Thursday, June 19, 2008

We Need Truth! Not Snake Oil!

Offshore drilling will NOT make a dent in gasoline prices. If this is a 9fair & balanced) Dumbo fairy tale, so be it.

[x Time]
Will More Drilling Mean Cheaper Gas?
By Bryan Walsh

On Wednesday morning President George W. Bush urged Congress to overturn a 26-year ban on offshore oil drilling in the U.S., and open a part of the Arctic National Wildlife Refuge (ANWR) for petroleum exploration. Flanked by the secretaries of Energy and the Interior, Bush also proposed streamlining the construction process for new oil refineries, and explained that these moves would "take pressure off gas prices over time by expanding the amount of American-made oil and gasoline." Coming a day after Republican presumptive presidential nominee John McCain made a similar appeal to enhance domestic oil exploration, Bush was sending an unsubtle election year message to the American public: I care about the economic toll of $4 a gallon gas, and Democrats in Congress, who have opposed such an expansion, don't.

But there's a flaw in that logic: even if tomorrow we opened up every square mile of the outer Continental Shelf to offshore rigs, even if we drilled the entire state of Alaska and pulled new refineries out of thin air, the impact on gas prices would be minimal and delayed at best. A 2004 study by the government's Energy Information Administration (EIA) found that drilling in ANWR would trim the price of gas by 3.5 cents a gallon by 2027. (If oil prices continue to skyrocket, the savings would be greater, but not by much.) Opening up offshore areas to oil exploration — currently all coastal areas save a section of the Gulf of Mexico are off-limits, thanks to a Congressional ban enacted in 1982 and supplemented by an executive order from the first President Bush — might cut the price of gas by 3 to 4 cents a gallon at most, according to the Natural Resources Defense Council. And the relief at the pump, such as it is, wouldn't be immediate — it would take several years, at least, for the oil to begin to flow, which is time enough for increased demand from China, India and the rest of the world to outpace those relatively meager savings. "Right now the price of oil is set on the global market," says Kevin Lindemer, executive managing director of the energy markets group for the research firm Global Insight. President Bush's move "would not have an impact."

The reason is simple: the U.S. has an estimated 3% of global petroleum reserves, but consumes 24% of the world's oil. Offshore territories and public lands like ANWR that don't allow drilling may contain up to 75 billion barrels of oil, according to the EIA. That may sound like a lot, but it's not enough to make a significant difference in a world where global oil demand is expected to rise 30% by 2030, to nearly 120 million barrels a day. At best, greatly expanding domestic drilling might eventually lower the proportion of oil the U.S. imports — currently about 60% of its total supply — but petroleum is a global commodity, and the world market would soak up any additional American production. "This is a drop in the bucket," says Gernot Wagner, an economist with the Environmental Defense Fund.

Still, with Americans hurting at the pump, it may be difficult for environmentalists and other opponents of increased domestic drilling to resist the push for more oil, whatever the cost. As recently as his 2000 Presidential run, McCain had been against offshore drilling, but he changed that position Tuesday, arguing that individual states should decide for themselves. (He remains against drilling ANWR, however, pointing out that "we called it a 'refuge' for a reason.'") The Republican Governor of Florida, Charlie Crist — considered a possible vice-presidential candidate — also flip-flopped, backing McCain's position. Though Democratic Senator Barack Obama and most of his party are against the proposed expansion, McCain and his supporters may have the public on their side: a recent Gallup poll found that 57% of Americans believe we should open up new territories to drilling. "It could help in the long term," says Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University. Still, he acknowledges that even expanded drilling is unlikely to bring prices down much.

Though offshore drilling conjures up fears of catastrophic spills, the petroleum industry rightly argues that safety measures have improved considerably in recent years. A 2003 report by the National Research Council found that only 1% of the oil that entered U.S. waters came from petroleum operations, like the offshore drilling platforms that run in the Gulf of Mexico — which also weathered Hurricane Katrina without massive spills. If it can be done in an environmentally friendly fashion — and with oil companies themselves footing the bill — opening up some new territory to drilling might be worth it. The reality is that our economy will run on petroleum for the foreseeable future, and that while investing in alternatives is the only way to secure truly low-cost energy over the long-term, we'll still need oil for decades more. But any attempt to increase supply must be coupled with even heavier investment in energy efficiency and other methods to decrease oil demand — an approach that, to his credit, McCain has said will be a key part of his energy policy (although in the Senate he has skipped or voted against every fuel efficiency bill since 1990, according to the League of Conservation Voters). In any case, Bush's plan is unlikely to be realized — the Democratic-controlled Congress remains against it, and Bush can't open up the new territory on his own.

Even as Democrats and Republicans squabble over a relatively small amount of petroleum, we're missing out on the opportunity to truly break our addiction to crude. This week the Senate again failed to renew the tax credit for renewable energies like solar and wind; the credit, which expires at the end of the year, is key to the healthy growth of low-carbon alternatives. Without it, "the industry will simply stop," says Santiago Seage, CEO of the Spanish company Abengoa Solar. With energy demand skyrocketing, we'll need more oil, and alternatives like solar, and demand-side measures like toughened auto fuel efficiency standards, or tax incentives for Americans to purchase less wasteful cars. We'll have to include action on global warming, like the recently defeated Warner-Lieberman carbon cap and trade bill. A study by the Massachusetts Institute of Technology found that under the bill, U.S. petroleum consumption would drop by nearly half by 2030 — savings far in excess of the amount of oil we could ever pull from Alaska or the coasts. "We can't drill our way out of this and we can't conserve our way out either," says Bullock. "We need both." Fair enough. But the sad truth is that neither drilling nor conservation will have an immediate effect on rising gas prices, even if they do have an immediate impact on the presidential race.

[Bryan Walsh writes on environmental issues for Time magazine. His Time cover story on April 21, 2008, (and the cover itself) enraged U.S. Marine veterans far and wide: Walsh proclaimed that "green has replaced the red, white, and blue" and the cover depicted the iconic image of Marines on Iwo Jima planting a tree rather than raising the Stars and Stripes. The Time cover was bordered in green rather than the traditional red.]


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The Dumbos Hype Bat Guano Energy Policy

First, The Geezer tried to peddle a "gas tax holiday" as energy policy. Yawn. He might as well have urged that the law of gravity be declared unconstitutional. (The Geezer was just getting warmed up on the issue of the right to petition for a writ of habeas corpus.) Now, we have the Four Horsemen of the Apocalypse: The Dubster, The Geezer, The Dickster, and The Tan-Man (Governor Charlie Crist of Florida) all yammering for offshore drilling for oil. The Austin fishwrap carried an item today that there is a shortage of offshore drilling rigs. All of the available equipment is committed for the next five years and no new drilling can occur unless the Four Horseman have an offshore rig fairy. In addition, there is the problem of fewer U.S. refineries today than there were 25 years ago. The Four Horsemen will need a refinery fairy, too. So, The Geezer goes off the deep end again with more bat guano energy policies. As the saying goes in Texas, Geezer, "that dog won't hunt." If this is (fair & balanced) energy reality, so be it.

[x Salon]
Gas Prices And Offshore Drilling
By Andrew Leonard

[Executive Summary: Not much is at stake on Election Day 2008. Just the long-term health of the global economy and the future of the planet. That's what the offshore drilling debate is all about.]

Let us suppose, for the moment, that President George Bush, Sen. John McCain, and Florida Gov. Charlie Crist are correct: Offshore drilling will ease pain at the pump for American consumers. I mean it, let's not hold back. Let's give Republicans the full benefit of the doubt. Let's even throw in ANWR, and accept at face value the White House's estimates that there are 18 billion barrels of oil ready to be exploited on the outer continental shelf, and another 11 or 12 billion in Alaska.

Don't even worry about the little problem that it will be years before oil starts flowing from these new oil fields. Let's be really generous. Let's even suppose that merely lifting the federal moratorium on offshore drilling would send such a strong message to energy markets that all those traders currently speculating in oil futures would get spooked and rush to unload their positions. If a fire on one North Sea oil rig can send prices spiking up, what would a huge American commitment to drill anywhere and everywhere do?

The price of oil would drop like a rock! Gas prices might start plummeting before the presidential election! A recession could be averted! Best of all, maybe GM and Ford could renege on their plans to close down their SUV manufacturing plants, because with lower gas prices, Americans would stop buying small hybrid cars and go back to their true gas-guzzling loves.

It could happen. It's certainly not impossible. The reason Republicans -- including the likes of Crist, a one-time opponent of offshore drilling who has performed a truly dazzling flip-flop pirouette on this issue -- are jumping on the politics of offshore drilling is that there is a clear kernel of truth in their stance. There is more oil to be drilled in this world, and more supply will undoubtedly have some effect on prices. Even just the prospect of more supply will likely make a difference. So Bush and McCain's hurtful accusation that Democrats are responsible for high gas prices is not entirely wrong.

So what's the worst that could happen?

If we're going to give Republicans the full benefit of the doubt, then it is only fair to offer the same treatment to Democrats. So let's take their arguments at face value also. There will be oil spills off the coasts of Florida and California, fouling beaches, killing wildlife, and harming tourism. Unrestrained burning of fossil fuels will continue to raise global temperatures and contribute to rising sea levels and devastating extreme weather events. A plunge in the price of oil will derail the current pressing economic incentives to improve energy efficiency and channel investment into research and development of alternative energy technologies.

And ultimately, these new oil fields will be exhausted, and the whole cycle of rising prices and economic pain will begin all over again. Only this time around, our children, or our children's children, will be in much worse shape than we are now. Environmental stresses will be higher, climate change will be further advanced, and there will be even less oil to go around. (Because, of course, while the U.S. is pumping to its heart's content on its outer continental shelf, existing oil fields around the globe will continue to peter out.) Prices will rocket even higher than our current worst nightmares. We will have sacrificed precious decades in which we could have gotten a leg up in figuring out how to maintain properity in a carbon-constrained future. And those madmen and fools who counseled a quick-fix response to humanity's biggest challenge will be excoriated as some of the stupidest, most criminal leaders in human history.

That's all.

Making the political case that high prices and recession now might be necessary to avoid even higher prices, a global depression, and ecological catastrophe later is no easy task -- especially in an election year. Arguing that the smart way to compensate for higher gas prices would be to redistribute wealth so as to bolster the economic position of low- and moderate-income working-class Americans offers Republicans yet another political opportunity to cry havoc and let loose the dogs of class warfare. And as each week goes by and gas prices continue to mount, the resolution to think about the long term weakens. This is eminently understandable.

But maybe the most fascinating aspect to the debate about offshore drilling -- to this profound choice between two worldviews, two ways of being on the planet -- is the harsh light it sheds on the value systems at the heart of how political identity is traditionally seen in the United States.

Republicans have made hay for decades by portraying Democrats as spendthrift, reckless liberals. Their side is supposedly "conservative" -- sober-minded, prudent, levelheaded -- while their opponents are "radical" -- dangerous, risky, foolish.

But what is the truly "conservative" position on offshore drilling, or energy policy in general? Recklessly exhausting all available resources now, and letting the future take care of itself -- or conserving those resources, investing carefully for the future, and thinking about the long term? Where does prudence reside -- in attempting to shave a few pennies off of gas prices now, or on planning on how to cope with high gas prices for the foreseeable future?

If you're looking for a metaphor, try the competing fortunes of Toyota and General Motors on for size. George Bush and John McCain are like the fin-de-siecle executives of GM, living only in the present, catering to their customer's worst impulses in pursuit of maximizing profit in the short term. But Democrats are like Toyota, making a bet on what makes economic sense for the future.

Presumably, Toyota's shareholders are a lot happier than GM's, right now. As shareholders in this planet, what do we want? A good quarter now, at the risk of financial disaster next year? Or a long-term ecologically healthy path to sustained prosperity?

That's what the debate over offshore drilling is really about.

[Andrew Leonard is a senior writer for Technology & Business at Salon and is the author of Salon's "Free Software Project," an online book-in-progress exploring the history and culture of the free software movement.]

Copyright © 2008 Salon Media Group, Inc.


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