Red State

Comments

1. Dependence on *all* oil producers should be reduced

   milesfromkansas July 17th, 2008 at 5:49 p.m. (link)

   It is not only the middle east from which America imports its oil. I believe Canada is the USAs primary source for foreign oil. There is Mexico and Brazil as well, and of course Venezuela and Nigeria. Success in this endeavor may be better served by avoiding references to specific countries or regions.

   1. Saudi Arabia is 2nd

      duckhawk July 17th, 2008 at 8:48 p.m. (link)

      Canada is indeed the top oil supplier, and Mexico is 3rd. Apparently less than a quarter of our imports are from the Persian Gulf:

      http://tonto.eia.doe.gov/dnav/pet/pet_move_impcus_a2_nus_epc0_im0_mbblpd_a.htm

      Still, keeping "Middle East" oil off the market would drive all oil prices higher. We're dependent on every significant producer, no matter which ones we buy from.

      1. my bad

         duckhawk July 17th, 2008 at 8:49 p.m. (link)

         the real EIA link

2. Will this oil be limited to sale in the US?

   freddyandeddy July 17th, 2008 at 8:22 p.m. (link)

   In your three-pronged plan, I'd like to know if your first point includes a requirement that all oil produced in these fields be limited to US consumption only? If not, this means it can be sold overseas to meet demand and would have little to no effect on prices at the pump.

3. Are you Hugo Chavez's nephews

   pilgrim July 17th, 2008 at 8:44 p.m. (link)

   A while back Hugo Chavez blustered that he was going to punish the US by selling Venezuelan oil to China. Somebody finally explained to that idiot that it will not hurt the US by doing this at all.
   

   Oil is a commodity with a price that is mostly dependent on the global price of crude oil. The larger the global supply the lower the price. It is bought and sold in a GLOBAL market. Currently over 95% of the crude oil is owned by countries that do not like the USA. International Oil companies like Exxon own less than 5% of the crude oil in the world.

   
   Extreme taxation, excessive controls, oppressive government competition with business … frustrated minorities and forgotten Americans are not the products of free enterprise.Ronald Reagan

   1. oops reply was not to Rep. Cantor

      pilgrim July 17th, 2008 at 8:47 p.m. (link)

      Sorry i intended to reply to user freddyandeddy.

      
      Extreme taxation, excessive controls, oppressive government competition with business … frustrated minorities and forgotten Americans are not the products of free enterprise.Ronald Reagan

   2. which is why I'm skeptical

      duckhawk July 17th, 2008 at 9:15 p.m. (link)

      Assume ANWR and offshore drilling yield 3 million bpd in 2030, twice the EIA's most optimistic estimates. The global market produces over 85 million bpd. Isn't our best-case domestic production just an incredibly small drop in the bucket?

      If so, domestic production shouldn't be part of any plan to "reduce the cost of gas" -- because it won't.

      1. I think your estimates are way low

         Dave_in_Fla July 17th, 2008 at 9:29 p.m. (link)

         ANWR alone is estimated to produce 1 million barrels/day. The oil shale in Utah is estimated to be 2 trillion barrels on the low end. I don't know the OCS estimates, but I recall hearimg the California coast estimates are very high. We have no wells of the east coast and only half the gulf has been tapped.

         I think a conservative estimate would be more like 10 million bpd and the oil would become available in 2011 with general increase in capacity through 2017. A 10% increase in worldwide supply would have a very significant impact, given that most of the current crisis is driven by a 500K bpd shortfall in production vs. demand right now.

         So domestic production will very much reduce the cost of gas. Sorry.

         "If they were merely incompetent, then at least SOME of their actions would have been to the benefit of the country."

         1. increased supply reduces the cost of gas

            pilgrim July 17th, 2008 at 9:40 p.m. (link)

            The only way for us to insure supply will increase is for the US to increase its production. Total increase in global production will reduce the cost.

            We can't rely on other countries to do it.

            
            Extreme taxation, excessive controls, oppressive government competition with business … frustrated minorities and forgotten Americans are not the products of free enterprise.Ronald Reagan

         2. that sounds too optimistic

            duckhawk July 17th, 2008 at 11:04 p.m. (link)

            OCS estimates are here. They predict another 0.2 million bpd.

            Oil shale isn't worth considering because nobody has ever converted it profitably. Of course research should continue, but even optimistic researchers think it will take more than a decade to get 0.1 million bpd.

            I'm not an expert, so I could be wrong. Can you show us the material you base your estimates on?

            1. Why should any country drill?

               gamecock July 17th, 2008 at 11:22 p.m. (link)

               Saudia Arabia produces 14% and the US 10% of the world's oil. Proven reserves in the US that are off limits now would but us third in the world.

               more later on your empty defeatist point

               What you want to put all our chips to continue modern life on are hopes that we find an alternative. The world waited 4500 years for oil.

               much more later

               Mike DeVine’s Charlotte Observer columns The Minority Report and The HinzSight Report "The way to stop discrimination on the basis of race is to stop discriminating on the basis of race." - The Chief Justice Race 4 2008 "One man with courage makes a majority." - Andrew Jackson

            2. Try again

               Dave_in_Fla July 17th, 2008 at 11:44 p.m. (link)

               "Royal Dutch Shell has announced that its in situ extraction technology in Colorado could become competitive at prices over $30 per barrel ($190/m3), while other technologies at full-scale production assert profitability at oil prices even lower than $20 per barrel ($130/m3). To increase the efficiency of oil shale retorting, several co-pyrolysis processes have been proposed and tested."

               That took me all of 3 minutes to find.

               "If they were merely incompetent, then at least SOME of their actions would have been to the benefit of the country."

               1. I want to believe

                  duckhawk July 18th, 2008 at 1:15 a.m. (link)

                  You're right, Wikipedia has a lot of interesting things to say about oil shale. I got really excited when I saw that paragraph, too.

                  I was disappointed to see that the sourced articles are much less exciting. These methods may or may not be technically feasible on a large scale. And if they are, all estimates of the time required to bring them to market exceed 10 years (Shell themselves predict another 12 years to finish a single test).

                  So it looks like oil shale is a very shaky prospect. Definitely worth hoping for, but never proven and riddled with implementation problems for the past twenty-five years. Thanks for checking, though.

            3. And then there is this

               Dave_in_Fla July 18th, 2008 at 12:04 a.m. (link)

               From your link...

               "Mean estimates from the MMS indicate that technically recoverable resources currently off limits in the lower 48 OCS total 18 billion barrels of crude oil and 77 trillion cubic feet of natural gas (Table 10)."

               This would be an increase of 41% over current production in off shore production. And it doesn't count exploration in areas in new areas or new recovery technology.

               So now I've got 1M bpd from ANWR, 2.5M bpd from new OCS for 20 years, and I'm not even into shale yet. So if we then add in shale, we get to 10.5M bpd and still have 773 years worth of shale left to work with.

               "If they were merely incompetent, then at least SOME of their actions would have been to the benefit of the country."

               1. check assumptions?

                  duckhawk July 18th, 2008 at 1:39 a.m. (link)

                  Yes, 18 bbl is technically recoverable. But we're looking for a flow rate that is both technically and economically feasible. Some barrels of oil are more expensive to drill than other barrels of oil. Nobody's going to extract the barrel that costs $500 unless they can sell it for more than $500. So if we assume 2.5 million bpd, we have to also assume that almost nobody can afford it. That doesn't help lower gas prices.

                  In the same report, the EIA arrived at a depressingly low flow rate: 0.2 million bpd by 2030. Looks like this is based on future oil prices based on the projected 2030 market.

                  The EIA's projection might be wrong, which is why I assumed in my very first post that ANWR and OCS together would total 3 million bpd. I'd love to see different projection of the market in 2030 that points out and addresses faults in the IEA's projection.

                  1. Shifting definition to make your point

                     Dave_in_Fla July 18th, 2008 at 8:09 a.m. (link)

                     Is really quite lame. But then I see GC just did a good disection of your silly points, so I don't need to waste me time.

                     BTW, technically recoverable MEANS that is is profitable to extract. Tossing in a silly $500/barrel strawman to confuse the facts is specious.

                     Obvious troll, obvious waste of time.

                     "If they were merely incompetent, then at least SOME of their actions would have been to the benefit of the country."

4. No one ever mentions how crucial it is

   gamecock July 17th, 2008 at 11:26 p.m. (link)

   to drill so that oil prices don't go up further than they would if we don't. Its not just about trying to lower prices. Its also about damage control.

   Mike DeVine’s Charlotte Observer columns The Minority Report and The HinzSight Report "The way to stop discrimination on the basis of race is to stop discriminating on the basis of race." - The Chief Justice Race 4 2008 "One man with courage makes a majority." - Andrew Jackson

5. Marginal increases can be significant

   GregInFla July 18th, 2008 at 12:08 a.m. (link)

   Let's say you are a married man, working, with your wife staying home with the kids. She gets a small part-time job while homeschooling the kids (not easy, I know, but bear with me), increasing your income $500 per month. While that is not a lot compared to your current income of $5000/month, that $500 is not burdened with the overhead that the $5000 has to cover. It can be used to retire your debts (car, home) earlier than otherwise, or paying for a nicer car or pleasure vehicle now, or just relieving the pressure of making ends meet. Yeah, it's a tenth of what you are getting, but it's worth is significant in both the short and long haul.

   -- A true evolutionist would let endangered species die off. Anyone care to change sides? -- Can't Feed 'em? Don't Breed 'em! --

   1. True

      duckhawk July 18th, 2008 at 12:46 a.m. (link)

      But I think it's generally under-appreciated how tiny this marginal benefit will be (according to the studies linked above).

      Your example looks different when the part-time job is a lemonade stand and the supplemental income is only $25/month. Sure, it might still be worth doing, but of course there's an opportunity cost and (in the case of oil) some obvious externalities.

      I don't want to argue about precise numbers. I only want to point out the relative scale, and raise the possibility: with a benefit this small, perhaps it isn't worth the cost? According to the EIA, IEA, and RAND, this is probably what the benefits look like.

      In any case, the additional $25/month (or even $500) doesn't "wean our dependence" on the original $5000. So I think the economic welfare argument for domestic drilling, though weak, is much more salient than the national security argument.

      1. For at least the next 30 years and probably

         gamecock July 18th, 2008 at 12:58 a.m. (link)

         much longer, oil will continue to be the fuel of prosperity. We can't count on 30+ years of no embargoes or other events that cut us off from foreign sources.

         Was it worth it for us to have energy independence when German U-boats roved menaced the Atlantic and Japan's navy the Pacific? Was it worth it for us to escape the pollution of burning wood in large cities? For Americans to be able to take Route 66?

         Is it worth it? Surely you jest?

         Mike DeVine’s Charlotte Observer columns The Minority Report and The HinzSight Report "The way to stop discrimination on the basis of race is to stop discriminating on the basis of race." - The Chief Justice Race 4 2008 "One man with courage makes a majority." - Andrew Jackson

         1. haha

            duckhawk July 18th, 2008 at 2:02 a.m. (link)

            But in the next war, our submarines and warships will be nuclear-powered! Instead of Route 66, we'll take the maglev bullet train -- Line 66?

            Seriously though, scale matters. Pushing back peak oil by a few months, or lowering the price of gasoline by five cents, won't help us win any war. Suggesting that we face an apocalyptic, pre-industrial, un-American thirty years if we don't drill in ANWR and the OCS seems sort of alarmist.

            So chill man, there will still be oil in 2030 even if we don't drill.

            1. We the People ride horses

               gamecock July 18th, 2008 at 2:25 a.m. (link)

               This nation was founded, tamed and has prospered by Americans on horsebacks, whether they be Mustangs, Colts or Broncos, and whether they be four-legged or four-wheeled.

               The framers of the Declaration and the Constitution rejected the European collective in favor of inalienable individual rights including liberty and the pursuit of happiness. Our liberty and happiness pursuits have been maximized by the freedom inherent in going to and fro at will, rather than seeking permission from Lord’s to open the large gate keeping subjects within the feudal walls.

               I must admit that I have been discouraged by recent events political and economic and have even written that we are facing a test of character as a people our standard of living is dropping due to energy and food prices. I have also said that no matter who is elected president, that it will require We the People to actively and aggressively monitor and admonish our employees in D.C., much like we did on the amnesty bill, save this country.

               But, at no point have I slumped into the Sloughs of Despond that some of Redstate.com friends, including my Dixie culture ex-patriot in Alaska and my opera loving economic guru in Manhattan have descended. At no point has this former Dem convert to the GOP despaired for a moment that we can’t solve our present problems or that the only way to solve them is by higher taxes and/or government controls. Such thoughts are anathema to everything this country stands for and counter to what history shows produces the desired results.

               Our times are much more akin to 1979 than to either 1932 or 1942. The present war is in no way analogous, in terms of the scarcity of energy resources need for the military, to WWII, when rationing was necessary. And we now know that the shifting government interventions and higher taxes following the Stock market crash prolonged the Great Depression.

               So it was quite shocking to read the following:

               Blackhead says this:

               But apart from needing to get to and from work and the logistics industry, motor transport is a relatively small factor in American industrial production.

               That insight is why I’m still in favor of the radical proposal of artificially making motor transport so expensive that we’ll back off it sharply.

               and

               Achance says this:

               I prefer rationing and licensing to the broad impact that setting the price so high that it would discourage transportation use, as blackhedd suggested.

               Wages have been so cheapened in this Country that it takes two incomes to support anything resembling the lifestyles that most would prefer. With children, one of those income earners spends a decade or more now working only for HI and retirement, the rest goes to childcare. Now we can take the income of the other wage earner and have it go to just getting to work. What does that couple buy? When a large segment of the workforce is in those economic straits, what drives our consumer spending driven economy?

               I simply find much of the free market talk here foolish in a Country that has few free markets and never has. Someone, perhaps you, will say that I sound like a Democrat by referring to the “cheapening” of US wages; so be it. The flow of high wage manufacturing jobs and other value added jobs out of this Country has had far more to do with US tax and labor policy than with the productivity and free market value of US labor. The US worker in a statutorily mandated safe and healthful workplace cannot compete with workers in Asian sweatshops or slave labor in China. He cannot compete with robots because the robots can be quickly depreciated or expensed off while he remains an ongoing cost. All of these are government policies at work, not the vaunted, holy even, free market.

               Talk of free markets in either petroleum or transportation is even more ludicrous. The price of petroleum is set by the oligopoly. There’s little room for “competition” at the refiner level and even less at the retailer level. Most retail outlets sell gas at little more than they pay for it and make their profits in the convenience store. On the transportation side, every aspect of American transportation has been in the main dictated by government policy, not markets. Government policy and government power and money favored the canal building to direct trade with the Old Northwest to the eastern seaboard rather than the “free market” route of the Y Rivers to New Orleans. That was enough of a bone of contention between the North and the South to merit its own piece in the CSA Constitution prohibiting CS federal expenditures for “internal improvements” to the states. The government drove the move to railroad transportation with right of way legislation, often imminent domain rights, and with lots and lots of federal land. It also harnessed the power of the federal government to preempt state attempts to regulate or tax the railroads. Then the government consigned the railroads to commodity status with the greatest “internal improvement” schemes ever; the federal highway system and the federal air route system. In the second half of the 19th Century, your town died if it wasn’t on the railroad. In the first half of the 20th Century, your town died if it wasn’t on a federal highway. In the third quarter of the 20th Century, your town died if it wasn’t on an Interstate. In the fourth quarter of the 20th Century, your town died if it wasn’t near a federally funded hub airport. Yeah, there’s a “free market” at work in all that. Right!

               Interestingly and ironically, something that the government had a lot to do with inventing but has since largely left alone, the internet, offers some solutions. Much of the work that Americans now do does not require you to live right on the bay where the ships landed, right on the river where the commerce flowed, right on the railroad where all the people and goods moved, or even right on the highway or near the airport. For knowledge workers, there’s not any reason anymore to get out of your PJs. The barriers to the dispersed workplace are cultural, not technological. In the last years of my career, I avoided the office as much as possible; I can tell somebody what to do from the flybridge of my boat or from some place in Mexico just as well as I can from my desk. Cell phones, WiFi computers, sat phones, streaming video, etc. make that all possible. Yet the managerial culture hasn’t really adapted to it, and I’ll confess to some guilt as well. It was OK for me to essentially telecommute, but I always had the nagging suspicion that my subordinates were screwing off when I wasn’t watching them. That’s something we’ll have to work out.

               And as to the jab about “GuysinSuits,” well I’m not one anymore; Hell, it’s a challenge to bathe regularly, but I am smarter and do make better decisions than most people. Deal with it.

               Then I said this:

               Achance prefers rationing and licensing because they would not discourage transportation use? No, they would outright prohibit transportation use above a certain level. And you think that R&L would prevent the “setting” of a high price?

               You ok man?

               Then you argue that we need to discourage transportation and bemoan that two wages earners can’t achieve the like people “prefer”.

               All over the lot.

               DIRECTORS, SOMEONE HAS HIJACKED THE ALASKAN’S ID!

               Or, his absence from Dixie and prolonged immersion in the bureaucracy has metastasized and produced an elitist, and I quote: “And as to the jab about “GuysinSuits,” well I’m not one anymore; Hell, it’s a challenge to bathe regularly, but I am smarter and do make better decisions than most people. Deal with it.”

               My liberal girlfriend told me that the problem in the USSR was that they just didn’t hire smarter bureaucrats.

               For now, Ac, you will have to deal with not being Master of the Universe and We the People soldier on, without you until the hangover wears off or you take a bath and rinse off the bullst clogging your ears and brain, in defense of liberty and continuing the policies that made the US the richest nation on earth. seriously man

               Then Ac comes back:

               Doing nothing or letting the market work it out is not “Door C;” there is no Door C. The Democrats, and a lot of Republicans will join them, are going to “do something,” and there is nothing the free market adherents can do to stop them. As I argued above, there is no “free market” in either petroleum or transportation, every thing is a function of government policy. The question then becomes, what government policy, not whether there will be a government policy intervention. The argument is simply, which bad policy?

               My own preference at a philosophical level is that we drill everything we can and work hard at some “regime change” around the World to break the cartel price. That ain’t gonna happen with Democrats in control, and may not happen even in the unlikely event that Republicans regain control; couldn’t do it last time.

               Achance may not remember an old Southern saying since he has been gone so long and blackhead may never have heard it:

               CAIN’T NEVER COULD DO NOTHIN’!

               Let the Rooster sing an aria for The Big Apple: The subway doesn’t stop in flyover country and if you favor raising taxes about 2000% more than all liberal democrats in history and King George, call them taxes, NOT, “artificially making motor transport so expensive that we’ll back off it sharply.”

               Let Foghorn Leghorn crow to the four decade removed south Georgian awash in Alaskan oil profit tax credits that the remnant of the Confederacy don’t cotton to elitists in Anchorage any more than we do in NYC or DC. And brother, don’t git above yer raisin’!

               Yes, there is an alternative to King George and Karl Marx.

               Heck, even France gets that:

               Sarkozy calls for fuel tax cut as protests spread across Europe

               “I want to ask the question to our European partners: if oil continues to increase, should we not suspend the VAT taxation on the price of oil?” Sarkozy said in a radio interview. French consumers pay about 19.6 percent VAT on the price of fuel. The Saudis seem to fear that the present price will harm them in the long run and hint at a rather large price decrease (I know, they couched their announcement in different terms and the liberal writer didn’t get it, but Gamecock gets it):

               Oil prices to stay above 60-70 dollars: Saudi Arabia

               Saudi Arabia’s oil minister believes oil prices are set to stay above a minimum price of 60-70 dollars per barrel, signaling a new era for world energy markets, he said in an interview released Sunday. Oil prices are currently trading at an unprecedented level of more than 100 dollars a barrel, heaping pressure on Saudi Arabia and other members of oil cartel OPEC to increase production at their meeting this week. Most significantly, U.S. Senators are getting the message loud and clear that Americans will not abide the 50-60 cents per gallon price increase that cap and trade would entail.

               Chances dim for climate-change legislation

               An influential coalition of Fortune 500 companies and environmental groups that was formed to support climate-change legislation has splintered over the Lieberman-Warner bill that is headed next week to the Senate floor.

               The U.S. Climate Action Partnership formed last year won’t take a position on the bill, although nine of its members - including General Electric (GE, Fortune 500), Alcoa (AA, Fortune 500) and four utility companies - signed a letter to senators backing the legislation.

               The letter, also signed by big environmental groups and obtained by Fortune, says: “Prompt action on climate change is essential to protect America’s economy, security, quality of life and natural environment.”

               But other members of the coalition known as U.S. Cap, most visibly Duke Energy (DUK, Fortune 500), a coal-burning utility, are strongly opposed. “It’s going to translate into significant electricity price increases,” says Jim Rogers, Duke’s CEO.

               Without widespread corporate support, passage of the bill - already a long shot at best - becomes even more unlikely this year. President Bush remains opposed. House Democrats have been slow to act.

               Besides that, a backdrop of rising gasoline prices and the sluggish economy makes it difficult to win votes for a regulatory scheme that will raise the prices of electricity and gasoline. In fact, a key purpose of the bill is to put a price on the emissions of greenhouse gases, as a way to speed the transition to a clean-energy economy and slow down global warming.

               With the Senate scheduled to begin debate Monday, lobbying and advertising around the bill are intensifying. (Here’s a new TV commercial supporting the bill from Environmental Defense Fund, and a radio ad opposing the bill from the Club for Growth.) But even supporters concede that the debate will set the scene for action in 2009.

               “This will put us in a position to have action next year,” says David Doniger, director of the climate center at the Natural Resources Defense Council, a supporter of the bill. “We expect in the Senate that the 60-vote rule will be applied. That’s a hard one to get over.”

               “It’s a teachable moment,” agreed Scott Segal, an advocate for coal-burning utilities that oppose Lieberman-Warner.

               Good luck with that $5-6/gallon tax increase dream. Even the Brits recently rejected a global warming tax.

               The Czech president is getting the word out on this farce.

               The process of winning the energy war has begun among We the People, and no party, president or Redstate defeatists will be able to stop us. Anger is rising as the formerly inattentive to calls for oil drilling, dems and repubs, look at the pump as they decide if they can afford enough spam for the kids. They are putting 2 and 2 together. We the People will rise up, and just as the Boll Weevil Southern Dems responded to the late 70s carter recession by passing Reagan’s tax cuts, the Blue Dawgs will join with repubs soon to demand letting Exxon loose in the Gulf of Mexico where China and Cuba take our oil.

               We may demand a Space program like project to solve the problem.

               But let one thing be clear: Americans are not getting off the horse that got us here.

               And where is here?

               Here is the most prosperous and powerful nation on earth.

               God bless America!

               Mike DeVine’s Charlotte Observer columns The Minority Report and The HinzSight Report "The way to stop discrimination on the basis of race is to stop discriminating on the basis of race." - The Chief Justice Race 4 2008 "One man with courage makes a majority." - Andrew Jackson

               1. Bravo! Encore!

                  stang July 18th, 2008 at 2:45 a.m. (link)

                  Hope your clarion cock-a-doodle-doo rouses your slumbering friends and inspirations to us all from their slumber. This couldn't be repeated too many times!

                  ..saying from 'round where I grew up...

                  "Don't let the b*ds grind you down!"

               2. GC, your reply just made duckhawk

                  pilgrim July 18th, 2008 at 7:43 a.m. (link)

                  ducklame, Excellent smackdown rooster!

                  
                  Extreme taxation, excessive controls, oppressive government competition with business … frustrated minorities and forgotten Americans are not the products of free enterprise.Ronald Reagan

                  1. He should have ducked

                     gamecock July 18th, 2008 at 7:54 a.m. (link)

                     nt

                     Mike DeVine’s Charlotte Observer columns The Minority Report and The HinzSight Report "The way to stop discrimination on the basis of race is to stop discriminating on the basis of race." - The Chief Justice Race 4 2008 "One man with courage makes a majority." - Andrew Jackson