingly fuel efficient vehicles and driving far less.
4) It takes 10-15 years to turn over the american automobile population.
So even if 50mpg cars were available tomorrow, they wouldn’t make it into the hands of a bulk of the population for at least a decade.
July 18th, 2008 at 1:25 pm
FormerDem:
I appreciate your input on this matter, and completely agree with you. There is one thing that particularly stands out to me in your comment:
“You’re arguing from a standpoint we’re against alternative fuel when the fact of the matter is that republicans and democrats agree in a move toward alternative energy sources.”
This is related to something I said in one of my previous articles. In this argument, or democratic friend has attempted to isolate himself more and more, as does his candidate. We begin to argue on things we may even agree on! OUR candidate is the one that’s looking to reach across the aisle and make something happen. We don’t need someone as isolated as our dear friend here; that will only divide us more and cause the legislature to do even less!
July 18th, 2008 at 2:08 pm
Well John, I do appreciate the response but what you’re missing with the wind and solar power focus is that while there is the theoretical capacity to produce the energy, practically the failure comes to delivery. If solar panels were laid in the Arizona and Utah deserts, it’s said they could produce enough electricity for the entire nation, just as in the Dakotas with wind energy. Delivery is the issue and not generation. Even at the estimate you gave, plus additional for solar - let’s say both combined COULD make up 25%, even 30% of our total annual electricity consumption. That’s more than a 10-fold increase from current levels, and is lofty by any standards.
To address the said “market forces” proposals that Senator Obama is promoting, I just have a hard time finding his very substantial “investments into green energy” - $150 billion in 10 years, another $50 over five years, doubling science and research funding, as well as several programs with unnamed values attached - as something economically viable. These fund will likely come from higher taxes on fossil fuel generation, costs which will undoubtedly be passed on to the consumer.
Texas recently is touting great gains in wind power investment, and I applaud them for that but it must be noted that the electricity produced from these venues come at a premium to the customer. While some Democrats may dismiss a 5-10% increase in cost of electricity for a family in a given month (the approximate premium of the Texas wind generated energy over other generation means) as something individuals should absorb in the sake of being “environmentally responsible,” in reality, that adds to the financial burden of many working class families. My point is while green energy is available and absolutely a direction that must be followed, it is ignorant to assume the higher production costs for energy will be readily absorbed into the already tight budgets of average, every day Americans.
I personally am not a fan of the high subsidies paid to the energy industry - or ANY industry for that matter, but alas, subsidies exist as an unfortunate fact of economics. Raising subsidies on one sector of energy to help another is the equivalent of robbing Peter to pay Paul and would be as effective as the windfall profit taxing scheme. If the plan is to find these billions of dollars elsewhere in the Federal budget, I would be interested to hear it.
As for your cited report, their facts may very well be correct with the estimated impact being seen in 2030. However, that is assuming that the ban on the OCS is not lifted immediately. I can submit that oil exploration on the OCS is not going to solve our nation’s oil needs but no single action can and that is incredibly important to remember. Given the only potential negative to drilling offshore is environmental, which as I stated, is negligible there is absolutely no reason not to. Even if the price of a barrel of crude oil is reduced by 5% by production, these are our nation’s resources to cultivate. The current moratorium on OCS exploration of oil additionally makes the case difficult for OPEC nations to want to produce more oil when we are sitting on untapped reserves.
As I’ve stated before, I don’t believe McCain has all of the answers to our energy problems but the important part is it is better than what is laid out by Obama. With essentially no forethought into the immediate energy demands, short-term concerns and existing infrastructure, Obama is very much showing his idealism and inexperience. While it is inspiring to think of a day when our carbon footprint is small, energy comes from renewable sources and human impact on the environment is marginal, the United States is far, far from that day. McCain’s approach is one of common sense - prepare for the future while worrying about today. I appreciate the optimism of Obama and I share in those ambitions of a greener future, as every American does, it is reckless to look so far ahead that the immediate tomorrow is forgotten.
July 18th, 2008 at 3:39 pm
Hmmm….this an interesting argument that John has. Let’s think about the recent events in politics.
American Solutions releases a petition of over 1.3 million people of ALL AFILIATIONS calling for drilling, and Nancy Pelosi responds by calling Bush a total failure.
Unity vs. Division and “Straw Man”
July 18th, 2008 at 5:04 pm
Just when I thought I was out, you guys pull me back in. I’ll do my best to respond to each of you briefly.
FormerDem, you write “The promise of increased supply does impact the market. Especially in a market where analyst account for 40% or more of the cost due to market speculators driving up the price. Your report takes none of this into account.”
I respectfully submit that this betrays an ignorance regarding the oil markets, the offshore reserves, and markets generally. First, if you believe that 40% of the price of crude is from speculators bidding up the price, I suggest you go get a margin account and make millions shorting oil futures. There is actually increasing global demand and a fairly constrained supply. Plus, where is all the missing oil?
Furthermore, while the “promise of increased supply” certainly is a component of market prices, market participants are not collectively as foolish as present company. The market won’t be tricked by opening up what has been objectively established to be a very small amount of oil relative to world supply and demand.
Let’s root our arguments in reality. Right now 79% of recoverable offshore oil reserves are available for drilling. When we talk about offshore drilling, we’re talking about that remaining 21%, much of which is in places where the locals won’t allow drilling to take place anyway. In addition, of the 44 million acres available to the oil companies, only 10.5 million acres are currently be exploited. So as I’ve pointed out again and again, the increase to global supply that would result from lifting the moratorium on OCS drilling would be 1) very small and 2) many years in the future.
You also write “You’re completely missing that oil-drilling is a great contingency plan and possibly a strong and viable export option for future economic growth as global demand continues to rise.”
While I think we’ve established that what the drilling we’re talking about isn’t a “great contingency plan,” this is an interesting aspect of the argument. I’ve heard various players in the renewable energy industry come down on both sides of this argument. Some people contend that as long as Americans believe that we can drill more then they won’t get serious about conservation and renewables, so we might as well drill offshore, if only to demonstrate that there is no silver bullet. Others, usually more environmentally inclined, say that doing so just feeds the problem and point out the non-negligible environmental aspect of offshore drilling, particularly near ocean food stocks. Some of the finance people I’ve heard discuss the issue think it’s foolish to begin extracting it now; leave it in the ground until oil is $400 a barrel and export it. But nobody contends that drilling will increase supply to the point that it would really affect prices.
“So ridiculous,” I find your arguments completely underwhelming. Rather than wasting all of our time with a long-winded rebuttal, I’d just like to ask you to explain how you would define a “true solution that is not just a band-aid” such that it includes expanding offshore oil permits but NOT higher CAFE standards.
Eric, as you seem to have extended to me the courtesy of actually reading my comments, I’ll try to answer you more specifically.
You say “To address the said “market forces” proposals that Senator Obama is promoting, I just have a hard time finding his very substantial “investments into green energy” [...] as something economically viable. These fund will likely come from higher taxes on fossil fuel generation, costs which will undoubtedly be passed on to the consumer.
That’s not actually correct. Obama has proposed auctioning the cap-and-trade permits, and using most of that generated revenue to fund these investments. As you may know, McCain does not support auctioning the permits, but would instead allow congress to decide which firms get them, and just give them away (no opportunity for corruption there!). Now, by introducing a scare resource into the market, energy prices will rise under both plans (I can provide sources if you’re curious). Obama’s plan proposes to use about 15% of the revenue to help lower income families and struggling businesses with the higher energy costs.
You write :”My point is while green energy is available and absolutely a direction that must be followed, it is ignorant to assume the higher production costs for energy will be readily absorbed into the already tight budgets of average, every day Americans.”
Again, that’s why Obama proposes financial assitance for struggling families. Furthermore, it’s important to realize that it’s not really the higher costs of renewables that we’re talking about; it’s about connecting the negative market externalities of dirty energy to the market such that those costs are reflected in the price people pay.
Naked coal can be generated for under 6 cents a kwh, but that doesn’t factor in the costs of the CO2, and even a cap-and-trade won’t factor in all the other neative externalities. Those externalities, mind you, aren’t just being born by the people that live in the vicinity of the mining and power plants. The increased healthcare costs from the particulate pollution are paid for by everyone who has insurance.
Next, you say “I personally am not a fan of the high subsidies paid to the energy industry - or ANY industry for that matter, but alas, subsidies exist as an unfortunate fact of economics. Raising subsidies on one sector of energy to help another is the equivalent of robbing Peter to pay Paul and would be as effective as the windfall profit taxing scheme. If the plan is to find these billions of dollars elsewhere in the Federal budget, I would be interested to hear it.”
First, note that much of the funds come from the auction permits. Then, you have to understand the Keynseian economic impacts of the investments. GE financial services estimates (conservatively, I might add, as they note all of the less easily quantifiable benefits they leave out) that the PTC for wind energy is revenue positive to the tune of $550 million for every $500 million in tax credits. The economic stimulus from all of the federal investment is an important component of the plan.
More locally, look at the impact of wind energy here in PA. We’ve seen a significant amount of foreign investment in our state due to our natural wind resources, and they’re bringing a tech base, capital, and jobs from oversees. Gamessa now has the first vertically integrated turbine manufacturing plant in the country located here. Iberdrola just opened up offices outside of Philly. The PTC for wind is an important and growing component of our states economy. That’s one of the reasons why Arlen Spector broke with the R’s and voted to invoke cloture on the Baucus amendment last year (as did Obama, but McCain didn’t show up to vote, and the motion failed by 3 votes.)
Finally, you say “Obama is very much showing his idealism and inexperience.”
This betrays a certain lack of sophistication about politics. Obama didn’t write his energy plan alone, or even primarily. Neither did McCain. It’s not as though Obama sat down all starry eyed wanting to transform the country into a giant wind farm. The experts informing Obama are no more or less sophisticated than those advising McCain. The differences are ones of ideology and priority.
So let’s recap briefly. Let’s not forget that the genesis for this discussion was Megan’s contention that Bush’s announcement lowered the spot price of oil. Meanwhile 79% of offshore oil resources are currently open for drilling, and of that only 23% are actually being drilled into now. The Bush Administration DOE reports that opening up further offshore sites, optimistically, will peak around 2030 and not bring any significant impact on the price of oil.
Surely if you were honest with yourself that even if offshore drilling had no negative effects, it isn’t a serious part of any energy policy. It’s a sideshow at best. And McCain has no center ring.
Now, that will have to satisfy you all as I’m heading out of town for the weekend, and as much as I enjoy educating you guys, it’s not exactly a vacation.
July 18th, 2008 at 5:06 pm
Dammit! Your website sucks! No comment preview feature, and I forgot to close a bold tag!
July 18th, 2008 at 5:53 pm
I’ll leave you with this, a post from your friends over at UPenn Democrats:
“According to survey results released by Rasmussen Reports on June 17, 79% of voters are “very concerned” about rising gas and energy prices. 67% of voters believe that drilling should be allowed off the coasts of California, Florida and other states, while only 18% disagree. Even 46% of self-described liberals favor more drilling, while just 37% are opposed.”
“This next statistic, however, may be the most important of all: 64% of voters, including 50% of liberals, believe it is at least somewhat likely that gas prices will go down if offshore oil drilling is allowed. The fact that lower prices may not come for five, ten, or even thirty years will matter very little come November. Americans want more drilling because they think it will reduce gas prices, and they may overthrow any party they perceive as obstructing legislation that will make this happen.”
This comes straight from the UPENN DEMOCRATS. Your friends in the Philly!
The UPenn Dems may even agree with us on some of these issues! Who are you arguing against anymore, us, or your own party?
I hope you have a wonderful weekend. Looking forward to hearing back from you.
One final note - though these are very heated debates, I am confident in saying that the PA State Board (and hopefully the Drexel Dems) appreciate the respectfulness of these debates and look forward to more in the future.
July 19th, 2008 at 3:39 pm
John,
Sorry, I couldn’t stomach much more of your misinformation.
Here is one such article about how speculation is affecting crude prices. There are many more where this came from.
http://www.globalresearch.ca/index.php?context=va&aid=8878
July 21st, 2008 at 10:42 am
My friends, I believe even most of you CRs will find this pretty funny.
FormerDem, trying to save face in front of his peers after having been rebutted so exhaustively, goes looking for sources to back up his claims that most analysts believe that “40% or more of the price of oil” is due to speculation, not the supply and demand of producers and consumers.
So how does he back up that claim? Here’s what happened. FormerDem made up the number, and when he got called on it, he googled “Oil speculation” and the first hit was this site:
http://www.globalresearch.ca/index.php?context=va&aid=8878
So he leaves that link in his above comment, claiming that there are “many more where that came from.”
That was where his research skills ended, but it was the beginning of the hilarity.
You see, FormerDem’s article was written by one F. William Engdahl, who is, well, a bit of a crank. He supports the abiotic petrolium hypothesis, which contends that oil is not a fossil fuel but rather the product of deep geological processes, and that petrolium is either effectively or literally in unlimited supply.
Might his belief in the crazy (and scientifically unaccepted) view that oil has unlimited supply affect his view of the oil market?
Engdahl is also a former LaRouche associate, and though he now disavows them, his work is still a favorite of theirs.
But that’s not all! Engdahl also believes:
- That global warming is a hoax. (http://globalresearch.ca/index.php?context=va&aid=8583)
- That the Bush administration created the Avaian flu to distract people from the Scooter Libby indictments. (http://www.globalresearch.ca/index.php?context=viewArticle&code=%20EN20051030&articleId=1169)
- That the Carter administration engineered the 1979 Iranian Revolution. (http://www.countercurrents.org/lendman120108.htm)
- That Bush’s late and half-hearted embrace of biofuels is because he wants to control world food supply. (http://www.counterpunch.org/engdahl08132007.html)
- That genetically modified food is a plot by the New World Order to control global food supply. (http://globalresearch.ca/books/SoD.html)
- That Hillary Clinton was deliberately ’sunk’ by the “political establishment,” consisting of, among others, Mark Penn and James Carville. (http://www.globalresearch.ca/index.php?context=va&aid=8595)
- Did I mention that he believes that oil isn’t made from living creatures but rather by inorganic geological processes, and there is either effectively or literally unlimited supply?
I’m sure there are others, but I thought that that was enough for now.
The funny part is, there is a genuine debate about the cause of the rise in oil prices. If FormerDem were a bit wiser, he might have cited Michael Masters testimony before the Senate Committee on Homeland Security And Governmental Affairs back in June. Masters is not a crank, and his arguments are taken seriously, though he’s hardly a disintrested party.
However, if you CRs had spent more time in class and less time in ostrich suits, you might have learned that two major indicators of a bubble are 1) Overvalued relative to its fundamentals and 2) increasing inventories (ie imbalance between supply (production) and genuine demand (consumption). 1 is difficult to say, but the global consumption has obviously been increasing. For 2, nobody has really explained where the oil is going if it is indeed being stockpilled by speculators.
It’s an interesting debate, and those interested will find a rebuttal to Mr. Masters testimony here and here. Further discussion by non-cranks can also be found at Calculated Risk and Econobrowser.
Alas, FormerDem, you have proven yourself to be a rather unserious person, unworthy of serious engagement. I have enjoyed our back-and-forths, but as I clearly take my responses more seriously than you do yours, you’re a waste of my time.
Oh, and it helps to check your sources.
July 21st, 2008 at 5:52 pm
Ok, I admit I’m a Dem, but that was funny. FormerDem just can’t win!
July 22nd, 2008 at 10:22 am
John:
Are we talking about the article, or this guy’s record? Two different things here.
I’ll give you this…your writing is great…but you get to the point where you are righting about NOTHING.
I’m not going to debate you about an author’s record. Nobody on this blog is. Let’s debate the issues from now on. How about that?
January 26th, 2010 at 11:50 pm
I’ve really enjoyed reading your articles. You obviously know what you are talking about! Your site is so easy to navigate too, I’ve bookmarked it in my favourites