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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."
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?