Energy thread

[southsider2k5]

http://www.washingtonpost.com/wp-dyn/conte...8081102145.html

 

'Snake Oil'

Debunking three 'truths' about offshore drilling

 

Tuesday, August 12, 2008; Page A12

 

THE NATURAL Resources Defense Council Action Fund has taken out full-page ads in this newspaper and others to decry offshore drilling for oil as "George W. Bush's Gasoline Price Elixir" that is "100% Snake Oil." The environmental group calls on supporters "to stop the giveaway of our coasts." It is urging visitors to its Web site to send a pre-written letter to their members of Congress that says, "I am not buying the lie . . . that sacrificing the Arctic National Wildlife Refuge and America's coastal waters to oil drilling would make a real difference in gas prices -- either today or twenty years from today!" And the missive adds, "With just three percent of the world's oil reserves, our nation simply doesn't have enough oil to impact the global market or drill our way to lower prices at the pump."

 

The NRDC's arguments above neatly encapsulate the position taken by environmentalists and other opponents of offshore drilling. And they include a couple of good points. Contrary to the baldly political suggestions regarding lower gasoline prices by President Bush and Sen. John McCain (R-Ariz.), drilling would make no impact on today's pain at the pump because it would be years before any oil flowed from the Outer Continental Shelf. We agree that the Arctic National Wildlife Refuge, with its varied and sensitive ecosystems, should be preserved. In the quest for new sources of energy, there are trade-offs. That pristine area must remain off-limits. But there are three "truths" masquerading as fact among drilling opponents that need to be challenged:

 

 

 

· Drilling is pointless because the United States has only 3 percent of the world's oil reserves. This is a misleading because it refers only to known oil reserves. According to the Interior Department's Minerals Management Service (MMS), while there are an estimated 18 billion barrels of oil in the off-limits portions of the OCS, those estimates were made using old data from now-outdated seismic equipment. In the case of the Atlantic Ocean, the data were collected before Congress imposed a moratorium on offshore drilling in 1981. In 1987, the MMS estimated that there were 9 billion barrels of oil in the Gulf of Mexico. By 2006, after major advances in seismic technology and deepwater drilling techniques, the MMS resource estimate for that area had ballooned to 45 billion barrels. In short, there could be much more oil under the sea than previously known. The demand for energy is going up, not down. And for a long time, even as alternative sources of energy are developed, more oil will be needed.

 

 

· The oil companies aren't using the leases they already have. According to the MMS, there were 7,457 active leases as of June 8. Of those, only 1,877 were classified as "producing." As we pointed out in a previous editorial, the five leases that have made up the Shell Perdido project off Galveston since 1996 are not classified as producing. Only when it starts pumping the equivalent of an estimated 130,000 barrels of oil a day at the end of the decade will it be deemed "active." Since 1996, Shell has paid rent on the leases; filed and had approved numerous reports with the MMS, including an environmentally sensitive resource development plan and an oil spill recovery plan that is subject to unannounced practice runs by the MMS; drilled several wells to explore the area at a cost of hundreds of millions of dollars; and started constructing the necessary infrastructure to bring the oil to market. The notion that oil companies are just sitting on oil leases is a myth. With oil prices still above $100 a barrel, that charge never made sense.

 

 

· Drilling is environmentally dangerous. Opposition to offshore drilling goes back to 1969, when 80,000 barrels of oil from an offshore oil well blowout washed up on the beaches of Santa Barbara. In 1971, the Interior Department instituted a host of reporting requirements (such as the resource development and oil spill recovery plans mentioned above) and stringent safety measures. Chief among them is a requirement for each well to have an automatic shut-off valve beneath the ocean floor that can also be operated manually. According to the MMS, between 1993 and 2007, there were 651 spills of all sizes at OCS facilities (in federal waters three miles or more offshore) that released 47,800 barrels of oil. With 7.5 billion barrels of oil produced in that time, that equates to 1 barrel of oil spilled per 156,900 barrels produced. That's not to minimize the danger. But no form of energy is perfect or without trade-offs. Besides, if it is acceptable to drill in the Caspian Sea and in developing countries such as Nigeria where environmental concerns are equally important, it's hard to explain why the United States should rule out drilling off its own coasts.

 

The strongest argument against drilling is that it could distract the country from a pursuit of alternative sources of energy. There's no question that the administration has been lax on that front. True leadership would emphasize both alternative sources and rational approaches to developing oil and natural gas. No, the United States cannot drill its way to energy independence. But with the roaring economies of China and India gobbling up oil in the two countries' latter-day industrial revolutions, the United States can no longer afford to turn its back on finding all the sources of fuel necessary to maintain its economy and its standard of living. What's required is a long-term, comprehensive plan that includes wind, solar, geothermal, biofuels and nuclear -- and that acknowledges that oil and gas will be instrumental to the U.S. economy for many years to come.

[kapkomet]

Have you noticed the demand numbers coming out of China and India? Their economic reports lately? The dollar? The price per barrel of oil?

 

I've been saying for a year all of what's happening now would happen, and I think it's no accident. As I've said before, I'd be a rich man right now if I had some money because I knew the markets would be doing EXACTLY what they are doing at EXACTLY this point in time.

 

It may not stick in the long run, but the timing of all of this is interesting.

[southsider2k5]

We all should set up a commodity fund together... It would be interesting to actually put some of this knowledge to a real life test. I know this great little trading firm we can use

 

 

Its funny because with my own money, I have been pretty right, I have just been a month early on all three of my crude oil plays.

 

[Balta1701]

Have you noticed the demand numbers coming out of China and India? Their economic reports lately? The dollar? The price per barrel of oil?

 

I've been saying for a year all of what's happening now would happen, and I think it's no accident. As I've said before, I'd be a rich man right now if I had some money because I knew the markets would be doing EXACTLY what they are doing at EXACTLY this point in time.

 

It may not stick in the long run, but the timing of all of this is interesting.

I finally found someone nice enough to put it in graphical form yesterday...heres' the oil price graph over the last few years. In terms of total dollars, the oil price correction we're seeing right now is the biggest...but in terms of percentage drop, it's somewhere right in the middle (the price is down another $5 or so from the point this graph was made, so the %age drop is around 18% now I think).

 

 

 

[southsider2k5]

I finally found someone nice enough to put it in graphical form yesterday...heres' the oil price graph over the last few years. In terms of total dollars, the oil price correction we're seeing right now is the biggest...but in terms of percentage drop, it's somewhere right in the middle (the price is down another $5 or so from the point this graph was made, so the %age drop is around 18% now I think).

 

 

Someones math is wrong. The top for Crude was $147.90 It is currently at 113.20 as we speak. That is down about 23.5%. The lows of the last few days of 112.21 are very close to down a full 25% from the all time highs.

[Balta1701]

Have you noticed the demand numbers coming out of China and India? Their economic reports lately? The dollar? The price per barrel of oil?

 

I've been saying for a year all of what's happening now would happen, and I think it's no accident. As I've said before, I'd be a rich man right now if I had some money because I knew the markets would be doing EXACTLY what they are doing at EXACTLY this point in time.

 

It may not stick in the long run, but the timing of all of this is interesting.

I didn't type it, but honestly, this is sort of exactly what I was expecting to see now. We've had a couple weeks of dropping oil prices, pushing gas back under $4 and taking "Rising gas prices" out of the #1 story slot on the evening news...and suddenly we're once again seeing bigger draw-downs in inventory than we expect. The speculators pushed it too high, now they pushed it too low, and demand is going to pull inventories back down until it rises again.

 

I'm really starting to think that for the next few years, your average price increase for oil is going to be determined by "What it takes to make people constantly hurt". Because the second it starts feeling like relief, inventories are going to start going down and the price is going to shoot back up.

[NorthSideSox72]

I didn't type it, but honestly, this is sort of exactly what I was expecting to see now. We've had a couple weeks of dropping oil prices, pushing gas back under $4 and taking "Rising gas prices" out of the #1 story slot on the evening news...and suddenly we're once again seeing bigger draw-downs in inventory than we expect. The speculators pushed it too high, now they pushed it too low, and demand is going to pull inventories back down until it rises again.

 

I'm really starting to think that for the next few years, your average price increase for oil is going to be determined by "What it takes to make people constantly hurt". Because the second it starts feeling like relief, inventories are going to start going down and the price is going to shoot back up.

Sure. Demand will continue to increse, supply isn't really going anywhere long run. Short run, they elect to delve into inventories and maybe cut back profit margins for the retailers. But those trends won't hold up. Prices will rise again, and more so than they had before.

 

[kapkomet]

I generally agree, but I can't help but wonder if China's demand will go down.

[lostfan]

If China and India are smarter and more forward-thinking than we were, they won't all go rushing out to buy gas-guzzling cars and they will have a better transportation infrastructure that isn't so dependent on oil.

[NorthSideSox72]

If China and India are smarter and more forward-thinking than we were, they won't all go rushing out to buy gas-guzzling cars and they will have a better transportation infrastructure that isn't so dependent on oil.

This is why it is so critical that we push alternatives here, NOW. If we don't, we are basically telling other countries, go ahead... be market leaders... we dont' need growing industries and new jobs.

 

Timing is critical here for all sorts of reasons.

 

[kapkomet]

If China and India are smarter and more forward-thinking than we were, they won't all go rushing out to buy gas-guzzling cars and they will have a better transportation infrastructure that isn't so dependent on oil.

 

 

This is why it is so critical that we push alternatives here, NOW. If we don't, we are basically telling other countries, go ahead... be market leaders... we dont' need growing industries and new jobs.

 

Timing is critical here for all sorts of reasons.

There have already been studies showing that they're buying the gaz guzzlers while we're over here trying to downsize everything.

 

[NorthSideSox72]

There have already been studies showing that they're buying the gaz guzzlers while we're over here trying to downsize everything.

That won't necessarily last. I'd rather see this country be out in front of the technology, than behind it. Much better for us economically.

 

[kapkomet]

That won't necessarily last. I'd rather see this country be out in front of the technology, than behind it. Much better for us economically.

I agree, but then I heard on the news at lunch time saying that even with $4 gas, Americans don't want little cars, they want hybrids with some room.

[NorthSideSox72]

I agree, but then I heard on the news at lunch time saying that even with $4 gas, Americans don't want little cars, they want hybrids with some room.

Fine. That shouldn't prevent anything.

 

[kapkomet]

Fine. That shouldn't prevent anything.

I was just passing on what I heard, I didn't mean that as some sort of position.

 

[southsider2k5]

That won't necessarily last. I'd rather see this country be out in front of the technology, than behind it. Much better for us economically.

 

And now that decades of consumer choices have driven the prices to the point that they are today, you are seeing that happen WITHOUT government intervention. Like I always say, if there is a profit motivation to do something, someone out there will be doing it.

[NorthSideSox72]

And now that decades of consumer choices have driven the prices to the point that they are today, you are seeing that happen WITHOUT government intervention. Like I always say, if there is a profit motivation to do something, someone out there will be doing it.

Yes, and its already happening.

 

But I am also a firm believer in the US government acting in its own business interests as well, and I think that investing in these sectors could give a very nice future return.

 

[mr_genius]

http://www.nytimes.com/2008/08/15/business...interstitial?hp

 

nice

[Balta1701]

[kapkomet]

Yes, and its already happening.

 

But I am also a firm believer in the US government acting in its own business interests as well, and I think that investing in these sectors could give a very nice future return.

I am a firm believer that the government should NEVER be acting in it's own business interest, which is the problem. Legislatures sure as hell aren't the inventors of the marketplace.

 

If there were high levels of money to be made off of "alternative energy", someone would already be a freaking trillionaire and the richest person in the world. You can't make money off of alternative energy (at least I'll say it this way - the technology is not there YET), otherwise there would be people cashing in hard core, DESPITE Congress, who has no power over these things.

 

That's yet another reason why I say RSO is full of s***, but it sure does sound good coming out of his mouth, doesn't it? It makes everyone feel good about what he'll do as president. *cough*.

[southsider2k5]

I am a firm believer that the government should NEVER be acting in it's own business interest, which is the problem. Legislatures sure as hell aren't the inventors of the marketplace.

 

If there were high levels of money to be made off of "alternative energy", someone would already be a freaking trillionaire and the richest person in the world. You can't make money off of alternative energy (at least I'll say it this way - the technology is not there YET), otherwise there would be people cashing in hard core, DESPITE Congress, who has no power over these things.

 

That's yet another reason why I say RSO is full of s***, but it sure does sound good coming out of his mouth, doesn't it? It makes everyone feel good about what he'll do as president. *cough*.

 

Well to be fair, Al Gore is making boatloads of money off of this stuff.

[kapkomet]

Well to be fair, Al Gore is making boatloads of money off of this stuff.

Ahh yes, the Goracle.

 

He's making money off of "carbon credits" and speeches of doom and hysteria (Kaperbole ™ ), but he's not making money off of anything "new", is he?

 

[NorthSideSox72]

I am a firm believer that the government should NEVER be acting in it's own business interest, which is the problem. Legislatures sure as hell aren't the inventors of the marketplace.

 

If there were high levels of money to be made off of "alternative energy", someone would already be a freaking trillionaire and the richest person in the world. You can't make money off of alternative energy (at least I'll say it this way - the technology is not there YET), otherwise there would be people cashing in hard core, DESPITE Congress, who has no power over these things.

 

That's yet another reason why I say RSO is full of s***, but it sure does sound good coming out of his mouth, doesn't it? It makes everyone feel good about what he'll do as president. *cough*.

You don't think the government should be acting in its own business interests? That makes no sense to me, unless maybe we aren't on the same wavelength here. I am not saying the government should be growing its numbers or taking things over - I'm saying they should be constantly trying to make decisions that makes the country - which is its business - stronger. That definitely includes investing in areas that will result in job and business revenue growth, which leads to more income for the gov't as well.

 

And this argument that I see some people pedaling - that if there was money to be made in alternative energy, it would already be done - is not relfective of the reality of business. First, energy prices have only just now gotten high enough to make larger scale investment worthwhile in the private sector. Second, it takes years for this stuff to develop and mature. Third, if you were to employ that model at a real world company - oh, no one else is doing it yet, let's wait until it makes sense for some other people - you'd not have a job for long. This is exactly the kind of situation that is problematic for Congress or a President, because the positive returns won't really kick in until after their term is up. But that's why its important for us, the electorate, to push for it when we vote.

 

If we hesitate on this, we'll end up having to buy the technology from overseas, further exacerbating our financial problems - we won't get the job growth, we will have to pay a premium, we'll have no control over it.

 

[kapkomet]

You don't think the government should be acting in its own business interests? That makes no sense to me, unless maybe we aren't on the same wavelength here. I am not saying the government should be growing its numbers or taking things over - I'm saying they should be constantly trying to make decisions that makes the country - which is its business - stronger. That definitely includes investing in areas that will result in job and business revenue growth, which leads to more income for the gov't as well.

 

And this argument that I see some people pedaling - that if there was money to be made in alternative energy, it would already be done - is not relfective of the reality of business. First, energy prices have only just now gotten high enough to make larger scale investment worthwhile in the private sector. Second, it takes years for this stuff to develop and mature. Third, if you were to employ that model at a real world company - oh, no one else is doing it yet, let's wait until it makes sense for some other people - you'd not have a job for long. This is exactly the kind of situation that is problematic for Congress or a President, because the positive returns won't really kick in until after their term is up. But that's why its important for us, the electorate, to push for it when we vote.

 

If we hesitate on this, we'll end up having to buy the technology from overseas, further exacerbating our financial problems - we won't get the job growth, we will have to pay a premium, we'll have no control over it.

I think the government acts in its own interest and NOT the people's interest, and that's why my comment. Those people are self serving assholes, at least most of them, and don't give a rip about their constituency. Now Rex will come in here and tell me that they really do care, but IMO as a collective body, they don't.

 

In terms of energy prices being high now, if there were some alternative that would make money, it would CERTAINLY already be done. So, by logic, it tells me that the price point of energy being high is only now justification for alternative energy investment tells me the price point on that very same alternative energy is just as high, if not higher. That means everything is bunk that's being spread by BOTH campaigns on this issue. Since RSO supporters are more "enviro-friendly", they're getting sold a bigger line of bullpuckey.

 

[Balta1701]

In terms of energy prices being high now, if there were some alternative that would make money, it would CERTAINLY already be done. So, by logic, it tells me that the price point of energy being high is only now justification for alternative energy investment tells me the price point on that very same alternative energy is just as high, if not higher. That means everything is bunk that's being spread by BOTH campaigns on this issue. Since RSO supporters are more "enviro-friendly", they're getting sold a bigger line of bullpuckey.

Unless, of course, the government was also being used by certain elements to keep alternative energy sources from being profitable, by, for example, dumping huge subsidies on to the old fossil fuel sources, creating regulatory issues that prevent development and deployment of alternatives or encourage additional consumption rather than conservation, allowing indirect costs for things like cleanup and mitigation of environmental harm due to the use of those fuels to be covered by someone other than the purchaser of that energy, and so forth.