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Letters to the Editor

Drilling barrier

August 4, 2008

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To the editor:

Why aren't the oil companies drilling?

Nancy Pelosi and others, responding to the "drill here, drill now" movement, have pointed out that the oil companies hold leases on which they are not drilling. This statement is true, as far as it goes. What is not stated is why the lack of drilling.

Chevron's experience in Florida in the 1980s may be instructive. Chevron had a lease over an area off shore of Florida. Studies showed that a major oil and/or natural gas deposit lay beneath the water. Chevron sank a few exploratory wells and found that the studies were accurate. But no production followed. While Chevron had permission for exploration, they did not have permission for production.

Chevron spent nearly 10 years attempting to get the needed permits to start production and never obtained those permits. Ultimately, they agreed to a government buyback of their lease. So, the reason those oil companies may not be drilling is that they know they have permission to explore, but not permission to produce. Why spend the dollars to explore if they will never be given permission to produce?

So, Pelosi's statement is accurate, but it does not tell the entire story.

Also, you "drill here, drill now" folks should make sure that IF any such law passes, that it grants production rights at the same time it grants exploration rights. Otherwise, you will be left with the same situation that exists now.

Brent Garner,

Lawrence

Comments

cato_the_elder 6 years, 4 months ago

Average, the "last little bits?" We've got 22 years worth of oil in ANWR alone, which can be utilized while alternative sources are perfected. When offshore is added, we can greatly increase our independence from foreign sources. Yes, we do view things differently.

average 6 years, 4 months ago

Sorry, we consume 20 million barrels per day. The world consumes about 85.

VTHawk 6 years, 4 months ago

Wait...Pelosi would be deceptive?!?

cato_the_elder 6 years, 4 months ago

When President Clinton vetoed the ANWR drilling bill finally passed by the Republican Congress in 1996, we were denied access to 75 billion barrels of oil that would have been available for our use since that time. The good news is that they still are. The bad news is that the Democrat-controlled Congress won't allow a bill to get to the floor, and last week even shut down the Capitol building and turned off its lights to prevent Republicans from using the House Chambers to make their point. Americans have now awakened to the fact that the Democrats' leadership in Washington is bought and sold by the Sierra Club and other radical environmentalist groups, which has even caused Senator Obama to announce his recent major flip-flop on offshore oil drilling. Drill now, and drill often - and if the Democrats won't allow it, then remove them from office.

monkeyspunk 6 years, 4 months ago

Some very educational and excellent posts by max1 and tolawdjk. Seriously, thank you.It's time to change how we think about energy and honestly, while the discussion about where to get oil is important, we should be arguing about what to do after oil. Again, these types of issues are placed in front of us by both parties to distract us from the real issue. That its time to kick the habit. Say it with me:"Hello, my name is Uncle Sam, and I am an Oil-oholic."

cato_the_elder 6 years, 4 months ago

Average, point taken - but I view it as Senator McCain's simply having come to the conclusion that in light of what we were facing, a blanket ban on offshore drilling was a luxury that we could no longer afford. Conversely, it's quite clear that Senator Obama had to be forcibly dragged into announcing his "change of position" for political reasons only, because he and his party were getting killed on it - and, frankly, I don't believe him. There are a number of issues, including expanded drilling, that in my opinion would get flip-flopped back if Obama were elected with an even more Democrat-dominated Congress, the first of those being FISA - which would be hypocritically eviscerated as soon as they had the chance, with their prior votes this year counting for nothing.

George Lippencott 6 years, 4 months ago

Hey Merrill are we going to let them make money or just demand they spend their money for no return so as to avoid the problemYes, alternate energy sources need to be implemented - faster if possible. That said it will be about a decade before we get to 20% wind energy. Truely alternate fuel cars wil probably take longer. In the interim we need oil to run our industries as well as our transportation systems. Just think how fast we could progress if we weren't transferring hundreds of billions a year to the foreign oil producers at their price. This is a big problem and stupid slogans or class hatred will not solve it. Remember ECON 101. we will not get alternatives unless they are money making.By the by, any of you coming to the energy efficiency symposium later this year. Maybe you could offer constructive alternatives rather than Bush hating bull.

cato_the_elder 6 years, 4 months ago

Max1, I take it then that if someone sends you to the store to buy a pair of flip-flops, you come home with hiking boots instead.

Alison Carter 6 years, 4 months ago

"Moderate" - keep posting those Econ 101 lessons on future stories about the economy. KISS KISS

rtwngr 6 years, 4 months ago

The problem is not lack of oil or oil reserves but the lack of refineries. No new refineries have been built in 30 years. The EPA shut down a number of existing refineries under pressure from the environmental left. The EPA will not issue new permits to build new refineries or re-open existing facilities. So we have what we have.

Richard Heckler 6 years, 4 months ago

July 18,2008New York TimesWASHINGTON - House Republicans on Thursday blocked a Democratic effort to pressure energy companies into drilling for oil on lands they already leased from the federal government.......

cato_the_elder 6 years, 4 months ago

Max1, I'm delighted to have irritated you that much. Hope I can do it again soon.

cato_the_elder 6 years, 4 months ago

Monkeyspunk, President Bush said essentially the same thing in his State of the Union address on January 31, 2006. Where have you been?

George Lippencott 6 years, 4 months ago

How about Econ 101. A company buys a lease and spends zillons to drill to determine if there is a profit to be had. Then somebody comes along (doesn't matter who) and says you can't get the return expected. If that were me I would not make the same mistake twice. Could that be why all those leases are dormantThe regulatory process needs to be simple and definitive. Either you can or you can't from early in the game. Unless we want the federal government in the oil exploration and development business with a hefty does of increased taxes we need to KISS.Lawrence has a similar problem. The plethora of rules pretaining to and groups that get to comment on an investment by business makes the planning expense questionable. Ottawa for example keeps it more professional.

average 6 years, 4 months ago

cato_the_elder:Wouldn't you agree that since McCain was also opposed to expanded offshore drilling for years, including through March of this year (looking for primary votes in Florida and California), that his current position is also a major flip-flop?

Daytrader23 6 years, 4 months ago

rtwngr (Anonymous) says:The problem is not lack of oil or oil reserves but the lack of refineries. No new refineries have been built in 30 years. The EPA shut down a number of existing refineries under pressure from the environmental left. The EPA will not issue new permits to build new refineries or re-open existing facilities. So we have what we have.---------------------------------------------And the head of the E.P.A is a former Exxon exec. appointed by Bush. So Bush and his friends are now left wing environmental radicals? Go on, blame the Dems for the last 8 years as we all know it's their faults. How about the real reason they are not drilling, There is NO oil, well not enough to make it profitable even with oil over $100 dollars a barrel. Every expert that is not financed by the oil companies agrees that we have reached peak oil. Even the actions from the oil companies themselves prove this point. They are either taking the money and running or they are investing in renewable energy sources, actions speak louder than words. They have the permits, they have the technology but they are not drilling because there is not as much oil as they claimed.

tolawdjk 6 years, 4 months ago

rtwngr quoth, "The problem is not lack of oil or oil reserves but the lack of refineries. No new refineries have been built in 30 years. The EPA shut down a number of existing refineries under pressure from the environmental left. The EPA will not issue new permits to build new refineries or re-open existing facilities. So we have what we have."Complete, total, and absolute hogwash. EPA does not issue permits to any facility operating on state land. In Kansas that pretty much means that unless someone wants to build a refinery next to the Indian casinos, they have to go to KDHE.The rest of the US is in the same boat. Unless you propose to build on tribal land (and there is one refinery currently proposed to begin construction on tribal land in ND.) you have to submit a permit application to the state you want to construct in.As to EPA mandated shut downs? Again, hogwash. Small and middle sized refineries closed down because they could not operate economically given the price of refined product and the cost of crude at the time. Those small refineries still don't reopen because it is -still- uneconomic to reopen. 20+ years of neglect would have to be repaired before you could even begin to discuss expansion to a profitacble size facility and the required new units to make it so. Many of these little plants were straight run units when they shut down and lacked the cat cracking, reforming, coking, and impurity removal process units you need in a modern refinery to efficiently produce gas.And if we build a refinery today, so what? Oil is still $120 a barrel. Refining $120 a barrel gas costs, oh, just enough that the US average is still $3.90 -after- demand has gone down do to costs. So unless your new, fancy, dreamed of refinery capacity has a sexy new way of refining such that is can make profitable gas and sell it for less than $3.90, your arguement is pissing into the wind. But hey, its soooo much easier to throw around unfounded accusations than it is to educate yourself on an issue. I love these ignoramiouses that seem to think that more drilled crude or more refining capacity is going to magically bring back even $2.50 gas.Sorry people, China and India say differently. They want the American dream too, and thanks to offshoring jobs and manufacturing, they don't even have to jump the borders illegially to get it. The only way that the US is going to do jack squat about transportation costs is to fundamenatlly change the way we look at energy usage.

cato_the_elder 6 years, 4 months ago

Max1, who says that I have to agree with every position that Senator McCain has ever taken? Do you agree with every position that Senator Obama has ever taken? Or, after the Senator's major flip-flop on offshore drilling, are you now voting for Ralph Nader? Or, perhaps, is even Mr. Nader not radically left enough for you? Or do you even vote?

cato_the_elder 6 years, 4 months ago

Max1, your 9:18 response was exactly what I thought you'd say. And, by the way, I'm not at all "senile" (your word from an earlier post), and chances are that I'm in significantly better physical shape than you are.

scott3460 6 years, 4 months ago

Thank you Democrats, Obama and McCain for the lowering of oil prices (despite bush & cheney's best efforts.) Threats of regulation of oil speculators and the very real talk of a new approach and path toward energy independence has resulted in lowering prices. It is a combination of a number of other things too, such as bush's finally realizing that negotiation with an enemy such as Iran is not the wrong approach (remember he snuck this in right before Obama's huge tour of the Middle East and Europe,) a very real threat that the oil reserve may finally be tapped, American's reducing our consumption significantly (by inflating those tires and tuning up those cars) and the dumb luck of few hurricanes. So, thanks to all, now let's get to work on finding the right combination of resources that will get us quickly to independence.

Brent Garner 6 years, 4 months ago

The point of my letter to the editor is that there is, as in so many things that the government oversees, multitudinal layers of rules and regulations which make it difficult if not impossible to get many things done. One poster points out, accurately, that we need more refineries. This is true and the reason we don't have more refineries is a combination of corporate decisions to raise profit margins at refineries combined with government regulations combined with legal actions taken by environmental groups. All of these combine to cause the consumer to get gouged. The same is true for oil exploration and, more importantly, oil development in the US and its off shore areas. The envrionmentalists, rightly, are concerned about preserving the environment. The oil companies want to preserve profits. The govenment's system of regulating all of this is such a hodgepodge that it takes an army of lawyers to try to wade through things. Then there are the seeminly endless litigations that always ensue. The result is that special interest groups on all sides of this issue, adamantly and singly pursuing their own focused agenda, unwittingly or wittingly combine to wreck havoc on the consumer. I am strongly suggesting that this Byzantine system be reformed. I do not see why it cannot be changed and still make everyone more or less happy. But, until it is, I promise you, the net effect will be an ever increasing burden on the consumer, who ultimately pays the cost of this unwieldy system we live with.

Richard Heckler 6 years, 4 months ago

Maybe Chevron could not drill due to a ban on drilling in environmentally sensitive areas supported by GW and Jeb while Jeb lived in Florida?McCain campaign is lying about control gasoline prices:so what's new?All of a sudden there is an endless supply of oil in ANWR:.bogus. Why then is the USA oil cartel trying to take control of mideast oil after they were booted out about 40 years ago?With 69,000,000 acres in the USA designated for drilling why are they not drilling?Once again consumers drive the price of all goods based are their willingness to pay what corporate USA decides what the market will bear.Since when can politicians decide the price of anything?Doesn't special interest funding of elections add to the cost of goods? It is after all an expense.Consumers/voters need to worry more about how campaigns are financed!Once people wise up and revolt against special interest funding voters will see a dramatic change in government.Until then McCain commercials are lying about Obama exactly how Bush lied about Kerry and McCain in previous presidential campaigns.Neither candidate can control the price of oil or gasoline!!!! It's up to consumers. Stop buying so much gasoline and find other practical means of getting around for shopping and socializing. Be Smart!Vote Obama! Vote Obama! Vote Obama!

Alison Carter 6 years, 4 months ago

I like to read bkgarner's thoughtful, nearly nonpartisan writing on this subject matter. Congress, the press and the public continue to parrot one another's misleading sound bites. Oil and other economic issues are difficult subjects to understand, write about and read. Right now it seems easier to bash one another than encourage a bipartisan discussion and development of policy.

average 6 years, 4 months ago

cato_the_elder:Seeing the same thing two ways is obviously going to be subjective.My read is that Obama is seeking to use drilling options as bargaining chips to get other energy things he wants (investment in alternative energy, fuel efficiency standards, rebates, transit, etc). Things McCain, when he was chairman of the Commerce/Transportation Committee, did everything he could to prevent. The GOP is playing this as a problem-solver. It isn't. Drilling the last little bits extends the happy-motoring eternal-growth party for a couple more years. It doesn't help the inevitable hangover.McCain isn't seeking legislative bargaining to get something done. Hell, McCain hasn't been to the Senate since March.

JHOK32 6 years, 4 months ago

We need a HUGE change. Bush & his big oil buddies have been financially raping this country. Exxon-Mobil posted the highest profits in U.S. history - $11 Billion dollars that WE are paying for, not to mention Bush's $ 500 Billion dollar deficit he is leaving -that WE are paying for. Not to mention his $ 560 Billion dollar war to profit big oil that WE are paying for. Wake up America. We are begging for change! At least Obama will return $1000 per MIDDLE class family to us working stiffs that big oil has robbed from us. Maybe we can get back a slivver of the $ 25 Million dollars that Ex-Mobil's CEO got last year

average 6 years, 4 months ago

Cato: The most optimistic estimate I can find for ANWR "technically recoverable oil" is 16 billion barrels. Estimates for actual recovery are at about 4 billion. The US consumes over 20 billion barrels a day (and the economy isn't happy unless that's growing by at least 1.5% per year). 22 years??? Try 1 to 3.Now, we would be getting oil for at least 22 years, yes. The estimate for max flow rate from ANWR oil will be 500k barrels per day. Or, half what we import from Mexico today 1.2 mbpd. By the way, Mexico (Pemex) is predicted to export basically no oil at all within ten years. They're down 15% this year over last year alone.

texburgh 6 years, 4 months ago

All of this drilling debate is nonsense. We can approve offshore drilling or ANWR drilling tomorrow and it would be years before there would be any impact on oil prices - if there would be any impact at all! We have these prices today because of the foolish and failed policies of Bush/Cheney/Halliburton. They started an unnecessary and foolish war in Iraq by lying to the American public and congress. They certainly believed they would end up controlling Iraqi oil. Instead they have put the US military in the middle of a civil war/quagmire, seriously disrupted Iraqi oil output, spent our nation to the brink of bankruptcy, and ticked off every middle east oil producing nation. Oil prices are where they are because our president is a fool guided by fools. Add to this repeatedly backing down on fuel consumption standards for vehicles so American car companies produce Hummers and Suburbans and other gas guzzling vehicles while ignoring new technoligies that would reduce our dependence on oil. Ever hear of supply and demand? Even with new drilling allowed, the supply will not meet our demand in the near term. It's long past time for the US to stop whining about oil and shake our addiction. It's long past time to enforce fuel economy standards. It's long past time to invest heavily in alternative energy sources and alternatives to the internal combustion engine.When we keep doing the same thing, why do we think we'll get different results? Mass transit, alternative fuels, hybrid and electric engines, the reduction of suburban and exurban sprawl will do far more to impact oil prices than more drilling. It's too bad that so many of us have been duped into believing that offshore or ANWR drilling is the great panacea.

chet_larock 6 years, 4 months ago

"False. The prospect of increased supply will move many speculators out of the Oil Markets. It already has, Oil has fallen about 15 bucks last month."Actually, that would be the prospect of decreased demand.

texburgh 6 years, 4 months ago

Screedposter responds to my earlier post:"'Mass transit, alternative fuels, hybrid and electric engines, the reduction of suburban and exurban sprawl will do far more to impact oil prices than more drilling.'""Oh, yeah, that's much quicker."Actually it is. With the exception of reducing sprawl, most of these things already exist. Granted it takes investment to get them going but the policies of the Bush administration have decreased the incentives for private industry to make those investments (with no stick to force automakers to create alternative/hybird vehicles, the American companies sat on their hands, created the Hummer, and let the Japanese leap frog ahead of them in the area of hybrids.) Now the automakers are reeling from losses and frantically scrambling to make up lost ground.Mass transit is simply an investment. Local, state, and federal governments could have made all the difference with investments in mass transit. Instead, they assured people that the supply of gasoline was plentiful, cheap, and secure. And the American people, following the lead of our government, have failed to support mass transit investments. Once again we let the other developed nations leap frog ahead of us while we encouraged the individual use of the automobile in support of real estate developers, oil companies, and the American auto industry. Now that we have squandered our national wealth trying to secure oil fields for the president's friends, we have nothing to invest in real long term solutions. More drilling will simply give us a blip of relief some years in the future. And not a bit of help today. As long as we continue to ignore alternative sources of energy and continue to demand more and more oil, more drilling won't solve the problem.

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