Comments on: Getting Serious About Domestic Oil Exploration

By: cafe world manual

cafe world manual — Wed, 27 Jan 2010 04:50:18 +0000

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By: SU Republican

SU Republican — Tue, 22 Jul 2008 15:22:20 +0000

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?

By: Dave

Dave — Mon, 21 Jul 2008 22:52:41 +0000

Ok, I admit I’m a Dem, but that was funny. FormerDem just can’t win!

By: John

John — Mon, 21 Jul 2008 15:42:51 +0000

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.

By: FormerDem

FormerDem — Sat, 19 Jul 2008 20:39:27 +0000

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

By: Michael Ubbens

Michael Ubbens — Fri, 18 Jul 2008 22:53:06 +0000

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.

By: John

John — Fri, 18 Jul 2008 22:06:34 +0000

Dammit! Your website sucks! No comment preview feature, and I forgot to close a bold tag!

By: John

John — Fri, 18 Jul 2008 22:04:43 +0000

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.

By: SU Republican

SU Republican — Fri, 18 Jul 2008 20:39:58 +0000

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”

By: Eric Sweeney

Eric Sweeney — Fri, 18 Jul 2008 19:08:25 +0000

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.