In a speech Thursday at Arizona State University, Secretary of the Navy Ray Mabus discussed the relationship between American national and energy security. Mabus’s remarks highlight, once again, how President Barack Obama is acting contrary to the United States’ national security interests by continuing to delay approval of the Keystone XL pipeline, as well as inhibiting full development of the USA’s oil reserves on federal lands and in the offshore regions. Acting against the national security interests of the nation runs contrary to the oath of office Obama took, as set forth in Article II, Section I, Clause 8 of the Constitution of the United States, which states:
It is truly astonishing how the Obama administration has not only failed to address the problem of rising gasoline prices, but actually spent the last two years making the problem worse.
In 2008, with a federal offshore drilling ban in place and a Congress that cared little for allowing more domestic energy production, gasoline prices began to spike toward $4 per gallon. With billions of barrels available for development offshore, our government’s decision to keep those resources under lock and key received the justified scorn of Americans who suddenly had to work longer just so they could afford to drive to and from work.
Despite President Obama’s moratorium on U.S. deepwater drilling in the Gulf of Mexico, the U.S. Export-Import Bank intends to guarantee $1 billion in loans to PEMEX, the Mexican state oil company, to bolster the company’s oil drilling in the region.
The bank, which is the official American export credit agency, loaned more than $1 billion to PEMEX in 2009 — when the company was the bank’s largest borrower — in support of its drilling activities. That year, the bank also guaranteed two loans totaling $300 million made by a commercial lender.
The latest request comes during a drilling moratorium that was first imposed by Obama in May to find out what was the cause behind the April 20 Deepwater Horizon oil rig explosion killed 11 workers and led to 206 million gallons of oil spewing from BP’s undersea well.
The Obama administration is poised to ban offshore oil drilling on the outer continental shelf until 2012 or beyond. Meanwhile, Russia is making a bold strategic leap to begin drilling for oil in the Gulf of Mexico. While the United States attempts to shift gears to alternative fuels to battle the purported evils of carbon emissions, Russia will erect oil derricks off the Cuban coast.
Offshore oil production makes economic sense. It creates jobs and helps fulfill America’s vast energy needs. It contributes to the gross domestic product and does not increase the trade deficit. Higher oil supply helps keep a lid on rising prices, and greater American production gives the United States more influence over the global market.
Drilling is also wildly popular with the public. A Pew Research Center poll from February showed 63 percent support for offshore drilling for oil and natural gas. Americans understand the fundamental points: The oil is there, and we need it. If we don’t drill it out, we have to buy it from other countries. Last year, the U.S. government even helped Brazil underwrite offshore drilling in the Tupi oil field near Rio de Janeiro. The current price of oil makes drilling economically feasible, so why not let the private sector go ahead and get our oil?
The Obama administration, however, views energy policy through green eyeshades. Every aspect of its approach to energy is subordinated to radical environmental concerns. This unprecedented lack of balance is placing offshore oil resources off-limits. The O Force would prefer the country shift its energy production to alternative sources, such as nuclear, solar and wind power. In theory, there’s nothing wrong with that, in the long run, assuming technology can catch up to demand. But we have not yet reached the green utopia, we won’t get there anytime soon, and America needs more oil now.
Russia more sensibly views energy primarily as a strategic resource. Energy is critical to Russia’s economy, as fuel and as a source of profit through export. Russia also has used energy as a coercive diplomatic tool, shutting off natural gas piped to Eastern Europe in the middle of winter to make a point about how dependent the countries are that do business with the Russians.
Now Russia is using oil exploration to establish a new presence in the Western Hemisphere. It recently concluded four contracts securing oil-exploration rights in Cuba’s economic zone in the Gulf of Mexico. A Russian-Cuban joint partnership will exploit oil found in the deep waters of the Gulf.
Cuba has rights to the area in which drilling will be conducted under an agreement the Carter administration recognized. From Russia’s perspective, this is another way to gain leverage inside what traditionally has been America’s sphere of influence. It may not be as dramatic as the Soviet Union attempting to use Cuba as a missile platform, but in the energy wars, the message is the same. Russia is projecting power into the Western Hemisphere while the United States retreats. The world will not tolerate a superpower that acts like a sidekick much longer.
By Daniel Whitten
(Bloomberg) — Restrictions on oil and gas drilling will cost the U.S. economy $2.36 trillion through 2029, according to a study requested by state utility regulators and paid for in part by industry-sponsored groups.
Drilling restrictions in Alaska’s Arctic National Wildlife Refuge and off the U.S. coastline are blocking access to about nine years’ worth of U.S. oil and gas consumption, according to the report. Among sponsors are the National Association of Regulatory Utility Commissioners and the industry-funded Gas Technology Institute, of Des Plaines, Illinois.
Former President George W. Bush and Congress ended bans in 2008 on drilling along the U.S. coastline. The Interior Department hasn’t acted to open the newly available areas, including offshore Alaska and on the U.S. Outer Continental Shelf in the Atlantic and Pacific oceans. Congress has kept the Arctic refuge off limits.
“Required actions to access the energy resources thought to exist there have not been taken,” O’Neal Hamilton, a former chairman of South Carolina’s Public Service Commission, said of the areas where leasing hasn’t proceeded. “Our research allows policy makers to know the extent of the resource base and the effects that maintaining the restrictions would have on the country.”
The report, issued today, said opening the areas would free up 43 billion barrels of oil and 286 trillion cubic feet of gas. The U.S. used 22.8 trillion cubic feet of gas and 5.2 billion barrels of oil in 2009, according to a press release issued with the report.
Gas, Oil Prices
Annual average natural-gas prices will increase by 17 percent by 2030 and electricity prices will rise by 5 percent if U.S. policy makers don’t open access to off-limit areas, the report forecast. That would cut the gross domestic product by $2.36 trillion cumulatively through 2029, or 0.52 percent annually on average, according to the report.
Dave Harbour, a retired commissioner of the Regulatory Commission of Alaska, who helped oversee the study, said the calculation of lost GDP was based on the contribution the untapped oil and gas revenues would make to the economy, including employment, taxes and royalties.
Harbour said the industry didn’t influence the outcome of the study, which was performed by McLean, Virginia-based SAIC Corp.
by Vince Haley
If you’re the President of the United States or one of his political appointees and you’re ideologically opposed to new oil and natural gas development offshore, what do you do when the public registers its overwhelming support for new drilling in public opinion polls?
You dance, delay, and deceive. You speak melodious words about seeking the wisdom of the public in making these decisions and then ignore evidence of the public will when you get it, or worse, you hide it.
First came the dance. In August 2008, after soaring gas prices and a dramatic shift in public opinion caused President Bush, Florida Governor Charlie Crist, and Republican presidential candidate John McCain to reverse their positions on offshore drilling, then-Senator Obama also changed. The Democratic presidential nominee reversed his own position and that of his party, saying he was open to offshore drilling as part of an overall energy plan. The Democratic Congress followed a month later by quietly dropping the 25-year Congressional ban on offshore drilling.
Then came the delay. In January 2009, President Obama inherited a draft five year offshore drilling plan prepared by the outgoing Bush administration. The plan was already receiving public comment as part of the elaborate rule making process followed by federal agencies. Ken Salazar, Obama’s new Secretary of Interior, determined the decision about new offshore drilling was so important that he ordered a six-month extension to the comment period.
Third comes the dishonesty.
In April of 2009, during a discussion about offshore exploration in San Francisco, Salazar said that President Obama directed him to “to make sure that we have an open and transparent government” and that “these are not decisions that are going to be made behind closed doors.” Salazar went on to say that President Obama wanted to make sure that DOI was “maximizing the opportunity for the public to give us guidance on what it is that they want to do.”
Yet, more than four months after the comment period ended, the Department of the Interior has failed to make any public announcement about the results, even though sources have told American Solutions for months the comments show a 2-1 advantage in support of offshore drilling.
It took American Solutions almost four months and the power of the Freedom of Information Act to finally uncover indirect confirmation that, out of over 530,000 comments submitted, pro-drilling comments outnumbered anti-drilling comments by a 2-1 margin.
In an email dated October 27, 2009, Liz Birnbaum, director of the Minerals Management Service, informs other Interior officials that a preliminary tabulation of the results of the comment period had not yet gone to Secretary Salazar, adding “[s]o the Secretary can honestly say in response to any questions that he’s [SIC] has not yet seen the analysis of the comments – staff is still working on it. I did, however, confirm to him the 2-1 split that these guys [at American Solutions] are emphasizing.”
When a public employee is on record condoning purposeful deception of the American people, the taxpayer should no longer have to fund his or her job. Secretary Salazar should immediately fire Liz Birnbaum for purposefully deceiving him, and in turn, the American people. It’s not possible for the Secretary to honor pledges of openness, honestly, and transparency in government if his staff is going to deliberately undermine such pledges.
Public opinion polls already measure near 70% support for offshore drilling, so the results from a public comment period that reflect the same public sentiment should not be surprising. But after all this talk of wanting the public’s input, Secretary Salazar and his team must find it a real stumbling block to have to explain all their anti-energy development actions in light of the comment period results to which they previously attached such great importance.
This newly gained insight into the anti-energy exploration mindset within the Department of the Interior allows a new perspective of President Obama’s mention of offshore development in his recent State of the Union address. Here is the one paragraph in which the President described offshore development:
But to create more of these clean energy jobs, we need more production, more efficiency, more incentives. And that means building a new generation of safe, clean nuclear power plants in this country. It means making tough decisions about opening new offshore areas for oil and gas development. It means continued investment in advanced biofuels and clean coal technologies. And, yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America.
To the passive listener, it sounded like President Obama expressed at least rhetorical support for offshore drilling.
But the President only says we must make “tough decisions” on offshore drilling, deliberately refusing to apply that standard to other decisions on energy.
But tough for whom? Certainly not for the public that overwhelmingly supports more offshore drilling.
Indeed, the only person facing a tough decision is the President since an important part of his political base is opposed to new American energy development.
Bucking public opinion would indeed be a tough decision for this President, but he has shown himself quite comfortable with bucking public opinion to pursue stunningly unpopular policies on health care and cap and trade.
In short, it’s a fair conclusion that the tough decisions the President identified in his State of the Union was his intended decision not to pursue any new offshore oil and gas development. The actions by Salazar and his team are entirely consistent with that conclusion.
What makes all of this dispiriting, especially this month, is that with 15 million Americans out of work and with the President’s recently submitted budget projecting trillion dollar annual deficits for the next ten years and a near tripling of the national debt by 2020, the President is throwing away a golden opportunity over the next three decades to create millions of new jobs and generate more than $270 billion in annual economic growth from new oil and gas development, including $54 billion annually in federal tax receipts that could help lower the federal deficit and the national debt.
These extraordinary benefits of job creation and economic growth – all without requiring any federal spending – are, sadly, not on President Obama’s agenda, notwithstanding all the phony rhetoric to the contrary.
Indeed, we can look forward to the President’s continued strategy of dance, delay, and deceive.
Jan. 13, 2010
McMoRan Exploration Co. today announced what it said could be one of the largest oil and natural gas discoveries in the shallow waters of the Gulf of Mexico in decades.
The discovery was made at the Davy Jones ultra-deep prospect located on South Marsh Island Block 230 in about 20 feet of water and 10 miles off the Louisiana coast, the New Orleans company and Energy XXI, one of its Houston partners in the project, said in statements this morning.
The well was drilled to 28,263 feet and found a 135-foot column of hydrocarbon-filled sands in the Wilcox section of the Eocene and Paleocene geologic trends.
That puts the estimated the size of the discovery close to 2 trillion cubic feet of resources, rivaling some oil and gas discoveries in the deep water Gulf.
If development drilling confirms what early testing has shown, “this is going to be a huge reserve,” McMoRan’s co-chairman, James R. Moffett, said in a conference call this morning.
What’s more, Energy XXI Chairman and CEO John Schiller said the discovery “verifies the ultra-deep potential of the Gulf of Mexico shelf and opens this horizon as a major exploration frontier.”
Investors responded by driving up the stock prices of McMoran and Energy XXI by more than 25 percent in morning trading.
“Success at Davy Jones could be a transformative event for (the companies),” said Jefferies Research, in a note to investors, noting the prospect could boost McMoRan’s year-end proved reserve base by 150 percent and Energy XXI’s by 60 percent.
McMoRan is the lead operator of Davy Jones, with 32.7 percent working interest. Houston’s Plains Exploration & Production Co. has a 27.7 percent stake, Energy XXI has a 15.8 percent interest, Japan’s Nippon Oil Exploration USA Limited holds 12 percent, while W.A. “Tex” Moncrief, Jr. has an 8.8 percent interest.