I wasn’t familiar with the ads in question, probably because I don’t hang out in the DC area. But writing in the openmarket.org blog, Sam Kazman of the Competitive Enterprise Institute thinks that Vladimir Putin should be Chevron’s Man of the Year because Russia recently cut off the natural gas pipelines to Europe which run through the Ukraine over a payment dispute between Naftogaz Ukrainy and Gazprom, the two state-run gas companies serving Ukraine and Russia.
Nominally, that’s not really worth the post by itself – after all, the Russia-Ukraine dispute has simmered for a few years and Europe has shivered in prior winters when one of the host countries for these vital gas pipelines decided to teach a lesson to a country farther down the line.
One has to wonder, though, about what happens if one of our energy suppliers gets into a disagreement with us. Suppose Israel escalates their excursion into Gaza farther and flattens the Hamas forces. Would our support for Israel be again translated into an OPEC embargo? While that would only take away perhaps 1/3 to 1/2 of our total usage since Canada and Mexico are our main foreign oil suppliers, the toll on our gasoline price and supplies would be severe. Overnight we could be back at $4 a gallon – or more. That cutoff could also leave many in colder areas of the country needing to decide whether to heat or eat because their heating oil would be spiking in cost as well.
While Europe doesn’t have a great deal of choice in the matter because of the scant reserves of oil and natural gas under much of that continent, America does have options because we’re blessed with abundant supplies of both.
Unfortunately, shortsighted people who seem to care more about what scare tactics they could conjure up of oil platforms blocking the sunrise on your favorite beach or vast environmental damage killing the caribou and polar bears frolicking like they’re in a real-life holiday Coke commercial on the snowy Alaskan tundra are hampering efforts to secure our own supplies of these vital fuels. They’re doing it through a compliant Congress or via a byzantine court system which has been a weapon of choice for environmentalists to block oil exploration because of the perceived impact on wildlife.
Recently my friend Jane Van Ryan at API pointed out to me that drilling expenditures in 2007 doubled their previous record, set way back in…2006. Each new oil well cost oil companies about $4 million apiece, while natural gas wells were ever-so-slightly cheaper at $3.9 million a pop. Overall oil companies invested $220 billion into oil exploration in 2007, and I’ll stack the jobs created by that $220 billion up against those created by the $700 billion bailout scheme Congress passed last year any day of the week.
However, one item that I could not find in the information provided by API is just how much of that $4 million or so per well goes to comply with the red tape created by regulations and the lengthy court battles which may need to be won before exploration can even begin. It’s overhead OPEC sure doesn’t have to put up with. (Maybe Jane knows that number too, she seems like a pretty smart lady.)
As a return to the Kazman piece, while Chevron advertises John Q. Public stating in various ways that, “I will use less energy,” (I found the ticker of oil and gas consumption running during my site visit fairly humorous), it’s interesting to note that the company itself is using plenty of energy rebadging their local gasoline outlets with the old “Pure” moniker. While it’s refreshingly retro, they have nothing on the Sinclair dinosaur signs.
More importantly, think of the energy used in the process of seeking and securing new sources of energy and compare that with the energy burnt up in some courtroom or back office inside the Beltway attempting to hold the former process up. Which is truly the better investment and which may leave us freezing like Europeans whose natural gas supply was cut off over a payment dispute between two faroff countries?
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