R-Squared Energy Blog

Pure Energy

Our Ironic Energy Policy

Energy policies in the U.S. often seek to punish our domestic oil and gas producers, while at the same time we work hard with foreign producers to ensure that the oil continues to flow. I noted in a recent essay:

It is ironic that Steven Chu doesn’t seem to feel the need to work with our domestic oil industry, but warns OPEC not to cut production, and then is pleased when they don’t. I believe the blind spot in the present administration over the need to support our domestic producers will simply mean that future energy secretaries are even more beholden to OPEC.

Now, over the weekend we have two bits of news that continue to show the irony of our energy policies:

Clinton on oil mission to Angola

LUANDA (AFP) – US Secretary of State Hillary Clinton shifted the focus of her Africa trip to business on Sunday, arriving in Angola to boost relations with the continent’s key oil producer.

The top US diplomat is on a one-day visit to the southern African nation, which vies with Nigeria as Africa’s biggest oil producer but where two-thirds of the population lives on less than two dollars a day.

Angola is now China’s largest supplier of crude oil, but it is also a key provider to the United States. Angola sold 19 billion dollars in exports to the US market last year, 90 percent of it oil.

I certainly understand the need to work with other countries to keep the supply chain open, but those policies don’t seem to extend to our own country. How about sending Clinton or Chu on a mission to ExxonMobil to figure out how to better work with domestic producers?

Then, we have the following two stories:

Other countries ink deals for oil drilling off the Florida Keys

While the debate about drilling off the coast of Florida continues in Washington and the state Legislature, several international companies are getting started on projects that could bring oil rigs within 60 miles of the Keys by year’s end.

Companies from nations like Norway, Spain, India, China, Russia and Brazil have signed exploration agreements with Cuba and the Bahamas that could mean drilling south of Key West this year, and 120 miles east of the Keys in the Cay Sal area of the Bahamas in fewer than two years.

“Wouldn’t it be ironic if the Russians could drill closer to our shores than American oil and gas companies? The losers would be the American consumers who are cut off from the trillions of dollars in government revenue and thousands of new jobs that could be created if more of America’s oil and natural gas resources could be developed,” Katie Matusic, media relations manager for the oil industry lobbying group American Petroleum Institute, wrote in an e-mail.

Russian oil rigs just 45 miles from Florida?

New York – Remember the Cuba Missile Crisis and the threat of Russian nukes 90 miles from Key West? Now, there is the possibility of Russian oil rigs even closer, drilling in Cuban waters off the Gulf of Mexico.

Last week, the Cuban government announced it had signed contracts with Russia, allowing Russia to hunt for oil and natural gas in the Gulf of Mexico, perhaps as close as 45 miles from US shores.

The US oil and gas industry is hoping the Cuban drilling causes the US to rethink its own policy in drilling in the eastern gulf of Mexico, an area the USGS estimates has 3.06 billion barrels of oil and over 11 trillion cubic feet of natural gas.

Last July former president Bush lifted the executive moratorium on drilling on the Outer Continental Shelf. The Congress, which usually renewed the moratorium each year, let it expire.

But, in February, Interior Secretary Ken Salazar, announced he was extending until Sept. 21 the period for public comment on a proposed five-year plan for drilling offshore.

Proponents of drilling maintain it would provide the Obama administration with a dramatic influx of $2.2 trillion in new revenue from royalties and taxes on profits. They estimate it would add 1 million new jobs as companies build new oil rigs and roughnecks get hired in Florida for the new rigs.

If you think we need to reduce our dependence on fossil fuels – and I do – then that’s one thing. Adopt policies that encourage this. But don’t adopt schizophrenic policies that result in us treating foreign producers better than we do our own domestic industry. The result could be that we will end up buying oil produced in the Gulf of Mexico from Russia, creating jobs for them and advancing their economy – at the expense of our own. And that is simply asinine.

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August 9, 2009 - Posted by | energy policy, Florida, Gulf of Mexico, oil companies, oil production, politics

11 Comments

  1. This idiotic "energy policy" is just another consequence of the take-over of the Democrat Party by a bunch of Neo-Stalinists. Hard to realize that Pelosi/Reid/Obama claim the same affiliation as President John Kennedy — he of tax cuts & moon missions.Problem with those Neo-Stalinists is that they have a very limited playbook. All they care about is their own power. To get it, the only way they know is to invent "enemies" and then demonize them. And so we have nonsense instead of an energy policy — can't do anything that might help a US oil company, after all. We see the same thing happening in health care, where the Democrats are now demonizing insurance companies.Time for the real Democrats, the JFK Democrats, to take their party back from this bunch of imposters.

    Comment by Kinuachdrach | August 9, 2009

  2. Like my brethren Kinu, I really have no strong opinions on this topic.I do share Kinu's exasperation–although in my case, with both parties. After all, Bush and the R-Party's big win was to radically enlarge the national ethanol program (sorry Rufus). And it was Gov, Bush of Florida who vowed to end oil drilling off the coast of Florida forever. With friends like these….and don't get me started on R-Party backwardness when it comes to energy conservation. I have to say, I am deeply disappointed with the Obama team on energy. They have not truly wrestled with the issue. There is no talk about gasoline taxes. There seems to be no plan to reduce imports. The CAFE standards are stupid, and we remain bogged down in an eternal war in Iraq-Afghanie-Pakistan which I suppose is about oil. Secy Chu says he likes nukes, but I see no push on nukes or mini-nukes. These guys do not seem to even grasp we just got handed a golden gift on a silver platter–natural gas, and epic supplies of it. Some states are moving ahead, while the feds stay mired. The Oabam team seems clueless and drifting on energy (but I thought the same thing about Bush). I agree with Kinu that the D-Party has to quit looking at productive US enterprises as the enemy. This is a sickness. (I would like the R-Party to feel the same about productive US workers, btw).Productive people are never the enemy. Any man or woman working (or taking care of family) is my friend. I wish people would understand this. The naysayers have it all wrong–this country could be energy independent in 10 years, and richer and more powerful for it.I wish Obama would set that as the goal, like the JFK space program.

    Comment by Benny "Boom, No Doom" Cole | August 9, 2009

  3. What energy policy? O promised change. US energy and environmental policy has gone from well defined to aimless. I understand everything dems are against. It is much easier to be in opposition. Ineffective policy is not going to solve any problems. A few wind turbines and solar panels is not going to close down any coal plants. Hopefully, the current inaction is a clever plan to reinvent Bush's offshore drilling and nuke plants as O's.

    Comment by Kit P | August 9, 2009

  4. They'll wake up in a year, or two, with headlines like these China Passenger Vehicle Sales UP 70%About two years of those sales gains, and who-the-hell-knows where the oil will come from?

    Comment by rufus | August 9, 2009

  5. "I do share Kinu's exasperation–although in my case, with both parties."Completely agree, Benny — a plague on both their houses. In my more lucid moments, I think of them all as the Political Class, a cancer that needs to be excised from society.As you point out Benny, we already have a number of viable options for power, good for the next 50-2,000 years. And there is absolutely no need for the pessimism that our host evinces about having to lower energy use (i.e., lower standards of living in the west, and no hope for the billions already living in poverty elsewhere).Unfortunately, the Neo-Stalinists who have hijacked the Democrat Party are trying to prevent that glorious future from ever arriving. You do know, Benny, that CH4 is a much more potent "greenhouse warming gas" (to use their scientifically incorrect language) than mere CO2? One of the readily-predictable future challenges to Natural Gas Vehicles is the inevitable minor CH4 leaks to the atmosphere during fueling. If it ever looks like NGVs are going to take off big time, the Political Class and their lawyers (but I am being redundant) will smother it — same as they have done to oil and nuclear, and are trying to do to coal.Technically, the future is very bright. We already have the know-how and the resources to give every human being a great quality of life. But it is going to take a very painful enema to eliminate the current constipation caused by the Political Class.

    Comment by Kinuachdrach | August 10, 2009

  6. Why do you think reduced energy use means a lower standard of living?  A huge amount of the energy which comes through the USA is simply wasted; fuel used for space heat is a particularly bad example, because proper building practices can often eliminate it completely.  We could easily have a higher standard of living with half the energy use by making more of the energy go to the actual purpose instead of losses.

    Comment by Engineer-Poet | August 10, 2009

  7. Unless the Russians will be pumping oil that lies within our territorial waters I see no issue here. Why is it ironic or schizophrenic to let others sell their precious oil to us today while it's cheap and keep ours in reserve for the future?

    Comment by doggydogworld | August 11, 2009

  8. Why is it ironic or schizophrenic to let others sell their precious oil to us today while it's cheap and keep ours in reserve for the future?This presumes we will still have the companies left to produce that oil. The schizophrenic piece is favoring foreign producers over domestic producers, and a number of policies that have been pushed do exactly that. The administration shows love for Saudi and Angola, and disdain for ExxonMobil. I would think they would be going to ExxonMobil and asking how they could work together if their interest is really in keeping the oil flowing.RR

    Comment by Robert Rapier | August 11, 2009

  9. Here's more major irony for you: US is loaning Petrobras up to $10 billion to help them develop their Tupi offshore field . . . WashTimesEditorial The original article is at Export-Import Bank Now this money is supposed to be used to buy US goods and services, so maybe it's a good thing, but somehow it seems a little wacky to bend over backwards to help out certain foreign oil companies? Don't they have equally obscene profits as those nasty US companies?

    Comment by OxyMaven | August 11, 2009

  10. Seems to be more of a case of NIMBY than of "distain for ExxonMobil". A policy of trying to get more foreign oil for Chevron and ExxonMobil.

    Comment by Clee | August 11, 2009

  11. Heating oil prices paid by consumers are determined by the cost of crude oil, the cost to produce the product, the cost to market and distribute the product, as well as the profits (sometimes losses) of refiners, wholesalers and dealers. In 2001, distribution and marketing costs accounted for 46 percent of the cost of a gallon of heating oil. The next largest component, crude oil, accounted for approximately 42 percent of the cost of a gallon of heating oil. Lastly, refinery processing costs account for another 12 percent.Now a days Current Heating Oil Prices is also an issue because its a nessessity of everyone.

    Comment by Daniel | August 13, 2009


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