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Energy Policy Outrage: ‘OPEC Has Plenty of Oil.’

Please don't pee down my leg and tell me it's raining.

By: Steve Maley (Diary)  |  October 28th, 2010 at 12:30 PM  | 

RESIZE: AAA

The Bureau of Ocean Energy Management of the Department of the Interior published a 33-page Interim Final Rule covering new oil and gas drilling regulations for the Offshore. Buried within the bowels of this beast is a perfunctory assessment of the impact of the rules on the economy and on small business in particular.

The impact on domestic deepwater hydrocarbon production as a result of these regulations is expected to be negative, but the size of the impact is not expected to materially impact the world oil markets. The deepwater GOM [Gulf of Mexico] is an oil province and the domestic crude oil prices are set by the world oil markets. Currently there is sufficient spare capacity in OPEC to offset a decrease in GOM deepwater production that could occur as a result of this rule. Therefore, the increase in the price of hydrocarbon products to consumers from the increased cost to drill and operate on the OCS is expected to be minimal. However, more of the oil for domestic consumption may be purchased from overseas markets because the cost of OCS oil and gas production will rise relative to other sources of supply. This shift would contribute negatively to our balance of trade. [Page 22 of the document.]

This is rather stunning on several levels.

  1. They assume the United States will only be affected only as to the world price of crude oil, not availability and security of supply.
  2. To the Administration, it’s OK if we lose domestic production capacity, because OPEC has plenty of oil. [Are you freaking kidding me??!!]
  3. “Currently there is sufficient spare capacity in OPEC” only because we are in a monumental, persistent worldwide recession and demand is low. Last time we had a vibrant economy, oil was $140 per barrel. Oil has doubled from $40 to $80 per barrel during Obama’s term, and the economy has been in the toilet the entire time. This is a big, red warning flag and should be of grave concern to anyone who plans to come out of recession some day. Expensive energy could keep it from happening.
  4. Energy planning time frames are 10 to 30 years. “Currently” there is excess supply overhanging the market. What about six months from now? What about six years from now?
  5. And what about small businesses? The rule goes on to say that they’ll be OK because they will just leave the Gulf for onshore, or better yet, overseas. Just like that, huh? It shows just how foolish and unconnected are the idiots who write this stuff.

The actions of this Administration are naive, ill-considered and contrary to the self-interest of our Nation. I swear to Aqua Buddha, we’d get better governance from the Student Government of a major university.

Note that this is an “Interim Final Rule”, not a “Notice of Propsed Rulemaking”. The rule went into effect 10/14/10, but there is a 60-day period of public comment until 12/13/10. Mail or hand-carry comments to:

Department of the Interior
Bureau of Ocean Energy Management, Regulation and Enforcement
Attention: Regulations and Standards Branch (RSB)
381 Elden Street, MS–4024,
Herndon, Virginia 20170–4817
Reference: ‘‘Increased Safety Measures for Energy Development on the Outer Continental Shelf, 1010–AD68’’ in your comments and include your name and return address.

Cross-posted at VladEnBlog.

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  • The Moat

    …There’s no problem if we lose another 10-15 million jobs domestically because China has sufficient excess labor supply to pick up the slack for global demand.

  • BooBooKitty

    obviously still not on the top ten list of the administration’s warped priorities. Maybe after the midterms they’ll have to drop the suits against US states and moratoriums on job creating energy indepence to make room for a few common sense (non-progressive) items on the agenda.

  • acat

    Machiavelli understood – trust your survival to that which you control. (yes, I mangled the quote)

    In energy terms, this is simple. “Drill here, drill now”.

    To trust OPEC “surplus production” will remain both surplus and available to us is madness.

    Mew

    • http://www.thehayride.com MacAoidh

      …the crassness of their disregard in noting that “yeah, this will cost $183 million a year to implement, but that doesn’t really matter” is a pretty stark reminder of who these people are.

      And why they have to be drummed out of government forever.

      A little more on the Final Rule, because Steve only touched on some of the amazing and frightening crap within its pages…

      http://thehayride.com/2010/10/lets-just-buy-all-our-oil-from-opec-and-draw-unemployment-checks/

      • http://vladenblog.tumblr.com Vladimir

        Anyone interested in the subject should follow his link.

        I was struck with the callous disregard on the BOEMRE as to how economic decisions are reached in private companies.

        “What’s the big deal? It’s only 1-2% of well costs>” Shorter version: “Let them eat cake.”

        First of all, would it ever surprise anyone if a government cost estimate were low? Naaah, that never happens.

        Second, they are utterly unaccountable for the accuracy of this number.

        Third, we are very sensitive as to whether money spent on a well is “at risk” or whether it is spent after you’ve proven the existence of reserves. They just cavalierly increased the money at risk in a dry hole by something like $100,000.

        Yes, they seem to say, this will hurt small companies and increase the balance of trade deficit. Here’s a quarter to go call somebody that gives a s***.

        • http://www.thehayride.com MacAoidh

          …uncaring or lacking in compassion is breathtaking in its audacity.

          You just ruined somebody’s livelihood with the stroke of a pen. You did it deliberately. And you just couldn’t care less about that fact.

          But because we don’t support raises for government clockwatchers we’re heartless.

          This can’t continue. At some point we’re going to reach a point of no return. The next two election cycles are going to have to repudiate these people and turn them out of government; if not, things will become untenable. And by untenable, I mean very, very bad things. We are not a bunch of Europeans.

    • http://Blackberrybear.etsy.com knitwit

      that caused gasoline shortages in 1972-1973? That was a hissy fit on the part of the oil sheiks then that cost us major headaches in production and put us in a recession at the time. I remember what that was like, getting to fill up by license plate numbers and lines around the block! So much for depending on the overproduction of OPEC, and do we not remember as well that little ol’ Hugo himself is a member of OPEC and egging them on to do whatever damage to the great satan that they can manage?

      Grow some, Obama!

      • acat
  • bobojake
  • proudmarinemom

    Obama to trust OPEC? It’s not like he would bow down and let them control our economy or anything, would he?

    He is laughing at us. Look at the acronym for the Bureau of Ocean Energy Managemen, Regulation and Enforcement:

    Now pronounce the word BOEMRE.

    Bummer!

  • http://www.gmsplace.com/ civil_truth

    They really want to reduce fossil energy usage by cutting off domestic supplies. This is partly ideological, to atone for our sins of “excessive” energy usage relative to the rest of the world by bringing us back to their level. Of course the elite pushing this will escape the consequence, while the peasants, who clinging to their guns etc. will be punished.

    Furthermore, there is a more utilitarian goal. Not only will the force up energy prices, but it also has the advantages of

    1) redistributing money for citizens money towards the “alternative” energy producers owned by big Democratic donors/supporters, accentuating crony capitalism/campaign donations cycle.

    2) causing further capital flight because we have to buy foreign supplies

    3) bringing our foreign policy under the control of oil/gas producers, who are the kind of governments Obama and lots of his lefty buddies like, so long as they’re the ones in charge.

    4) I won’t there go there quite yet, but Kenny knows where I’m heading on this one – as in that part of the world bordered by Turkey, Egypt, and India/China.

    And Hugo…

    You know, that tinfoil makes such as nice crinkling sound. But I’m starting to think I may not be in tinfoil country after all.

    Especially when you follow the money – and see the rampant self-serving hypocrisy in the arguments.

    Petrobras being Exhibit A

    • proudmarinemom

      Every act has been untaken methodically, with passionless focus on the ultimate goal: to level the playing field for the Third World so it can replace Imperialist America on the global economic stage. This will continue after the Great Election of 2010. Elections have little bearing on the crusade — they are annoying distractions, like the Constitution, but they only strengthen his resolve to live out his dream of a divided, broken, contrite America.

      • proudmarinemom

        correction

      • Ausonius

        …I believe he would not have been elected.

        And if America had read his “Cairo Apology,” they would be demanding at least a resignation.

        But America as a whole depends too much on TV ads, and so we suffer the moronic result of government by soundbite.

        • proudmarinemom

          people will read Dinesh D’Souza’s excellent analysis of how this man came to believe that America deserves to be dismantled. From his irresponsible, sexually promiscuous, spoiled brat of a mother, he learned that America has always been a great Oppressor. From his drunken, polygamist wife-beater of a father, he learned that he had a calling. His calling is to empower those whom he perceives to be the downtrodden dogs of the world and to turn the whip upon their masters (America, Great Britain) in the name of social justice.

          What better way to fulfill his calling than to gain control of the most precious commodity on earth : Oil.

      • http://www.gmsplace.com/ civil_truth

        …as the overarching ideology. Straight unreconstructed Marxist radicalism/anti-imperialism of the 60s/70s, the advocates of which grew up to be Obama’s mentors.

        But for many of the fellow-travellers , it’s plain old greed and power divorced of utopianism that’s motivating them. And then they are surprised when the revolution comes and they’re among the first to “disappear” and find themselves escorted to the detention camps.

    • http://www.thehayride.com MacAoidh

      …it’s one of those things where you say “that’s just crazy” out of reflex.

      And then you’re asked to explain why on earth they would do the things they do.

      If you can provide such an explanation, you’re doing better than most of us. I’ve yet to see one.

  • mkozikowski

    in Asia.

    China is making a point of closing out all competitors in the energy markets.
    It would not be too far fetched to believe that China would buy all contracts for oil available from OPEC. Their internal justification for the cost would be economic supremacy.

    And Supremacy is what their end game is.

  • jollygiantsd

    All we can hope for is the GOP majority plus a republican presidential winner in 2012 to stop this or at least show it downa few decades.

    After Russia gained its freedom, Yeltsin let everything cool down and has slowly been nationalizing their energy markets, and taking over more and more energy companies since 1998 (read up on Gazprom). It became fully nationalized under Putin in 2000.
    What we saw in 1996-97 in Russia is now happening here with Commisar Obama and his cronies. Moving to a nationalization of the energy sector, one at a time slowly and in plain view of the ignorant public.
    Between the Russian governmental agency and the government run national bank, hey hold 79.6% stake in the company, and slowly expanding their share and overtaking of other companies along the way.

  • blooch

    Is Obama throwing some business to Exelon for his buddy John Rowe?

    http://www.bi-me.com/main.php?id=47074&t=1&c=35&cg=4&mset=1031.

    “The holder of around one-fifth of the world’s known oil reserves, the Saudis have moved slowly on nuclear energy, despite having signed a bilateral peaceful nuclear cooperation pact with the United States in May 2008.”

    Funny how the Saudis signed the papers at the same time the Gulf drilling moratorium was issued.

    http://www.2theadvocate.com/news/latest/98295599.html

    Maybe they just needed some concrete assurance that Obama wasn’t really serious about weaning us off of Saudi oil.

    I wonder if Axelrod will head back to Exelon soon. Shoot, Rahm might go back, too if the Mayor of Chicago thing doesn’t pan out.

    :removes tinfoil hat:

    :places it on hat rack to keep an eye on it:

  • http://www.redstate.com/etcartman Kenny Solomon

    Betcha didn’t know that.

    I did…… Posted it too. On October 17th.

    Scroll down about half way and you’ll see this:

    http://www.israelnationalnews.com/News/News.aspx/140107

    OPEC, which provides 40 percent of the world?s oil, is comprised of Algeria, Angola, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, Ecuador and Venezuela.

    Nothing to see here.

  • Adjoran

    and elevate the muslim world, how else would you go about it?

    Increasing energy dependency is far more effective than mere bowing and scraping before potentates and apology tours, don’t ya know?