Sunday, June 22, 2008

Obama's Policy on Drilling: No We Can't.

Rather than put words in his mouth I'll let him speak for himself:

He mentioned several things that I want to discuss.

1) Sen. Obama would tax oil company's profits to fund some sort of tax break and/or rebate for taxpayers. If this actually takes place oil companies will react just as any other business would. They will either manage their production in order to minimize reported profits (which they do now), INCREASE their prices or (most likely) a combination of both in order to offset the increased (and altogether artificial) tax burden. This means you and I will pay MORE at the pump, NOT LESS! What about Sen. Obama's tax break you say? Given the efficiency of government and the laws of economics we just discussed, I'd guess that in the event you actually receive $1,000.00 in tax relief, you will have spent $2,500.00 or more in taxes and/or fuel charges to get it.

2) It would take 30 years to develop new domestic oil fields. Sen. Obama must have gotten his notes mixed up because this is patently untrue. It may take 30 years to move to an alternative source of energy, but you can't tell me it will take 30 years to keep using what we already have! Five years ago, the Independence Hub gas platform did not exist in the Gulf of Mexico. As of today, it produces about 5% of the Nation's natural gas supply. Oil companies are also producing millions of gallons of oil off the West Coast of Africa. This area has virtually no infrastructure and there are ongoing civil wars in many regions. These undeveloped countries also demand that a large percentage of the labor used to develop these oilfields be performed using local laborers. In most cases local laborers are unskilled and must be trained, adding to the overall expense. In spite of all this, West Africa has developed very rapidly (i.e. quicker than 30 years) and contributes significantly to the world oil supply. We could develop fields along the US coastline much more quickly and efficiently. 20 to 30 years to develop an oil field is an absolutely ridiculous notion.

3) Drilling and production operations would ruin the coastline and the environment. While it is undeniable that there will be risks of oil spills in any location where drilling and production activities occur, these spills (at least in the gulf of Mexico) have historically been relatively small. A leak of 100 barrels a day would be large for this region. In my opinion, the net effect of installing large offshore production platforms has been environmentally positive when you consider the habitat that these structures provide for an incredibly variety of sea life. Ask any fisherman or offshore oilfield worker and they will tell you that these structures hold and produce fish abundantly. I live in Louisiana and I can tell you with authority that the threat to the environment here is not oil spills. It is the unchecked coastal erosion that is washing away 25 to 35 square miles of our wetlands every year. If Sen. Obama wants to help out, he can start by keeping our wetlands from washing away into the ocean, not by waging war on the companies which provide the very energy to which this country has become addicted.

4) We must focus on alternative energy sources. I wanted to mention this point because it is one of the few points on which I must agree with Sen. Obama. At the risk of having my "Evil Oil" membership card revoked, we DO need to develop alternative energy sources which are renewable, cleaner and more efficient. I just don't think that we should focus on these sources exclusively, to the detriment of existing sources. Oil is readily available and perhaps more importantly, the infrastructure to use it already exists. Moving to another energy source will be a very gradual shift, not the overnight change that Sen. Obama seems to think it will be.

5) If we were to explore and produce more oil domestically, the additional supply would have NO effect on oil prices. This flies in the face of basic economics. While the net effect of the additional supply on the overall price of oil is certainly a nebulous question, there would definitely be SOME effect and the effect would certainly be positive. The price of oil will NEVER come down through a policy of taxing oil companies and NOT drilling for more oil.

In short, refusing to drill for oil within our own borders while putting ALL your hopes in unproven (albeit cleaner) energy technologies is a bit like refusing to eat the leftovers in the fridge because you have a cow in your back yard which will someday make great steaks. It makes more sense to do both, does it not?

1 comment:

James H said...

I totally agree with tll this post. Why can't we drill and look for atlernative enrgy at the same time. I have no idea why people are using an either /or apporach