Oil Politics, At Home and Abroad (In Iraq)
Photo, Getty Images
According to the NY Times, "Exxon Mobil, Shell, Total and BP -- the original partners in the Iraq Petroleum Company -- along with Chevron and a number of smaller oil companies" expect to sign contracts with the Iraqi Oil Ministry by 30 June. Americans remain in advisory roles at the Ministry; their role in the contracts is unknown.
Iraq has the third largest reserves of oil in the world. The stalled -- and controversial -- hydrocarbon law would essentially remove control of Iraq's oil from the government and put it in the hands of corporations. Moreover, the law would "allow much (if not most) of Iraq’s oil revenues to flow out of the country and into the pockets of international oil companies."
Concurrent with this development, President Bush has reprised calls to open US waters to off-shore oil drilling.
Care to explain how a country that consumes a quarter of the world's oil production can drill its way out of this hole.... when it owns less than two percent of the world's oil reserves? Right. Didn't think so.
Since 1981, Congress has banned oil drilling in federal waters up to 10 miles from the coast. So the President implies that the US has both oodles of oil reserves (we don't) and that they are untapped because Congress has locked them down (they aren't). According to the Federal Mineral Management Services we think we have about 89 billion barrels of recoverable oil offshore; 80 percent is open to drilling already.
Sen. John McCain, the presumptive Republican presidential nominee, supports relaxing the off-shore drilling ban. Sen. Barack Obama, the presumptive Democrat presidential nominee, supports continuing the current moratorium.
Republicans aren't walking in lockstep, according to The Chicago Tribune:
California Gov. Arnold Schwarzenegger spoke out against the plan Wednesday. "The direction our nation needs to go in, and where California is already headed, is toward greater innovation in new technologies and new fuel choices for consumers."
Platitudes, Not Leadership
In a speech Wednesday, President Bush said that "dramatic" growth in the demand for oil and "the basic law of supply and demand" are what is causing the price of oil, and thus gasoline, to rise. Others place the blame at the hands of Wall Street, as Kimberly Amadeo explains.
Forbes points out that Uncle Sam would be a prime beneficiary of any offshore drilling relaxation. That's because the "U.S. government collects royalty payments and upfront cash from oil companies that lease federal lands for oil and gas exploration and production." Could this really be a plan to help pay down the federal deficit? Nah.
The President asserts in his speech that the long-term solution to our energy crunch is "to reduce demand for oil by promoting alternative energy technologies." Yet he only advocates solutions to expand production of oil, a traditional energy technology. In the main, these are long-term proposals -- the same ineffective arguments we've heard for years: expand off-shore oil drilling, expand oil shale production, allow exploration in the Arctic National Wildlife Refuge (ANWR), and make it easy to permit a new refinery.
The real solution in the face of the rising cost of a non-renewable resource is to reduce consumption. Nary a mention of behavioral change in the President's message. The word "consumption" doesn't appear. "Reduce" appears once (quoted above).
As with our current war of aggression in Iraq, we Americans aren't being asked to tighten our belts or effect any other reasonable, even if cliched, change in our ways.
There's no leadership here, simply political platitudes and election-year posturing.
Need more proof? The director of the President's Economic Council, Keith Hennessey, told the Washington Post that these proposals are not short-term solutions to record prices but are, instead, remedies "definitely measured in years."
And the "remedies" may not be as rosy as advertised.
In May, a Department of Energy report commissioned by Sen. Ted Stevens (R-AK) concluded that drilling in ANWR "is not projected to have a large impact on world oil prices." This is consistent with prior DOE reports.
Cindy Shogan, Alaskan Wilderness League, puts the May DOE report into dollars and centers: "At peak production, two decades from now, the amount of oil speculated to be available in [ANWR] would lower gas prices by less than 4 cents a gallon." That's a savings of less than 1% of the price of a gallon of gasoline today. You can save more than that by making sure you have the right air pressure in your tires!
Insane! This is how we should handle an addiction to oil?
Comments
“Antonia Juhasz, an analyst with Oil Change International, a watchdog group, is the author of “The Bush Agenda: Invading the World, One Economy at a Time.”” Says it all.
Don’t you mean, according to a left wing nutcase posting an incredibly biased opinion piece? But, this nutcase mirrors your own views so it’s fact huh?
Must be embarrassing to claim your a professor of “journalism” aint it?
C
Hi, Chuck … I have NO idea what you are talking about. I have said nothing about “invading the world”.
Can you please point me to something factually in error in the column?
Are you saying that you think we can drill our way out of today’s oil prices?
Do you think that we should try to find a oil production supply/demand balance simply by increasing the supply of oil supply?
Jesus, don’t you read your own crap. You provided a link to the NY times editorial and I copied from the bottom of Juhasz’s column to demonstrate what a far left marxist kook he is. And to point out how far you will go with their lies and distortions.
Your entire hit piece is based upon opinions by leftists who only want to stop progress.
Drill Here, Drill Now!
C
American taxpayers are paying Trillions to protect and defend IRAQ.
It is only the right thing to do is pay back to the Americal taxpayers via the sale of oil and providing a percentage of those revenues to the American taxpayers as a pay-back.
Jay Draiman
Hi, Chuck: just because something is an editorial does not mean that it contains No Facts. Here’s the cite from the editorial – a fact that came from the Federal Government:
According to the Federal Mineral Management Services we think we have about 89 billion barrels of recoverable oil offshore; 80 percent is open to drilling already.
Now, if you want to challenge that figure — please do so. But saying that it’s an OPINION (which it is not) and that its not relevant simply because you don’t like the author is not a persuasive argument. It’s an ad hominem, which is how most of your comments are argued.
Hi, Jay:
We are spending trillions in Iraq because We Broke It. They didn’t ask us to invade; we chose to. Our leaders — and some energy analysts — argued at the time that the war would pay for itself via oil. It hasn’t. GIVING that money to OIL COMPANIES doesn’t reimburse the US treasury.
There is no bill in the Iraqi Parliament that “[provides] a percentage of those revenues to the American taxpayers as a pay-back.”
Your ill informed kathy, the US has over 3 times the oil reserves (note sources) that Saudi Arabia possesses. IN addition, these reserves can be removed at costs considerably less than $140/barrel and without adverse environmental costs.
Equally important is that the AMerican people don’t share your Leftist views regarding oil drilling.
http://www.naplesnews.com/news/2008/jun/26/poll-74-percent-support-offshore-oil-drilling-us/
It is disturbingly obvious that you are an unabashed Leftist. If your going to offer advice, try being more objective and independent thinking. It will raise your credibility from the depths that it now resides.
Sources:
http://www.fossil.energy.gov/programs/reserves/npr/publications/npr_strategic_significancev1.pdf.
http://www.mms.gov/revaldiv/RedNatAssessment.htm
Hello, Bob —
In proven oil reserves, the US ranks #11 with 20.9 billion barrels, per the DOE. Reserves peaked when we started drilling in Alaska; production there peaked in the 1990s.
According to British Petroleum Statistical Review of World Energy, as of 2007 Saudi Arabia has about 21% of conventional world oil reserves — self-reported at 264 billion barrels.
That’s an order of magnitude more than proven US reserves.
One thing I’m not following is the sources for this article and comment (8), above, say the US has 20.9 billion barrels of proven oil reserves. But Kathy’s article says, “89 billion barrels of recoverable oil offshore”. Please explain this. Furthermore, the NYTimes editorial linked to from this article says there are 36 billion barrels on federal land. 89 + 36 = 125 which is alot more than 20.9.
On another topic, tar sands, what Bob is saying is that the US has significantly more reserves if the oil in tar sands is counted. Not sure its 3x Saudi Arabia, but it is considerable. If you look at this source:
http://www.eia.doe.gov/emeu/international/reserves.html
The reserves for Canada including oil shale is 179billion barrels or 16billion barrels without. The oil is there, its significant, but the environmental consequences of recovery and production are much worse than mountain top removal coal mining which is laying waste to large areas of Appalachia. Furthermore tar sands/oil shale need to go through much more processing and refinement further increasing the consequences of its recovery and reducing its EROI. Point being, maybe it should be left in the ground and the energy and resources devoted to developing renewable energy that doesn’t have the environmental consequences of fossil fuels and could become a new technological advantage & industrial export of the US.
My own thoughts on this are the recovery of oil from tar sands is commercially viable only in an environment of high oil prices (which is why it has been attempted only once, during the 1970s when oil prices were high). So how will tar sand oil cause the price of oil, in general, to go down?
to Jay,
In fact the oil law now being ‘considered’ in Iraq is written to give oil revenue to foreign corporations (ensuring the wealth will flow out of Iraq and into private companies), not to either the Iraqis who own the oil or to the American taxpayer (who, IMHO don’t deserve it, sorry, Kathy’s right–the US broke Iraq).
And Jay, if you go back in history to the 1950s something similar was happening in Iran: foreign companies were extracting oil wealth from Iran. Mossadegh, the democratically elected leader, put a stop to this and was thrown out of office in 1953 by a US CIA led coup. The Shah was put in power by the US and the rest is history… and history is repeating itself in Iraq. If you’re hoping for stability in Iraq, the current hydrocarbon law is one way to ensure that it doesn’t happen.
Hi, Fred:
They are ALL guesses.
Check out Wikipedia for the semantic difference between “reserves” and “proven reserves” … the latter number is smaller because there are data to “prove” the estimates to 80-90% “certainty.”
The Wiki article also has the DOE data that puts US at #11 and Saudi Arabia at #1.
The article quotes DOE ….”we think we have about 89 billion barrels of recoverable oil offshore; 80 percent is open to drilling already.” The key words are “we think we have” … these are not PROVEN reserves.
We need less ambiguous terms to describe the guesses at the amount of oil under the ground. :-/
And all reporting — including mine — needs to be more precise re proven reserves versus possible, or unproven, reserves.
Kathy, keep up the fight to get the truth to the people! Although it seems you are in a battle of wits with unarmed persons; the witless cannot know when their debate has no merit. It doesn’t help that McBush & cronies are pumping disinformation in order to further their agenda: to further separate the haves from the have-nots.
Thanks, NRT!