President Obama’s recent invitation to open an area in Alaska to energy drilling is playing to poor reviews from industry leaders and administration critics, who say the move is an attempt to mislead the public about the administration’s willingness to open federal lands to more oil and gas production.
Over the weekend during a brief refueling stop in Alaska on the way to the nuclear summit in Seoul, Mr. Obama issued a release inviting industry input on an oil and gas lease sale in Alaska’s Cook Inlet.
“Today’s announcement is part of our commitment to increasing safe and responsible domestic oil and gas production as part of an all-of-the-above energy strategy for America,” said Secretary of the Interior Kenneth L. Salazar. “We will continue to support efforts to safely expand offshore oil and gas exploration, using the best science to assess where recoverable resources lie and providing industry with abundant opportunity to lease and develop areas that contain those resources.”
But the Cook Inlet, off the coast of South-Central Alaska is the oldest oil field in the state, dating back to the early 1960s, and industry organizations are ridiculing the move as an attempt to try to dress up an old leasing area the industry has had little to no interest in drilling in for years. In fact, two previous Cook Inlet sales in 2009 and 2011 were either canceled or put on hold because of lack of industry interest.
“Oil production has been tapering off there – that’s true for any old oil field,” said Benjamin Cole of the industry-funded Institute for Energy Research. “It’s not economic for the industry to put oil wells there.”
Mr. Cole compared the administration’s lease sale offer in the Cook Inlet to a used-car dealer offering a 1962 Ford with 350,000 miles on it.
“It may be a good car, may have been a good car for all those people who learned to drive on it, but it may not make economic sense to lease it again,” he said.
A spokesman for the House Natural Resources Committee said the panel would not have an official response but argued this “latest political move is really much ado about nothing.”
The Cook Inlet lease sale was part of President George W. Bush’s 2007-12 plan for drilling in the outer continental shelf, which the Obama administration canceled and then delayed coming up with its own five-year proposal until last year.
“This is another case of President Obama canceling a lease sale that was scheduled by a previous administration and then trying to take credit for possibly allowing it to happen,” said committee spokesman Spencer Pederson. “Also, the Cook Inlet is mostly natural gas, so if the administration is using this to distract Americans from noticing gasoline prices have doubled under President Obama, House Republicans have a list of places we would suggest the administration open for American oil production to help lower prices at the pump.”
A Department of Interior spokeswoman declined to comment on the claims about the Cook Inlet, but pointed to an Interior Department estimate that the area could contain more than 1 billion barrels of undiscovered oil and 1.2 trillion cubic feet of natural gas.
The same report estimated another area off Alaska, the Chukchi Sea, could contain an estimated 15.4 billion barrels of oil and 76.8 trillion cubic feet of natural gas.
ConocoPhillips Alaska operates the Kenai liquefied natural gas export terminal in the Cook Inlet Area and has expressed interest in the drilling in the Interior Department’s latest lease sale opportunity.
In contrast, oil companies jumped at the chance to drill in the Chukchi Sea when the Bush administration offered a lease sale for a portion of it in 2008.
But more than a dozen environmental organizations have tried to derail drilling in the Chukchi Sea scheduled to start in July by challenging the drilling plans of companies such as Royal Dutch Shell in court.
Sabrina Fang, a spokeswoman for the American Petroleum Institute, says the industry has only marginal interest in the Cook Inlet and would much prefer to see more permitting opportunities in the Chukchi Seas, as well as Beaufort Sea, another area off Northern Alaska, which is home to one of the largest colonies of Beluga whales.
“Leasing in areas that have been available for years is not the forward-thinking energy policy needed to increase future energy security,” Ms. Fang said. “If the administration was serious about Alaska oil and gas exploration, then they would schedule lease sales in these areas before 2015 and 2016.”
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By Ron Finke
Independence, MO —Why do we allow companies to have any profit at all? If a company makes a profit, doesn’t that mean that it charged more than it should have for its products?
This fiscal year ending Sept. 30, our federal government will pay out $2.2 trillion just for safety net and interest expenses, 97 percent of its total intake. The government needs money so shouldn’t we just raise taxes on companies that have excess profits?
Speaking of excess profits, everyone knows that gasoline prices are too high. Exxon Mobil had revenue of $424 billion in the past year and almost $38 billion was left over after interest, taxes and depreciation. What good is that doing society?
Exxon Mobil pays $9.1 billions of that net profit to its shareholders as a dividend, $1.88 per year per share, amounting to 24 percent. Almost half of its shareholders are institutions like pension plans, universities and other foundations. That might be doing some good.
In 2009 , the oil company paid $7.7 billion in U.S. taxes but no federal income tax. Why? It paid more than $15 billion of income tax to other countries where it gets its oil. Worldwide Exxon paid $78.6 billion in total taxes before we see any leftover profit. Nigeria makes out pretty well since it charges up to 85 percent of profit from its Exxon Mobil oil production.
If Exxon could pump more oil in the U.S., our government would get more income and other taxes. Since oil pumped and sold is gone, the behemoth looks for new oil everywhere. A few years ago, it and Norwegian Statoil began exploring in a new, deeper area of the Gulf of Mexico. It can only do that after paying the U.S. government for permits. The Department of the Interior now claims Exxon Mobil abandoned three of its five permits when it requested a short suspension of activity to upgrade its equipment for new safety technology and was a little slow in signing new contracts with Chevron as a new partner.
Oh, did I mention that the finding is estimated to be a billion or more barrels of oil? Or that the exploration had already cost $300 million (that came from profit leftover from previous years and sales)? Exxon is ready to start but our government has stopped Gulf drilling by regulation. The rigs have begun to be moved to Brazil and Africa.
There is a new steel plant in Youngstown, Ohio, already producing drill pipe for our domestic production. Perhaps it could make steel for something else, but I don’t know what.
Exxon Mobil will begin paying about $10 billion in royalties and taxes to the federal government if and when it can get started on the Julia field. In the meantime, it has sued the government over its alleged snatching of the three permits. That should be successful, but lawsuits are anything but cheap. So there goes more of that leftover profit.
I wonder how smaller companies fare in fights with the government. Our U.S. government has lots of lawyers and all the time in the world. Does this type of thing have anything to do with businesses stockpiling money instead of pushing ahead, taking initiative and hiring new workers?
Congresswoman Michele Bachmann recently promised $2/gallon gas at one of her campaign functions, and a researcher affiliated with NASA reported that aliens may destroy humanity to save the planet. Which statement is farther off the wall? Let’s set the stage with the facts.
Last week, the Obama administration found itself in a legal battle with Exxon over the largest find in the company’s history, a field of over 1 billion barrels off the coast of Louisiana. This represents 5% of total U.S. oil reserves and there’s supposed to be a lot more out there. The Marcellus Shale field in New York, Pennsylvania, Ohio, and Maryland contains between 160 and 500 trillion cubic feet of natural gas. Out in North Dakota, Montana, and Saskatchewan, the Bakken deposit is estimated to contain from 10-40 billion barrels of oil equivalent according to industry experts. This doesn’t include large deposits in Colorado, Wyoming, and elsewhere. Even if Bakken comes in at the low end it, represents another 40-50% increase in onshore American oil reserves.
In the meantime, the oil companies drilling in the Gulf of Mexico are still reporting incredible delays in re-opening even the inshore oil rigs. Offshore fields have become almost impossible to develop despite the incredible size of some of these discoveries. The government shut down even the inshore oil fields in the Gulf after the Deepwater Horizon disaster last year. The Department of the Interior just announced the first auction of oil leases since the Deepwater Horizon tragedy in April of last year, to be held in December. The Gulf provides 29% of America’s oil and 13% of our natural gas.
A report released in July by LA Senator David Vitter noted the departure of 10 deep-water rigs, the imminent departure of several more, and the diversion of 8 more since the moratorium was declared in May 2010. Each of these projects ranged from hundreds of millions to billions of dollars in investment. Many of those rigs are on their way to the vast 50- to 80-billion-bbl Lula oil field off the Brazilian coast. It is interesting to note that the Export-Import Bank is loaning $10 billion to Petrobras, the Brazilian oil company, to invest in their offshore oil industry. Funny timing.
The administration has also done its best to stall drilling both on the North Slope and in the Cook Inlet in Alaska. While talking about exploration, new pipelines, and improved practices, the reality is that every roadblock possible is being placed in the way of increased production. Last year, Fenton Associates, the public relations agency for many environmental groups, boasted that they had shut down drilling in Alaska.
“Drill, baby, Drill” has been replaced by “Chill, baby, Chill.”
While having approved several nuclear power projects, all of them additional reactors at existing sites, the government has adroitly avoided offering the necessary licensing guarantees necessary to obtain funding to build them. Another catch-22 engineered by the bureaucracy.
Ezra Klein in the Washington Post reports that the EPA is moving forward with its plans to shutter 20% of the nation’s coal-fired power plants. While many are grandfathered in, the power will still go offline starting in the next 18 months. The president has clearly stated on the record that he wants to put the coal industry out of business.
The real battle is being fought under the radar. The administration is using regulatory power and permitting to choke off conventional power. Last year, I sat in a packed conference center at China’s largest solar power conference as I listened to one of Europe’s leading solar power executives state that the industry needed to work to make conventional power so expensive that alternative energy sources can compete. This has been a part of the plan all along and the current administration seems to be working along those lines.
This is economic and engineering Luddism at its worst. After the farce of the carbon offset scam and many of the issues facing the industry, administrators, systems operators, and users would be well-advised to look upon many alternative energy technology providers with a gimlet eye. Objectivity is critical to the long-term health of the energy industry.
Let’s look at the alternatives. Test data on solar modules indicates a failure rate of between 3-7% within seven years of installation. Failures of inverters are exceeding 10%. None of this data is reflected in the current economic models for solar power. The assumption is 25 years, but there is very limited data. The business model for solar panels is becoming ever more challenging with rising materials costs globally and that of labor in China. In North America Solyndra has gone through over $535 million in government funding and is on the edge. Evergreen Solar, another poster child for solar power in this country, filed for bankruptcy last week.
Globally, the solar module industry will install 11-12 gigawatts of power this year, or the equivalent of 4-5 nuclear power plants. This certainly does not keep up with demand. As Germany and Japan have announced the phase-out of nuclear power, the great mystery is how it will be replaced.
As GM, Nissan, Toyota, and other car companies have ramped up production of electric vehicles, General Motors reported that the company had sold only 125 Chevy Volts in July. Costco announced that the company was removing electric vehicle charging stations from most of its locations because the stations are never used.
Wind power has received a lot of press, but even there, the largest project planned for the country was canceled because of obstruction and a poor financial outlook. Wind power is subsidized at up to 10 times the cost of conventional energy and is unpredictable. In studies of the over 6,000 turbines in Denmark, it has been found that without heavy subsidies, wind power would rapidly fail. Germany and Spain have withdrawn subsidies for wind power installations not because the industry has grown more viable, but rather because the difficulties and costs associated with this source of power outweigh the benefits.
And yet nowhere have I seen a coherent and objective study of the energy needs and policy of the United States, the world’s largest consumer. As American consumption of energy stands at 27,000 terawatts, with $85-bbl oil, an economy on the verge of recession, and significant capacity going offline, it would be nice to have a policy that is not based upon smoke and mirrors, or even some kind of sensible policy at all.
Maybe Congresswoman Bachmann isn’t so crazy after all. Judge for yourself. In the meantime I’ll be watching the skies for alien invaders.
By Jerry Della Femina July 27th, 2011
Grandpa, I’m so so cold.
But Grandpa, why is it so cold?It’s cold because we have no oil. There isn’t a drop of oil anywhere in this country.
Because drilling for oil in Alaska was bad for the caribou. And drilling for oil offshore sometimes caused an oil spill. And we used up every drop of oil we had.
But couldn’t we have bought the oil from another country?
Yes, but we ran out of money and the Chinese were so mad that we couldn’t pay back the money we owed them that they bought up a lot of the world’s supply of oil for themselves.
But Grandpa, is that when The Supreme Leader Barack Obama made that great speech that I read about in my schoolbooks?
Yes, he was in his best speech-making mood after we lost Israel and the Middle East.
Who could his forget his “Shame on you, Iran, for being not nice” speech at the United Nations. The delegates cheered him for seven minutes and gave him their “Prince of Peace” award. Then he made a brilliant speech blaming the banks, the rich, the oil companies and the car companies for making us dependent on oil and causing global warming.
Grandpa, isn’t that when Obama dissolved our armed forces?
Yes, that was his most famous “What do we need the military for? We’ve won the respect of the Third World by destroying all of our weapons” speech.
Then he flew to Iran, threw his arms around Mahmoud Ahmadinejad and said, “I will be your friend if you will be my friend.” Ahmadinejad just giggled and walked away.
Was Obama embarrassed?
No. He dropped to his knees and said, “I never liked Israel either.” Then he sang “All We Are Saying Is Give Peace a Chance.” There wasn’t a dry eye in the Iranian parliament. Actually they laughed until they had tears in their eyes. Sadly, Iran tried to destroy the glory of Obama’s big moment the next day when they dropped a hydrogen bomb on Saudi Arabia. But that didn’t stop Obama. He went to Brazil and made his famous “I’m starting to lose patience with Iran” speech.
Yes. By that time the United Nations had moved out of New York because we were out of oil and re-located to Brazil where it was warmer and more comfortable.
Grandpa, was that in 2016, when he stopped being President and asked to be re-elected for the third time?
Yes, that was a wonderful time for the Liberals, the unions, Democrats and The New York Times. It started with a New York Times front page “news” story titled “Many Want Obama To Stay On.” Then the Times said in an editorial that since it was against the law for Obama to be elected President again, let’s eliminate the title of President and elect him as The Supreme Leader.
Yes, I read all about it in school. That’s when he ended taxes and unemployment in the United States.
Exactly. Since he had convinced everyone that the rich were destroying the country and he had taxed just about every penny he could get out of them, he came up with his “Your Money or Your Life” amendment.
He said, “We are all born equal and there is no reason why we shouldn’t stay equal financially, no matter if one man chooses to work every day of his life and another man chooses to live off the work of the man who works.”
Grandpa, I know the great Obama “We are all our brothers’ keepers” speech, and that’s when he was declared the last President of the United States and the first “Leader of the World.”
Yes. So far we’re the only country to go along with this, and all the other countries have more respect for Costa Rica as a world power than us, but you know how persuasive Obama can be when he opens his mouth. YES HE CAN, YES HE CAN.
But Grandpa, it’s freezing. I’m so so cold.
Well I have a surprise for you. For your 10th birthday your Grandpa just sold everything we have for nine pieces of black-market coal.
Grandpa! Grandpa! Nine pieces of coal—we’re rich!
By Kevin Mooney on August 12, 2011 8:21 am
Oil drilling moratorium, union favoritism, ObamaCare mandates undercut business
Louisiana is beset with some of the most economically damaging regulations that flow out of Washington D.C, according to industry representatives and public policy analysts. Moreover, some small business owners view local level licensing practices within their own municipalities as being overly costly and redundant.
Anti-Energy Policies Remain in Effect
For starters, there is the moratorium on deepwater oil and gas drilling that the Obama Administration imposed in May 2010 in response to the British Petroleum oil well explosion. Although the moratorium was official lifted in October of last year, a “de-facto” moratorium remains in place, officials with the Louisiana Oil and Gas Association (LOGA), have argued.
The “political uncertainty” surrounding the Gulf region has discouraged companies from making investments that could help spur economic growth, Don Briggs, the LOGA president, has observed. As was previously reported, ten oil rigs have left the Gulf of Mexico since the moratorium went into effect and eight others that were heading into the region have been detoured away.
“When you have companies that would be spending hundreds of millions of dollars, or some cases, billions of dollars, they need certainty,” Briggs explained. “We don’t have that now and I don’t expect that we will anytime soon. We will be in a deteriorating position until this changes.”
Sen. David Vitter (R-La.) has announced that he will block the nomination of Rebecca Wodder to serve as Assistant Secretary for Fish and Wildlife Parks for the Department of Interior unless expiring Gulf drilling leases are extended for another year.
“Since the moratorium, oil and gas exploration in the Gulf of Mexico has been dramatically curtailed,” Vitter said. “In 2011 alone, more than 300 offshore drilling leases in the Gulf of Mexico are due to expire. If these leases are allowed to expire, they will revert to the federal government, killing jobs and cutting off potential revenue from exploration and production. The U.S. economy will greatly benefit by allowing the offshore energy industry to get to work and stay working.”
Earlier this year, Vitter also blocked the nomination of Dan Ashe to the Interior Department, but lifted it after new deepwater exploratory permits were issued. In addition, Vitter has successfully opposed an almost $20,000 pay raise for Interior Secretary Ken Salazar.
While Vitter’s actions have been effective, states like Louisiana that rely on cheap, affordable energy for their livelihood will most likely remain back on their heels for some time, Bonner Cohen, a senior fellow with the National Center for Public Policy Research (NCPPR), said.
“What you are seeing in Louisiana is only a small piece of larger mosaic being put together by the Obama Administration to make affordable energy as inaccessible as possible,” he observed. “From the administration’s war on coal to the serious consideration it is giving to imposing a nationwide regulation of hydraulic fracturing, to its shut down of deepwater drilling in the Gulf of Mexico, to its `endangerment finding” from the EPA [Environmental Protection Agency], the administration is practicing its own form of selected industrial sabotage.”
Although the Obama Administration failed to pass the Waxman-Markey “cap and trade” bill, it continues to pursue the same regulatory goals through the EPA and other federal agencies, Marlo Lewis, a senior fellow with the Competitive Enterprise Institute (CEI), has warned. As an alternative to pricing the carbon dioxide emissions from coal as part of a cap and trade program, the idea now is to simply prevent “conventional coal” from entering into competition with other energy sources, Lewis points out in “Green Watch,” a publication of the Capital Research Center (CRC.)
“Obama’s target is virtually identical to the mix of electricity fuels that would develop under Waxman-Markey,” Lewis explains. “Under Obama’s proposal, 80% of U.S. electricity would come from nuclear, natural gas, CCS, and renewable energy by 2035. Under Waxman-Markey, an estimated 81% would come from the same sources by 2030, according to the U.S. Energy Information Administration (EIA).”
The EPA also issued an “Endangerment Rule” back in Dec. 2009 that could have far reaching consequences for Louisiana businesses and average citizens. The rule claims that the “elevated concentration” of GHG (Greenhouse) emissions in the atmosphere “endangers public health and welfare.” This could create an enormous opening for additional regulatory mischief by misapplying and misusing the Clean Air Act (CAA), which makes no mention of “greenhouse gas” or the “greenhouse effect,” Lewis notes.
“If the Obama Administration is really were to impose the EPA’s Endangerment Rule on the nation, than the Clean Air Act could be transformed into a law that requires the United States to de-industrialize itself,” Lewis laments.
But the EPA insists it has the authority to implement new regulatory rules under the CAA under the U.S. Supreme Court’s Massachusetts v. EPA ruling in 2007. The court concluded that carbon dioxide (CO2) was an air pollutant as the term is defined within the parameters of the CAA.
Team Obama Advances Big Labor Agenda
The EPA has a long track record of anti-business activity that is well documented and not likely to change anytime soon Mike Mitternight, the president of the Factory Service Agency, an air conditioning service and installation company based in Jefferson Parish, observed. But he is equally concerned with the “pro-union” leanings of the National Labor Relations Board (NLRB).
“We always need to be concerned about the EPA,” he said. “Businesses have historically done battle with the EPA. But right now I’m looking over my shoulder at what the NLRB is doing. The pro-unionization rulings are something we need to keep our eye on.”
Mitternight is particularly concerned about a proposal to curtain the amount of time set aside for unionization elections involving private companies. If the rule change goes into effect, the NLRB would set elections from a current median time of 37 days to as little as 10 days from the filing of an election petition. They would also set pre-election hearings for 7 days after a petition is filed; the rules would also require the employer to respond to a pre-hearing questionnaire raising any legal issues or waive its right to do so. And finally, the new rules would defer a decision on the issues raised at the hearing till after the election, putting an employer at risk if the decision is challenged.
“From the point of view of small business, this is very problematic,” Mitternight said. “It means a union could break our employees out into small groups and attempt to unionize in a piecemeal fashion.”
Mitternight also expressed concern over the “repetitive nature” of the licensing policies in Louisiana municipalities that translate into multiple fees and taxes. The total sales tax is 9 percent in Orleans Parish and 8.75 percent in Jefferson. Therefore, if he makes a purchase in Jefferson Parish and pays the 8.75% and then subsequently installs equipment in New Orleans Parish, he must then pay the 1/4 percent difference as a use tax for installation in Orleans.
Mitternight holds an occupational license in Jefferson Parish but must also maintain an occupational license in Orleans Parish, which is used to collect the additional ¼ percent tax. In addition, he holds a statewide Mechanical Contractors license, but is also required to have both a mechanical and a gas fitters license in Jefferson, Orleans, Kenner, Plaquemines, St. Tammany, Slidell, Mandeville, St. Bernard, and any other similar municipality or Parish where he operates.
“I have to fill out the tax report form on a monthly basis and indicate where I made an installation in New Orleans and pay them the extra tax,” he said. “It can be an expensive proposition to be an air conditioning manufacturer because you have this multi-layered licensing and I see it as an over-regulation.”
ObamaCare Could Force New Bureaucracies, Higher Costs
Unless the U.S. Supreme Court intervenes and rules in favor of the lawsuits that challenge the constitutionally of President Obama’s new health care law, Louisiana and other states will be forced to accommodate new layers of bureaucracy and higher costs, a report from the American Legislative Exchange Council shows.
“ObamaCare’s Medicaid mandates will bring significant fiscal damage to already strained state budgets, especially when taking into consideration the amount states currently spend on Medicaid” the report warns. Louisiana’s own Department of Health and Hospitals has produced a study that shows implementation of ObamaCare will cost the state in excess of $7 billion over a 10 year period.
Rep. John Fleming (R-La.), who is also a medical doctor, points out that the “governmentalization” of health care has been in motion since the 1960s. The Patient Protection and Affordable Care Act (PPCA), the official title of ObamaCare, accelerates a harmful trend that must be reversed, he said.
“These policies are separating the patient from the private sector by inserting government with all its bureaucracy, additional costs and regulations,” he observed. “ObamaCare just makes this worse.”
Rep. Fleming has offered up two proposals, which would help to expand choice, lower costs and expand the influence of the private sector. Policymakers should “open up state lines” so that insurance companies must compete with one another and consumers can choose the best plan for their needs, he said. Fleming also supports the expansion of Health Savings Accounts (HSAs). They come with higher deductibles, but this also creates an incentive to save and to make “wise purchases,” he said.
“This is about putting consumers back in charge. Often times, we see them saving over and above what their deductible is in their Health Savings Accounts. ”
Louisiana is a plaintiff in the multi-state lawsuit that has been filed against ObamaCare.
Federal Court’s Summary Judgment Compels Obama Administration to Act on Deepwater Drilling Permits (…Again)
Posted by: Jim Adams on Tuesday May 10, 2011, 16:34
“Although the government has begun to issue some permit applications, plainly because of this lawsuit, the future of drilling in the Gulf of Mexico remains elusive; plaintiffs’ other long-pending permit applications speak loudly to this,” Judge Feldman wrote in his ruling. “Moreover, the government’s conduct of delay in deepwater drilling in the Gulf dramatically presents far more than the mere possibility of persistent and repetitious intentional delays in processing . . . permit applications.”
The judge added: “The government has presented no credible assurances that the permitting process will return to one marked by predictability and certainty. Processing a scant few applications is at best a tactical ploy in a real world setting.”
We could not have said it better. For months, the Obama administration has aggressively dug in its heels to maintain its de facto moratorium on oil drilling. We’ve only seen the administration move – reluctantly – when shoved.
Fortunately, there are some leaders willing to give the administration a firm push. Today, the House is voting on H.R. 1229, which would require the Interior Secretary to decide on a drilling permit within 30 days of receiving an application.
Clearly, a lot of folks think the Obama administration needs a kick in the pants – whether in the form of a court order or an act of Congress — to do its job.
Americans don’t expect government to solve our problems. But we do hope our government won’t be the cause of our problems. Right now, the Obama administration is not only causing problems – unemployment, higher gas prices, more dependence on foreign oil – but it’s standing in the way of a solution.
It’s time that Gulf workers got back to work exploring for domestic oil. Americans want it, Congressional leaders are demanding it, and a federal judge has ordered it. What more does the Obama administration need to do its job?
Jim Adams is the President of the Offshore Marine Service Association. OMSA represents the owners and operators of U.S. flag offshore service vessels and the shipyards and other businesses that support that industry.