Monthly Archives: August 2011

Obama: Regulations Are Mere Rumors


by Tait Trussell

“Don’t believe everything you hear.”  Many rumors “are unfounded.” That’s what Barack Obama​ had the audacity to tell farmers on his recent tour in the Midwest after they complained about federal regulations.

The president’s attempts to buffalo farmers with false assurances come in a record year of federal regulations. “In the first six months of 2011, some 15 major regulations were issued, with annual costs exceeding $5.8 billion, and one-time implementation costs approaching $6.5 billion.” These figures are stated in an extensive report on federal red tape assembled by the Heritage Foundation.

The administration announced Aug. 23 it would soon release plans for trimming hundreds of what Obama called “dumb” rules. Obama’s Regulatory Czar is Cass Sunstein​, an academic who believes in libertarian paternalism and whose adoration for FDR knows no bounds. The new regulatory backtrack was said to save $10 billion over 10 years. But they don’t include some of the most objectionable regs, such as rules to reduce carbon emissions and requirements supposedly to protect the public from financial and health abuses. The Chamber of Commerce praised the regulatory review, but said it didn’t go far enough.

The Obama administration “imposed 76 new major regulations from January 2009 to mid FY 2011, with annual costs of $38 billion,” the Heritage analysis said. “This flood of red tape will undoubtedly persist, as hundreds of new regulations stemming from the monstrous Dodd-Frank financial regulation law, from Obamacare, and from the EPA’s global warming crusade advance though the  regulatory pipeline.” This all “further weakens an anemic economy and job creation.”

Federal regulations are not only disrupting business, they are entering Americans’ lives, including how we heat our homes, light our rooms, what food we buy, how we cook it, the mattresses we sleep on, the toys our children play with, etc. Regulatory costs for businesses are passed on to consumers in such items as toilets, showerheads, cars, washing machines and dryers, ovens and refrigerators, TV sets, even bicycles.

No official accounting of total regulatory costs exists, the Heritage study said. Estimates vary. Unlike accounting of tax revenues, the study says “an oft-quoted estimate of $1.75 trillion annually is about twice the amount of individual income taxes collected last year.”

The cost burden imposed by new regulations can be tracked, however, the Heritage analysis said, and “it is growing substantially.” Fiscal 2010 saw record increases, and they have risen in 2011. From the start of the Obama reign to mid-FY 2011, regulators have stuck the American citizenry with $38 billion in new costs, “more than any comparable period on record.”

Added costs include $1.8 billion a year for compliance and a one time implementation cost of $5.2 billion from new emission limits on industrial and commercial boilers and incinerators. The EPA said it would postpone the effective date pending its reconsideration. But the rules are still on the books, the Heritage study said. And they will be, pending judicial review or EPA reconsideration. Until then, business is constrained from “expansion, developing new products or making efficiency improvements.”

Included also are five sets of complicated regulations put forward by the Securities and Exchange Commission (SEC) to control financial institutions. The SEC calculated the cost of “outside” professional services that will be required to comply with three of the rules, but didn’t include the cost of 317,962 hours of “internal work” compliance which the regulation requires.

When ObamaCare became law, some Republicans charged that the IRS would have to hire 16,500 more agents to enforce the law—that is, collect the fines from those who refused to buy health insurance. But a ruffled Senate Majority Leader Harry Reid (D-NV) said adamantly it would only take 12,000 more employees. What a relief!

Among the many regulations, fuel economy and emission standards are included for cars and light trucks at an annual cost of $10.8 billion. Add to this $1.2 billion cost for constraints on “short sales” of securities, plus a tsunami of other Dodd-Frank regs still to come out.

Regulations also swell the government regulatory workforce, which was estimated to rise to 281,832 in 2011. The George Washington University’s Regulatory Studies Center keeps tabs on such matters.

One set of regulations of which the administration must be very proud is special accommodations for foreign workers who are hired as goat and sheep herders in the U.S. The regulations assure their living quarters are government approved and comfy. The rules for herders, required by the U.S. Labor Department, apply to sleeping quarters, food storage, lighting, laundry, even cell phones.

When Obama was on his Midwest town hall tour earlier this month, a corn and soybean farmer told the president that nature itself offers plenty of challenges. “Please don’t challenge us with more rules and regulations from Washington. We would prefer to start our day in a tractor cab or combine cab rather than filling out forms and permits to do what we’d like to do.”

Original Article

White House bluster hides truth



That’s a mighty wind blowing from the east. No, I’m not talking about Hurricane Irene. It’s the blustery gusts stirred up long before Irene by the constant whining from the Obama White House: Everything but the administration’s own policies are responsible for the faltering economy.

Irene is only the latest of the “head winds” White House officials blame for feeble economic growth and persistent high unemployment. There was the earthquake/tsunami in Japan, the fiscal crisis in Greece, the civil war in Libya on top of Arab Spring uprisings in other Arab countries and, of course, Republicans refusing to go along with President Barack Obama’s spending binge, er, “investments.” One adviser even found head winds from the East Coast earthquake, though its most notable damage appeared to be cracks in the foundation of the Washington Monument.

No doubt these events did create drag for the economy. But Democrats never cut that kind of slack for President George W. Bush. They constantly talk about him inheriting a surplus from the Clinton years but ignore that he also inherited a deteriorating economy that produced a recession in March of 2011 just weeks after he was sworn in.

Liberals ignore the economic devastation of the Sept. 11, 2001, terror attacks in New York and Washington. Air traffic was grounded for days, commerce came practically to a halt. But none of that was allowed to intrude into the left’s narrative of Bush squandering the surplus.

Hurricane Katrina was a convenient cudgel to pound Bush over the failure of government to respond effectively to the disaster, though it was the Democratic-run governments of New Orleans and Louisiana, the first responders, that were the most guilty. Here again the Democratic narrative leaves out the economic consequences of Katrina.

The point is that any president has to deal with “head winds” to the economy from unexpected and uncontrollable events domestic and foreign. What’s remarkable about this presidency is the never-ending whining about them.

This finger-pointing is just passing the buck to avoid responsibility for policies that have failed to revive the economy and, worse, served to prolong the economic suffering.

There’s the nearly trillion-dollar stimulus that failed its goal of keeping unemployment from breaching 8 percent. ObamaCare and the new financial regulatory law have bureaucrats working overtime writing new regulations. That’s frozen investment by businesses large and small worried about the yet-to-be-determined costs of the new rules.

Obama and his advisers never flinch from anti-business rhetoric, further undermining investment. They rail about millionaires and billionaires but their tax proposals would hit small businesses earning far less than a million dollars.

Democrats sneer at the Texas job growth story by pointing out that a significant part of it is based in the oil and gas industry, revealing left-wing job-killing hostility to developing traditional energy resources. A study by the business analysis firm IHS Global Insight asserts increased offshore energy production could produce nearly 230,000 jobs, add $44 billion to the economy and provide nearly $12 billion in tax and royalty revenues to state and federal governments.

But documents released by Sen. David Vitter (R-La.) show that the administration’s campaign against deepwater drilling in the Gulf of Mexico caused 10 oil rigs to leave for better opportunities in waters off Egypt, Congo and other places — including Brazil where, ironically, Obama has promoted the ocean exploration he frustrates at home.

Meanwhile the administration pursues alternative energy jobs, though the New York Times reported this month that “federal and state efforts to stimulate creation of green jobs have largely failed.”

All the finger pointing, whining and passing the buck can’t hide the failure of Obamanomics.

Original Article

Push for permits in Gulf of Mexico

By Sheila McNulty in Houston

Sixty per cent of rigs contracted in the Gulf of Mexico are not working almost a year and a half after the Macondo disaster.

Industry participants are meeting on Tuesday with regulators to speed up permitting in the world’s most productive deepwater and oldest shallow-water basin, which was temporarily halted after the April 2010 rig explosion but has been slowly ramping up.

“We have the will to drill,’’ said Jim Noe, executive director of the Shallow Water Energy Coalition of companies drilling in the gulf’s shallow waters. “We just don’t have the permits to drill.”

Of 115 rigs in the gulf, 51 have no contracts, said Cinnamon Odell, senior rig market reporter at ODS-Petrodata, which provides data on the energy sector.

Of the 64 with contracts, she said, only 48, or 41.5 per cent of the fleet, are working.

That is down from the 74 contracted rigs in March 2010 – the month before Macondo. Sixty-five of those rigs – or 56.4 per cent – were working at that time.

Companies have complained that slow and unpredictable permitting costs them millions of dollars and has led some to pull rigs from the gulf.

Analysts said BP has for months been paying $2.4m per day for five rigs on standby.

BP Macondo oil well

BP has had a difficult time getting access to permits

The UK company has had a particularly difficult time getting access since it was in charge of the Macondo well that exploded.

In reporting its second-quarter results, BP said it had one rig back at work but added: “In the third quarter, we expect costs to continue to be impacted by rig standby costs.”

Bill Townsley, Royal Dutch Shell’s deepwater programme delivery manager, said it had seven rigs running, up from five when Macondo hit.

But the issue is having permits to drill new wells when a job ends, which is every two to five months.

“Right now, we’re receiving permits just in time,” Mr Townsley said. “We are working to get permits ahead of time. The Gulf of Mexico is one of our major heartlands.”

Shell would like to have 11 rigs in the gulf in 2013.

Analysts said at least nine rigs have left the gulf since the accident – six this year with two leaving this month.

“Once they leave, they typically leave on a long-term contract,” said Jim Dillavou, of Deloitte, the consultancy. He noted that several rigs destined for the gulf are going elsewhere.

Melissa Schwartz, spokeswoman for the Bureau of Ocean Energy Management, Regulation and Enforcement, said: “Personnel are working overtime to process pending permits.”

Since the moratorium ended, she said, regulators had approved 68 new shallow water permits, 112 permits for 34 unique deepwater wells requiring sub-sea containment and 45 permits for additional activities, including water injection.

“There are more rigs on contract today than there was a year ago,” she added.

But Mr Noe, also senior vice-president of Hercules Offshore, the gulf’s largest shallow water drilling company, said there was a moratorium on drilling in the deepwater gulf a year ago, so the comparison was meaningless.

“We have 18 of our 25 rigs working today but that may not last long,” he said. “We have 10 or 11 committed jobs for the rigs but we don’t have permits for the work yet. Without the permits, these wells won’t be drilled.”

Original Article

Bernard L. Weinstein: US energy resources worth the investment


Bernard L. Weinstein

Over the past three years, we have seen a dramatic rebound in America’s oil and natural gas production after a hiatus of almost 40 years. This has occurred despite falling output in Alaska, the moratorium on deep-water drilling imposed in the wake of the Gulf of Mexico oil rig blowout last year, and extremely low prices for natural gas.

New technologies for extracting oil and gas from deep under the ocean floor as well as shale formations have been largely responsible for the country’s fossil fuel renaissance.

All this is good news for America’s consumers. Though gasoline and diesel prices have jumped 30 percent over the past year, absent the 11 percent increase in oil production from U.S. fields consumers might be paying even more.

At the same time, falling imports chopped about $20 billion off America’s import bill last year. Abundant new supplies of natural gas at low cost have reduced the home heating and electric bills for millions of American households.

In a sluggish economy, energy producing states like Texas, Oklahoma, Arkansas and Louisiana are benefiting from the job and income growth associated with the resurgent energy sector.

Each of these states currently posts unemployment rates below the U.S. average of 9.1 percent and each has posted job gains over the past year, led by the energy sector.

According to a recently-released study by Quest Offshore Resources, drilling and production in the Gulf of Mexico currently support about 182,000 jobs in Texas, Louisiana, Mississippi and Alabama — a number that would have been even higher in the absence of the deep-water moratorium. Should drilling permits return to their pre-Macondo pace, by 2013 Gulf of Mexico operations could support 320,000 jobs in these states.

Non-energy states are also benefiting from the nation’s fossil fuel revival. According to the American Petroleum Institute, 9.2 million jobs across the county can be attributed directly and indirectly to spending by the oil and gas industry.

Developing oil and gas resources currently off-limits in the Outer Continental Shelf (OCS), Alaska and the Rockies could create another 160,000 jobs by 2030 while expanding production in the Marcellus Shale and Canadian oil sands could add a further 620,000 over the next 20 years.

President Obama can help create these jobs by dropping his perennial call for higher taxes on U.S. oil and gas producers. These companies already fight an uphill battle against foreign firms who receive sweetheart tax and regulatory deals from their home governments.

Second, the OCS and other areas currently off-limits but rich in fossil fuels should be opened for environmentally-responsible exploration, drilling and production. Finally, the proposed Keystone XL pipeline that will bring oil from Alberta to refineries on the Gulf Coast should be approved without further delay.

The Energy Information Agency believes more than 59 billion barrels of recoverable oil reside in U.S. offshore waters. The U.S. Geological Survey recently estimated total recoverable oil reserves in North Dakota, home to the Bakken Formation, at four billion barrels.

Alaska, California, Pennsylvania, New York and Texas also possess great potential for additional oil and gas recovery, if only we have the political will.

Investing in North America’s energy resources, especially oil and gas, can revive our economy, lessen our dependence on imports, and increase our national security. But the current energy boom will only become sustainable if public policy becomes accommodating rather than inhibiting.

Bernard L. Weinstein is associate director of the Maguire Energy Institute and an adjunct professor of business economics in the Cox School of Business at Southern Methodist University.

Original Article

Chinese-built oil rig setting sail for Cuban waters


HAVANA,  (Reuters) – A new, Chinese-built drilling  rig was expected to depart Singapore yesterday or later this  weekend on its way to Cuba where it will be used to usher in a  new era in offshore oil exploration for the communist-led  island.

The Scarabeo 9, owned by Italian oil giant Eni SpA’soffshore unit Saipem and contracted in Cuba by Spanish oil firm  Repsol YPF, was anchored in Singapore and ready to leave on  what an Eni spokesman said would be an 80-day voyage.

A Western diplomat in Havana said the rig would stop in  South Africa and Brazil before reaching Cuba in November, with  the expectation it will start drilling shortly after arrival.

Oil experts on the island say Cuba may have 20 billion  barrels of oil in its still-untapped portion of the Gulf of  Mexico, although the U.S. Geological Survey estimates reserves  are a more modest 5 billion barrels.

Repsol drilled a well in Cuban waters in 2004 and found oil  there, but for various reasons, including the longstanding U.S.  trade embargo against the island, has not drilled again.

For Cuba, a big oil find will give its struggling economy a  boost and reduce or eliminate its dependence on oil-rich  leftist ally Venezuela, which ships 113,000 barrels a day to  the island at reduced prices.

Opponents of the Cuban government fear that if significant  oil reserves are discovered, it will only further entrench the  communist system and its leaders.

Cuban President Raul Castro, 80, is in the midst of  liberalizing the Soviet-style economy with the goal of assuring  the survival of communism once he and his elderly leadership  group are gone.

The Scarabeo 9, which has the latest technology and is  capable of drilling in up to 12,000 feet (3,600 metres) of  water, was built in Yantai CIMC Raffles Shipyards in Yantai,  China, but  after a number of delays was shipped to the Keppel  FELS shipyard in Singapore last fall for completion.

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