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Drill Here. Drill Now. PAY LESS.

By: Caleb Howe (Diary)  |  March 17th, 2011 at 04:26 PM  | 

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From the video description:

Gas prices are rapidly increasing and could reach record levels by this summer, but President Obama is preventing us from harnessing our nation’s massive domestic oil supply. It’s time to tell President Obama to Drill Here, Drill Now.

Even Bill Clinton says delay in permitting are “ridiculous“. Gas prices are out of control. I don’t even have to relate the skyrocketing prices to the economy, because we all know how it’s affecting our personal economies.

When the Drill Here, Drill Now campaign launched in 2008, it went from internet petition to major grassroots movement in a matter of months. It’s time for that to happen again.
Find out more here.

Say it with me folks. Mr. President: Drill here, drill now. So we can all pay less.

COMMENTS

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  • spim

    If it weren’t for posts like this – and the very existence of RedState.com – I would not be aware of issues like this.
    (I don’t watch TV – and this is probably not on it anyway.)

    Signed the petition – and will start on other things that I can do.

    again … thanks for taking the time to share these items.

    • http://www.americansolutions.com Dan Kotman

      @spim Thanks for signing the petition. Check back often as we will be continually updating it with the latest news on drilling and gas prices. Also, let us know if we can provide any other resources that would be helpful.

      @Caleb Thanks for posting the video!

  • rickbull

    bemoaning that gas prices were so high, and the writer did not understand, since we in the US don’t buy oil from Libya. I guess some folks have not yet heard about that ultra-modern invention called the Global Marketplace.

  • http://locomotivebreath1901.blogspot.com/ locomotivebreath1901

    Drill here. Drill now…. In order to free ourselves from the tyranny of foreign oil.

    But if you want to pay less for refined petroleum products, follow the simple market rule of supply and demand: BUILD MORE REFINERIES.

    Increased supplies equal lower prices.

    • YnotNOW

      not just oil drilling and building refinery capacity, but all energy sources. There is inevitable cross-over effect of all of the various energy sources, and increased capacity gives slack to absorb price shocks in others. Energy policy needs to speed permitting and reduce regulation of all types:
      – off-shore drilling
      – anwr drilling
      – oil shale in mountain states
      – pipeline from Canada
      – natural gas drilling in mountain states (including fracking)
      – natural gas power plants
      – coal mining
      – coal power plants
      – nuclear power
      – etc.

      • http://www.americansolutions.com Dan Kotman

        Important point, and we do agree with expanding those energy sources you listed.

  • seanc

    There are reasonable discussions one could have about the pros and cons of environmental constraints on domestic drilling, but no unbiased analysis I’m aware of has ever suggested that US has sufficient reserves or low-cost production to lower the cost of gasoline. Oil is perhaps the most globally fungible commodity out there; prices are set by global markets on the demand and supply side. The US does not have sufficient volumes of un-extracted oil to meaningfully affect supply/demand balances and even if we did, we don’t have enough low-marginal cost production to shift costs down. (For example, Albertan tar sands produce a massive volume of oil, but have such high marginal production costs that they only make sense in a world where oil is expensive; if oil fell to $20/bbl again, those fields would be economically forced to stop production.)

    So suppose we did drill here, drill now. If you’re an oil major and can suddenly produce more oil at $30/bbl production costs while global markets are running at $100+, are you going to sell it onto global markets for a $70 profit or pump it back to the US to keep the gasoline price down? Clearly the former. Which leaves the question as to whether there would be enough volume brought on line by those producers to depress global prices… and there ain’t, at least to any meaningful degree. (If the goal is to lower oil prices by bringing low cost supply on board at large scale, remove Iranian sanctions and invest like mad in Iraqi infrastructure. Not suggesting that’s a good political idea, but it probably would lower global oil prices, unlike drilling in the US.)

    The right has much to contribute to US energy policy. Our energy sector is rife with massive distortions that keep market forces at bay, hugely disrupting supply/demand balances. The right uniquely can push that agenda. My great frustration with the “drill here, drill now” is that it is simultaneously ignorant of basic energy economics and – on close examination – only works if we inject more subsidies and distortions into an already distorted system.

    • http://vladenblog.tumblr.com Steve Maley

      Throwing around the word “fungible” is not sufficient in an of itself.

      The fact is, the price of crude oil is set on a world market. Oil is a uniquely valuable commodity, both as a transportation fuel and as a chemical feedstock. (Example: is $3.50 a reasonable price to pay for a fuel that can transport you and the Family Truckster from point A to point B twenty miles distant? If you really, really needed to go, would you pay twice that much? Most people would.) That’s why there’s said to be inelasticity of demand for petroleum — higher prices don’t readily cut back demand.

      “Normalcy” exists in the market when a couple of million barrels a day of production capacity exists over and above world aggregate demand. Right now, that’s about 85 million barrels a day. When there’s a greater excess capacity, tanks, tankers and pipelines are full, so the incremental barrel has a carrying (storage) cost, and prices plummet.

      The other side of the coin — when there’s a shortfall of production capacity of as little as a half million barrels a day or so — causes prices to be rapidly bid up. As above, there’s almost no limit to what some buyers will pay — they need the oil. Eventually, some consumption patterns adjust (cut back on leisure driving, more car pooling), but by and large demand is what it is, and China and India just keep demanding more.

      The right has much to contribute to US energy policy. Our energy sector is rife with massive distortions that keep market forces at bay, hugely disrupting supply/demand balances. The right uniquely can push that agenda. My great frustration with the ?drill here, drill now? is that it is simultaneously ignorant of basic energy economics and – on close examination – only works if we inject more subsidies and distortions into an already distorted system.

      Could you have possibly jam more Democratic talking points into that paragraph? I doubt it.

      Just answer a few questions:

      • What “massive distortions” are you referring to? Be specific.
      • How am I ignorant of basic energy economics?
      • What “subsidies” are you referring to, and how are they unique to the energy industry? Be specific.

      The primary distortions I see in the current energy policy arena are the ones which favor “green” solutions (ethanol, wind, solar and electric vehicles) over conventional fuels. Without the constant life-support of direct government subsidies (tax credits and market mandates), those green solutions would die a rapid death in the marketplace.

      • seanc

        Steve:

        My credentials, for whatever they’re worth are a degree in chemical engineering, 3 years working as a consultant to the energy industry including assignments to several oil majors, US DOE and US EPA, 6 years running a manufacturing firm that built modular power plants and 5 years running an independent power company. I wouldn’t say that makes me an expert, but I think I do have a pretty good understanding of the venn diagram where regulatory policy, technology and economics overlap – that is, after all, a prerequisite for any success in US energy markets.

        You are right that ethanol, solar and EVs are also subject to regulatory distortion, but that’s far from unique. Bush Sr’s former CIA chief Jim Woolsey has noted for years that a system that funds oil supply channels out of income taxes (e.g., defense of the Suez canal) will never lead to a price signal for fuel in US markets that leads to rational capital allocation. (A criticism that could also be generally made against ethanol, where subsidies paid out of ag policy affect energy prices). Tax breaks, grandfathered pollution rights and choices made decades ago about how we fund basic infrastructure (electric grid, toll roads, rail, etc) all conspire to create additional barriers to entry to lots of otherwise-economic technologies. That’s not an environmental or democratic issue per se; it’s an economic issue. If you can make widgets cheaper than I can but I get tax breaks that you don’t have access to, the world will pay too much for too few widgets. In a nutshell, that describes US energy policy, where we get less energy at higher cost (per dollar of GDP) than many of our trading partners, to our collective detriment.

        Given the critical importance of energy supply to the US economy, it is naive (if horribly frustrating for an entrepreneur) to assume that we will ever have a subsidy-free energy system. Thus, the relevant question becomes comparative: who’s subsidy is bigger? Solar subsidies dwarf those received by just about any other clean energy technology (distorting clean energy markets in the US), but pale next to the subsidies received by conventional sources. For data, here are smattering of reports, but far from complete. The first may be most directly relevant, which was prepared by Congress and estimates that of the total “revenue loss” accruing to the US government from various energy subsidies, 21% come from renewable subsidies and the balance from subsidies to fossil fuels:

        http://www.earthtrack.net/files/uploaded_files/CRS%20Energy%20tax%20expenditures%20May10_R41227.pdf
        http://www.gao.gov/new.items/d08102.pdf
        http://www.elistore.org/reports_detail.asp?ID=11358

        I truly don’t think this is a democratic/republican issue, except in its framing. If I’m in the fuel-extraction business, I have a rooting interest in raising the cost of energy. If I’m in the energy-consumption business, I have a rooting interest in keeping the cost of energy low. The overwhelming majority of the US economy falls into the latter camp… and would therefore collectively benefit from a truly level playing field, where markets & entrepreneurs can unleash their magic. Subsidizing the status quo (the current reality) or subsidizing a few favored green technologies (a growing consensus) is equally stupid, and shouldn’t be the fulcrum of the debate.

        • YnotNOW

          the price swings can be dramatic for a relatively small change in supply volume. i.e. the large increase in prices due to Libya’s war and production disruption. But the same can also be said for the opposite – an increase in supply can make a big difference to bring prices down.

          I understand that much of US production is at much higher costs, and they will NOT produce much at all if oil falls to $20/barrel. But at $100/barrel, they can turn a profit and invest to increase production. And make a big difference in keeping the price from increasing further.

          2 more quick points – domestic production is a huge job creator, which is good to our economy as well as our tax base (which even Democrats should recognize). Plus, opening new areas of production (ANWR, new Gulf sites, Alberta, etc.) require lots of time, and so will be impacting supply volumes and prices in the future more than today, but we have to start now or in 2 or 3 years we will be having the same argument all over again.

          • http://impudent.edublogs.org/ kyle8

            as long as you realize that to a great extent; energy = production. If energy prices go too high then production (of everything) will fall.

            That will raise prices. So there is a multiplier effect on energy prices. But that does not mean that there are no substitutes. There are only imperfect substitutes.

            (sorry, I am making a purely economistic argument. That is why we are called, the Dismal Science.)

          • seanc

            US energy efficiency is not a static #, and isn’t static between countries either. (Denmark, for example, uses 1/2 of the primary fuel per unit of GDP as the US does.) Skip Laitner at ACEEE has done some really interesting calculations showing that even adjusting for de-industrialization, gains in energy efficiency since 1970 have effectively cut primary fuel consumption in half (e.g., had we not made those gains, we would consume ~200 Quads worth of fuel per year rather than the 100 we currently do).

            Upshot is that from an economic activity perspective, it is the energy we consume that matters, not the energy we produce… and the relation between the two is conversion efficiency, which should never be assumed to be a static number until we have hit physical limits. Which are a long way off, given the comparisons to other countries.

  • http://vladenblog.tumblr.com Steve Maley

    It’s OK, because I have used that term in reference to myself many times. However:

    “If I?m in the fuel-extraction business, I have a rooting interest in raising the cost of energy.”

    Not true, at least it’s not true of me. I am in the energy extraction business. In terms of my personal net worth, it would be a good thing if we forget about ANWR,, stop all hydraulic fracturing and, while we’re at it, keep the deepwater Gulf of Mexico shut in. That way my company’s oil and gas reserves will be worth more.

    But I have promoted all these things in these pages, because I have been informed by my education and experience of the risks and the potential reward of each.

    Your sources don’t do much to detail subsidies to oil and gas. If you listen to API, renewables far outstrip oil and gas in terms of gov’t subsidies. I have not read them in detail, but one of your sources documents electrical subsidies, one targets the foreign tax credit (which is not an issue with small domestic producers like my employer), and one refers to cost depletion, a tax preference item which is common to all the natural resource industries, not just oil and gas.

    Anyway, thanks for your participation & viewpoint.

    • seanc

      Sorry if you took it that way! :)

      Interesting post from Nat Geographic here, essentially making the argument that since the US reserve/production ratios are so low relative to other producers, actions to accelerate US production accrue primarily to the benefit of OPEC, not US consumers.

      http://www.greatenergychallengeblog.com/blog/2011/03/21/drilling-down-on-oil/

      • http://vladenblog.tumblr.com Steve Maley

        I don’t trust the NatGeo for much of anything when it somes to policy issues. Everything is filtered through an AGW filter, so I figure, what’s the use?

        Historically, drilling and development have expanded the resource base. “Saving ours and using theirs” makes little sense in the real world.

        http://www.redstate.com/vladimir/2009/12/17/the-big-energy-lie/

        • http://impudent.edublogs.org/ kyle8

          here in the US that could still produce by using modern methods.

          In the old days wells were played out when the cost of getting that further barrel of oil was close to the price of the oil.

          But the price is now ten time what it was in the seventies, and the methods are much better.