oil and natural gas – Page 9

What’s overlooked in the top story

Today it was announced that the Gulf oil spill, better known around these parts as the Deepwater Horizon disaster, was voted the top news story of 2010 in an annual AP poll of editors and news directors.

But there’s an overlooked element of the story that may last longer than the effects of the light sweet crude which spewed from the ruins of a wellhead (and has mainly either dissipated in the seawater or been removed as tar balls onshore.)

It was the perfect excuse for the Obama Administration to place a lengthy ban on giving out new permits for offshore drilling and then rescind the plans for new drilling leases in offshore waters. In turn, that’s costing our economy thousands of jobs, as Jack Gerard of API points out:

“The oil and natural gas industry is a reliable vehicle for growing the economy and creating good-paying jobs. This decision (to cancel new offshore leases) shuts the door on new development off our nation’s coasts and effectively ensures that new American jobs will not be realized. It will stifle investment, deny billions in revenue for critical government services and increase our dependence on foreign energy sources.

“The oil and natural gas industry is committed to safe and environmentally responsible operations, and both the industry and regulators have added new safeguards to ensure such operations. This reversal on new lease sales off America’s coasts comes on top of a de facto moratorium, which has all but stopped new drilling in the Gulf of Mexico.”

Obviously the story focused on the economic damage to the Gulf seafood industry. Indeed, it was a very tough blow to their finances but for many assisting BP or filing claims for damages with them, they were made as whole as possible. Yet taking away the livelihoods of thousands of oil company workers didn’t seem to be nearly as high on the priority list, and little attention was paid to their demands when they had their own “Rally for Economic Survival” back in July.

Yet where the energy industry is allowed to do its job, there are jobs being created. An oil boom in, of all places, North Dakota has led them to the lowest unemployment rate in the nation (3.8% in November) and the state is doing its best to encourage the Williston Basin boom. And private industry is following suit – see how this works?

On the other hand, so-called ‘green’ jobs tend to be one-time production jobs for the components and limited-duration construction jobs for installations. Once you set a windmill or solar panel, it’s not going to create any new jobs.

It seems to me that the government is quite happy to create or save jobs in the pencil-pushing field, but when it comes to promoting employment by making stuff and extracting natural resources within our borders they seem to fall short (even if they have the prospect of being their precious union jobs.) We’ve lost something around 8 million jobs since the employment peak a couple years back, and while the energy industry might not be able to bring them all back we certainly can make a dent in the number.

That is the story which needs to be reported. Spread the word.

Another falls for the ‘green energy’ scam

And to think, if I didn’t have Martin O’Malley as a Facebook friend I wouldn’t have noticed this. We’ll see how long that lasts before I’m defriended! Then again, just because I didn’t vote for him either time doesn’t mean I shouldn’t have a say in state affairs, particularly when a dose of common sense is needed.

It all stems from an article by Erin Cunningham in the Gazette detailing a Montgomery County resolution on wind turbines. The Montgomery County Council (all Democrats, of course) unanimously approved a measure calling on the Maryland General Assembly to “pass legislation requiring the state’s Public Service Commission to direct public utilities to enter into long-term contracts for offshore wind power.”

Gee, a little more government interference in business – just what the state needs! </sarc>

Needless to say, Governor O’Malley was thrilled about the news and asked a question on his Facebook page:

I believe that wind power and other alternative energy sources will help our state move forward in a sustainable way. Do you think it is important that we invest in clean, green sources of energy?

After reading about 50 or so mostly deluded sycophants and hangers-on, it was time to set them straight as I often like to do.

Sure, the wind blows a nice, steady speed all the time and the sun comes out 12 hours each and every day. Wait, you’re telling me that’s not true?

There’s a reason we depend on coal and natural gas to create the electricity we need – they are both RELIABLE sources. And, contrary to popular belief created by those with an agenda in both the press and in government, both are in plentiful supply. In fact, there’s a nice supply of natural gas locked under the hills of far western Maryland.

Instead, your administration would rather shake down energy producers and distributors with a phony carbon-trading scheme (RGGI) that simply serves as a device for wealth redistribution while propping up the ‘green’ energy industries with a subsidy to artificially make these other sources come to a competitive price point.

In a time where our budget needs to be prioritized and the burden on job producers needs to be lightened, these so-called ‘investments’ probably aren’t the best use of tax dollars. If the person from Dorchester County thinks wind power is that important and would be such a good investment they should be happy to pony up $40,000 and not rely on the state for a handout.

It’s also worthy to note that Cunningham’s article says Montgomery County gets 25 percent of its electricity from wind power. Perhaps someone should compare price and verify if that’s a prudent use of tax dollars?

I have little objection to the state making an effort to assist local property owners who wish to use alternative sources of energy (although I wouldn’t consider it a funding priority in these lean budgetary times) but I recall one expert in the field who would prefer to streamline the process and invested his own funding before getting a dime back from the state of Maryland. The state is in the position to make it easier and less expensive if they so desire.

My larger objection comes from the state mandating how the energy required to produce electricity needs to be harnessed. There are two good reasons we rely on burning coal and natural gas, as I alluded to in my comment: they are relatively inexpensive, quite efficient, and sources are fairly reliable. (They would be moreso if Washington scrapped its wrongheaded approach to energy exploration.)

Seems to me the usage of windmills as power providers in rural areas ended over a half-century ago once the government decided to force utilities to bring electricity to sparsely populated areas and farmers found being wired into the grid to be much a more reliable means of power – so the government getting its nose under the camel’s tent is nothing new! Where were the environmentalists objecting then?

I guess everything old is new again. In the meantime, how about terminating the program of wealth transfer and allowing instead utilities to invest in stupid stuff like improving infrastructure and building new power plants? Now THAT would be moving Maryland forward!

Kratovil pitch sullies Harris in Big Oil

Obviously the dirty tactics used by Martin O’Malley to smear Bob Ehrlich as a friend of Big Oil have a fan in Congressman Frank Kratovil. I recently received a fundraising pitch from the Democrat called “Apologize to BP?”

The e-mail screams that “Harris’s friends in Congress have gone so far as to apologize to BP for our efforts to hold the company accountable,” referring to Congressman Joe Barton of Texas – who later rescinded his “shakedown” remarks. Obviously we have no idea whether Harris considers Barton a friend, let alone whether they have even met.

(continued on my Examiner.com page…)

O’Malley slinging the oily mud

Perhaps I don’t listen to the correct radio stations since I haven’t heard the spot in question, but Martin O’Malley got the ball rolling on nasty campaigning by producing a radio commercial tying Bob Ehrlich to Big Oil. (Maybe that ball O’Malley started rolling is a tar ball.)

Obviously O’Malley is playing to both his radical environmental base and upon the fears of a Deepwater Horizon-style catastrophe fouling the waters of Chesapeake Bay.

(continued on my Examiner.com page…)

Cleaning up politically

It goes without saying that thousands of people who depend on Gulf tourism or aquaculture have suffered an economic impact in the wake of the Deepwater Horizon disaster. They may suffer for months or years due to the loss of income during this period when these industries would normally be producing.

But there is another group which has been thrown out of work at a time when they, too, would normally be producing – those who ply their trade in helping to provide America’s energy needs. As the group Freedom Action notes:

Freedom Action calls on President Obama to immediately lift the damaging, counterproductive ban on offshore drilling in the Gulf of Mexico. The six-month ban, which has closed down dozens of safe, productive operations, is doing nothing to help clean up the spill…but is keeping thousands of oil and gas workers from making a living and having a far larger economic impact throughout the region.

“In a knee-jerk move with perverse consequences, the President’s total ban on drilling in the Gulf has created further hardship for communities already reeling from the impact of the BP spill,” said Myron Ebell, Director of Freedom Action. “Now in addition to the tourism and fishing sectors – which together account for about 5% of Louisiana’s economy – the oil and gas sector – which accounts for 16% – is also being knocked down at exactly a time when its high-paying jobs could be helping to support families in the region.”

Louisiana’s Gov. Bobby Jindal and Sen. Mary Landrieu have already spoken out strongly against the White House’s blanket ban, urging the President to allow offshore platforms to re-open and begin providing energy again to the American people. Sen. Landrieu has even proposed a list of several possible alternatives to the ban, including increased safety inspections, while at the same time pointing out that continuing with the current policy could cost as many as 38,000 jobs.

“The empathy and concern from around the country for the affected residents of the Gulf Coast has been tremendous, and it is understandable that Americans would want to see a policy that protects the area from further harm,” said Ebell. “But keeping locals from making a living and sabotaging their economic recovery so that a handful of environmentalists and Washington politicians can congratulate each other on their concern for wildlife is an arrogant and immoral policy. President Obama needs to remove the drilling ban now.”

Allow me to restate one factoid mentioned in the Freedom Action release for you. We see the pictures and interviews of shrimpers idled by the oil spill, and yes they do contribute to the economy of the state of Louisiana. But the energy industry contributes over three times as much and, as I have pointed out, had a long unblemished safety record even through some of the nastiest Mother Nature could throw at them – including Hurricane Katrina.

Even thousands of miles away, our Governor O’Malley and Senator Cardin smirk and gladly dismiss the prospect of offshore oil drilling off Maryland’s coast, regardless of the number of jobs which could be created. To be honest, it’s only a guess to this point whether there’s enough oil and natural gas offshore this far north to be commercially viable for collection, and it would take exploratory wells just to find out.

Instead, O’Malley believes that offshore wind power is the way to go despite the effects that could have on marine life and ocean currents, not to mention the precious ocean view off Ocean City.

To me, it’s shortsighted to dismiss out of hand energy sources proven to be successful at powering our nation’s prosperity. The Gulf shores will eventually be cleaned up just as Alaska’s Prince William Sound has been after the Exxon Valdez accident, hopefully without completely bankrupting British Petroleum (a company which obviously has capping the well as its best interest too since otherwise millions of dollars’ worth of oil gushes forth on a daily basis.)

The answer is not in banning deepwater offshore drilling, but encouraging energy production in shallower waters and in areas where reserves are proven to be but overzealous environmentalism prohibits production. We have plenty of oil within our borders – what we need are the stones (and the courts) to tell the environmentalist wackos to go pound sand.

By the way, I’ve caught wind of a local effort to help out with the cleanup – a number of area musicians are putting together plans for a benefit concert to raise funds for the cleanup. Obviously I’ll see what I can find out and pass it along.

Friday night videos – episode 36

Kicking back and relaxing on a warm summer night – take your time with these videos. Perhaps you’re like me and do a lot of your web surfing outside.

You know, that Joe Sestak job offer scandal is still percolating around Washington, casting a shadow on the Obama Administration.

I know the Center for Individual Freedom generally exceeds its “Freedom Minute” but it’s worth watching.

Something that probably won’t be worth watching is an upcoming Comedy Central show called “JC.” It’s a show I wrote about for Patriot Post and begs the question – is America ready for more Christian-bashing out of a network which was afraid to portray the prophet Muhammad? (Probably NSFW if you’re there.)

Yeah, that was pretty disgusting. Speaking of disgusting, let’s have the reaction of folks on the left to this guy becoming violent at a Tea Party protest in North Carolina.

Oh, I forgot, it’s the Tea Partiers who are violent. That might be the next thing Obama blames Bush for, and the background music is priceless. (I actually used the Smokin’ Gunnz version of the song a few weeks back.)

Yeah, I got that from Eric Cantor’s office. But it was good. On a more serious note (and since Obama referred to the Deepwater Horizon spill) the next two videos feature American Petroleum Institute chief economist Dr. John Felmy discussing the effects of the Gulf drilling moratorium.

Of course, some of these jobs could’ve gone to newly minted graduates – ALG talked to some recent ones about the youth job situation and 26.4% unemployment.

As always, let’s close with a song. Local artist Bryan Russo has a jazzy flavor on this song as he takes a trip to the ‘Smokey Cafe.’ Don’t think I’ve ever embedded a Vimeo before.

With that, another episode of FNV is a wrap.

The results are in…

You may recall that back on Wednesday I took Fedzilla to task for soliciting additional public comment on whether to build barrier islands off Louisiana to mitigate the damage done by the Deepwater Horizon disaster.

In the 24 hour period they received only about 700 comments, many anonymously. I’ll grant I’m no scientist or geologist but the point I made in my comment (see page 166 here) was that the process is reversible. Given enough time and inattention, the islands would likely disappear on their own.

Look, every few years we pay millions to replenish the beaches in Ocean City and the Delaware resorts because the sand eventually leaches out to sea, so why not be expedient and try this solution? Barrier islands need not be permanent, and the failure of multiple efforts along the bottom of the Gulf to stem the tide means we’re learning about all this by trial and error anyway.

One last thing. Those on the left who want to punish BP and the rig operators for their transgressions against Gaia need to consider that containing and cleaning up this gusher is not just costing BP and the taxpayers directly in terms of the actual spill, but that thousands of barrels of oil won’t be sold by BP because they’re instead leaking into the Gulf of Mexico. At a conservative estimate of 12,000 barrels of oil per day multiplied by the going price (about $75 a barrel) each day the well remains uncapped costs BP nearly a million dollars – obviously the figure is much more if the 100,000 barrel a day leakage number bandied about at the high end of estimates is accurate.

Moreover, their market capitalization has taken about a 1/3 hit as stock which was trading above $60 per share before the incident now lies south of $40 per share. Add to that the implied threat from Washington – “we will keep our boot on the throat” of BP – and the question may become one of BP’s continuing to function as a business.

Obviously there’s a lot of ecological damage, but the economic damage may eventually be more widespread. Making oil into the villain and giving in to the desire for punitive measures may eventually cost us over a million jobs, and no one else is making the break from oil exploration. Perhaps they know something we don’t?

Ambulance chasers of the deep

You knew it had to come, and among the junk e-mail I got this afternoon was a link to this gem of a site. I can hardly wait for the obnoxious TV commercials on the scale of the law firms constantly harping for victims of mesothelioma.

Thousands of businesses, property owners and cleanup workers are at risk of devastating financial harm and physical injury. These include those involved in the Commercial Fishing, Tourism, Hotel and Vacation, Condominium/Time Share, Fish Processing, Cannery Operating, Seafood Restaurant Industries.

Talk about casting a wide net! Wait until they find a thin slick off Ocean City (which may happen but well offshore.)

Obviously trial lawyers are free to drum up business any way they can, and there are a number of people who should be compensated for their loss. But it just seems so tawdry to have these people believe they can win life’s legal lottery without informing them up front that any settlement will likely be years in the making and a large share of the proceeds won’t be fattening the coffers of those who were afflicted but instead benefit the trial lawyers. (I doubt they’re taking these cases on a pro bono basis.)

Perhaps a dose of “loser pays” would help to address this problem? These 2% of bad apples are ruining the other 98% of the legal system which works on a regular basis to address legitimate legal issues.

Congress vs. the oil industry

It’s beyond question that the oil industry is down on its luck right now, and the black eye received from the Deepwater Horizon accident in the Gulf of Mexico is a shiner which will stay on its public face for quite awhile. And while radio host Stephanie Miller claimed the Gulf oil spill as proof that “God is a Democrat,” the Democrats who sit among us mere mortals in Congress are taking direct aim at what they sneeringly call “Big Oil” with two particularly punitive measures.

With Democrats’ first try at cap-and-trade (better known as Waxman-Markey) stalling in the Senate after a contentious House vote, last week Senators John Kerry and Joe Lieberman brought forth their version of energy legislation. Originally sponsorship crossed party lines when Senator Lindsey Graham, a Republican, agreed to back the bill, but Graham withdrew his support when Senate leader Harry Reid decided to press for passage of immigration reform rather than this measure.

That’s not to say Graham would be staunchly against the proposal. But the sticking point he sees is that, “problems created by the historic oil spill in the Gulf…have made it extremely difficult for transformational legislation in the area of energy and climate to garner bipartisan support at this time.” Predictably, Democrats representing waterfront states like Florida, New Jersey, and Maryland are already coming out dead set against the additional oil exploration included in Kerry-Lieberman, a tradeoff intended to get Republicans to support a bill which would levy taxes on greenhouse gas emissions and, as studies have concluded, be a net job loser.

Moreover, Kerry-Lieberman gives a rare nod to states’ rights from the liberal side, allowing affected states more liberty to curtail or cease oil exploration off their shores. It’s a complete turnaround in one month’s time – only a few weeks ago the oil industry was cautiously optimistic about the Obama Administration allowing exploration in certain leaseholds to go ahead beginning in 2012. Needless to say, those ambitious plans are on hold after White House adviser David Axelrod warned, “no additional drilling has been authorized and none will until we find out what has happened (with the Deepwater Horizon).”

A second Congressional attack on the energy industry in the accident’s aftermath comes from their bid to bolster a little-known federal fund called the Oil Spill Liability Trust Fund (OSLTF). Created by Congress in 1986, the OSTLF lay dormant until 1990, when in the wake of the Exxon Valdez tanker accident a per barrel tax was levied on petroleum produced or imported into the United States. Currently oil companies pay eight cents per barrel toward this fund. In addition, there is a limitation on liability of $75 million per incident for economic damages – companies already have to shoulder the actual cleanup costs.

But a new proposal would devastate small- and mid-size oil companies, forcing them out of business by increasing the prospective liability to $10 billion. Naturally, the OSTLF would be increased as well through the possible fourfold increase of the per-barrel tax to 32 cents, but the additional revenue may not necessarily go to the OSTLF – proceeds could be spent on other projects Congress deems worthy of funding.

These are just two of the more egregious examples of how Congress wants to punish Big Oil for the sin of having a tragic accident occur on an offshore platform. The federal government has done its part to assist British Petroleum in coping with the accident and its aftermath, so there’s no need for Congress to exert another pound of flesh from an apologetic industry.

Michael Swartz used to practice architecture but now is a Maryland-based freelance writer and blogger whose work can be found in a number of outlets, including Liberty Features Syndicate. This piece was made available to LFS clients on May 20.

The industry side

As you likely know, in the wake of the Deepwater Horizon tragedy President Obama placed a halt on proposed oil exploration off the Virginia coast, among other places. While some shortsighted elected officials in Washington cheered the news, the actual producers of society were not as pleased. One example is Jack Gerard, President and CEO of the American Petroleum Institute:

“We understand the concerns many people have about offshore drilling in the wake of this incident, and the frustration many feel toward oil companies. But this issue is much larger than the oil industry, since access to affordable energy impacts every sector of our economy, every state in our nation and every American family. Further, thousands of products – from toothpaste to iPods, cell phones to computers, and vitamins to vegetables – use oil and natural gas as a feedstock in the manufacturing process.

An extended moratorium on safely producing our oil and natural gas resources from the Gulf of Mexico would create a moratorium on economic growth and job creation – especially in the Gulf States whose people and economies have already been most affected by the oil spill – by undercutting our nation’s access to affordable, reliable, domestic sources of oil and natural gas.

Deepwater development is a key component of domestic energy security. In 2007, deepwater provided 70 percent of the oil and 36 percent of the natural gas from overall federal Gulf of Mexico production. The 20 most prolific producing blocks in the Gulf are located in deepwater.

Additional moves to curtail domestic production by postponing exploration and development off the coasts of Alaska and Virginia, as well as areas in the Gulf, have the potential to significantly erode our energy and economic security.

Decisions that impact the industry’s ability to produce the oil and natural gas this country needs in every sector of our economy and in every household in this country will affect the lives of every citizen, every day. We will encourage the administration and Congress to reconsider any decisions that would place previously available lease areas off limits, and to ensure that there is a process and a timeline for revisiting decisions that impact our energy and economic future.” (All emphasis in original.)

There’s no question that what happened to the Deepwater Horizon was unprecedented (not to mention tragic, as the 11 people who perished in the explosion seem to have become but collateral damage to the overall cause of killing the energy industry) and will be catastrophic for some time to the Gulf region. But on balance, the region has been helped more than hurt by the oil and natural gas industry for decades, and thousands of rigs have and continue to work safely despite the onset of hurricanes and shutdowns for routine maintenance for years. There’s 3,500 rigs out there in the Gulf.

In my view, this ban is akin to not rebuilding the city of Salisbury after the Great Fire of 1886 or abandoning the space program after the Challenger disaster. In both instances, we took a short pause to learn from the mistakes but redoubled our efforts for improvement. We didn’t simply throw in the towel and persuade ourselves that it can’t be done.

Yet, because the environmentalists want to preserve their precious ocean view and push drilling 50 miles or more offshore, the vast majority of the areas they allow oil exploration within will have these same issues of deepwater drilling. Two-thirds of the area off Virginia where Lease Sale 220 was to occur has ocean depths of 5,000 feet or more, similar to the Deepwater Horizon’s wellhead. (But they don’t complain as much about windmills which would be much closer to shore and tower close to 150 feet over the waterline as well – never mind their real threat to bird life.)

If President Obama and his minions use the Deepwater Horizon incident for a complete stoppage of oil exploration, not only would gasoline suddenly become more expensive but thousands of workers would be placed on the unemployment line. There’s no way we have nearly enough “green” jobs online for these specialized workers to take, but no one feels sorry for those future unemployed – especially in comparison to the sympathy being drummed up for the watermen along the Gulf coast. Certainly this is a tough row to hoe for those who make their living harvesting shrimp, but in many respects they are having the sort of year a farmer does when the skies don’t open up and pour rain on the crops.

One has to wonder what the true motivation is behind the reaction to the Deepwater Horizon disaster, and ponder what other leaders would do in such a situation. If offshore drilling is such a bad deal, then perhaps it’s time to look at other methods of getting oil and natural gas like taking advantage of oil shale out west or even the natural gas from the nearby Marcellus formation which crosses the western edge of our very state. Streamline the processes for getting that done instead of putting up roadblocks.

Perhaps the most bitter irony about a Gulf drilling moratorium (should one occur) is that it won’t stop other players like Mexico or Cuba from exploring in their waters. In fact, they may exploit our hesitation to increase their efforts and they’re truly not going to care about the risk of environmental damage to nearly the extent we take care to prevent it.

Until April 20, the American oil industry in the Gulf had a stellar record of safety. Let’s allow them to get back on the horse and do what’s best for our economy.

MDGOP overreaches on oil spill criticism

Playing on the emotion of the Gulf oil spill, the Maryland Republican Party blasted Governor O’Malley for raiding money from the state’s Oil Disaster Clean Up Fund. Out of $4.8 million in the ODCU fund, O’Malley sought to move $2.2 million before the General Assembly cut the transfer to an even $1 million.

In reading the release, one may think of a primordial black ooze seeping onto the beaches of Assateague and Ocean City when in reality we may see a few stray tar balls, according to a University of Maryland researcher.

Certainly it’s acceptable for the state to have money on hand for such a cleanup, particularly when nasty spills have occurred in the fairly recent past.

(continued on my Examiner.com page…)

Mention for the morning

Why not start out the day with good news on the blogging front?

My friend Jane Van Ryan was doing a roundup of reactions to the Deepwater Horizon disaster on her Energy Tomorrow blog and kindly cited my blog post/Liberty Features op-ed in the story. She’s probably going to be pretty pleased with the op-ed I wrote yesterday for LFS as well, since I again reference the Deepwater Horizon tragedy and the punitive measures Congress is considering for the oil industry. Why not stick with a hot topic?

You know, it’s funny that once in awhile when I bring up the subject of oil and write about my stance of “drill baby drill” I’m called a shill for Big Oil. Trust me, I pay the same amount for gasoline as everyone else around here – no sweetheart deals for me. And as far as I know, I have no relatives working in the energy industry who benefit either. (I used to own Exxon/Mobil shares but those had to go awhile back, as did my Sun Oil stock even earlier. There’s my nod to full disclosure.)

Maybe it’s my logical mind that sees the idea of sticking with the tried and true technology we’ve used for a century (yet is still evolving), an energy source which is quite versatile and can both move us around and heat our homes. Yes, I’m quite aware that there’s a finite supply but I’m also aware that solar panels are useless if the sun doesn’t shine and windmills need just the right wind speed to work. (Oh, and they aren’t too gentle with the birds which have the misfortune of flying into them either.) I always have to ask – if alternative energy is so great, why do we have to legislate our way to a market share for it? Must be because these options can’t make it on their own.

So thanks to Jane for her mention – it’s nice to know I’m appreciated. Don’t worry, I’ll keep up my end of the battle.