Yo Dems! What Do You Want YOUR Drilling Bill To Look Like?

Now that Nancy Pelosi has aligned herself with the 70+ percent of Americans who favor offshore drilling, the debate will shift to where, how much, and under what terms.   She has now seen where the American People are headed, and is attempting to get back in front to lead.

Thus far, it has been GA Republicans – Chambliss, Isakson, Westmoreland, Price, and Gingrey – that have been at the forefront of this battle.  GA Dems have remained largely quiet.  

I have no doubt that Pelosi’s strategy is to grant the most limited drilling she can, while enacting a bill full of platitudes that will amount to promises of an America powered by magic unicorns by 2016.  It doesn’t have to be this way.

Chambliss and Isakson have already reached across the isle.  I have been told directly by one of the House Republicans that they’re open to all suggestions in order to get the drilling they are looking for. 

Democrats should quit worrying as they go to sleep at night that some oil company, somewhere, might make some money.  They will.  The government will make 4 times as much.  So instead of trying to figure out how to torture oil executives, why not quantify some things you want and get it into a good bill, that is neither Republican nor Democrat, but is just good for America?

A couple of months ago, I posted something called “The Icarus Energy Plan“, which consisted of:

1)  Drilling in all coastal areas of the US and ANWAR.  A portion of the royalties retained by the federal government shall be reserved for environmental protection and mitigation in the direct drilling area.

2)  A new imported oil tax, to shift demand preferences from “cheaper” foreign oil to favor domestic supplies.

3)  Building at least 2 new domestic refineries

4) Streamline and fast track new nuclear reactors, and allow taxpayer backed bonds to finance the construction

5) Fast track new windfarms where they are viable

6) Expand tax credits for energy efficient improvements (hybrid or diesel cars, hydrogen infrastructure, coal liquification)

7) A new tax on gasoline, starting in two years and regularly increasing thereafter, to demonstrate to consumers that “cheap” gas isn’t coming back, but to allow time for consumers to upgrade cars on their current cycle of obsolescence.

I’ve got a few other ideas, and wish to expand on a few of the above.   I’ll hold them back for now.  I want to see what ideas the Peach Pundit readers have.  Quite a few of our lawmakers have staked a claim on this issue.  It appears there will be some kind of bill.  What do you want to see in it?

22 comments

  1. John Konop says:

    Interesting article.

    WSJ-Obama Suggests Charging Oil Companies for Unused Leases

    Sen. Barack Obama said that rather than opening up more federal land to drilling, he would instead dun oil companies for the leased lands they are currently sitting on and use the proceeds to fund sustainable energy projects.

    In a town hall event outside of Las Vegas Tuesday, Obama aimed twin arrows at Big Oil and his rival, John McCain, blasting the Republican senator for recently saying he would support more offshore drilling in the U.S. Though the fruits of an expanded domestic drilling program would take years or even decades to yield extra oil output, McCain recently said that opening up federal waters to drillers would have a “psychological impact that I think would be beneficial.”

    Though McCain was clearly talking about the calming effect such a policy decision might have on oil futures markets, Obama cast the comment as an attempt to pander to voters. “In Washington-speak, that means it polls well,’’ Obama said, adding that the drilling would have little practical effect and amounted to “the same old gimmicks.’’

    Instead of opening more lands to drillers, Obama said he supported a bill in Congress that would levy a fee on oil companies that have rights to exploit federal property but don’t. Current law requires oil companies to develop a lease within 10 years or lose it. There are millions of acres of unexploited, leased lands in the federal inventory; Obama said these lands carry the potential to double U.S. oil output. “If that compels them to drill, we’ll get more oil,’’ Obama said. “If it doesn’t, the fees will go toward more investment in renewable sources of energy.’’

    Obama’s remarks were mixed in with a host of energy proposals he has pushed recently, including stepped-up investment in renewable energy research and a windfall tax. Aides said it was the first time on the political hustings that Obama has voiced support for a Senate bill that would implement the dunning procedure on fallow federal leased land.

    The bill is sponsored by Connecticut Sen. Chris Dodd and Illinois Sen. Dick Durbin.

    The Obama campaign says it calculated that 68 million acres of leased land remain untouched, compared with the 1.5 million acres that President Bush would like to see opened to exploration in the Alaska National Wildlife Refuge.

    The majority of these unexploited acres are currently inaccessible by pipeline and much of the land has dubious production value. Nationally, only about a quarter of federal leased lands are being tapped for crude or natural gas.

    http://blogs.wsj.com/washwire/2008/06/24/obama-suggests-charging-oil-companies-for-unused-leases/

  2. griftdrift says:

    “Chambliss and Isakson have already reached across the isle.”

    And have been roundly vilified by the usual right wing outlets including this site.

  3. Three Jack says:

    thanks for representing libs konop, you do a good job of being the mouthpiece for pelosi/reid policies.

    now for the other side, here is a blog post from former congressman ernest istook:

    Former Congressman Ernest Istook took time out his busy schedule to reply to a blogger’s misgivings concerning the new Democrat mantra against “Big Oil,” in particular, their criticism that the oil companies are not exploiting the vast majority of already granted oil drilling leases. Below is Mr. Istook’s reply:

    Col. Ward —

    First, thank you for your service to our country. We can never express that often enough. Your general description of the oil and gas business is on-target. And the congressional comment you cite sounds to me like it came straight out of the playbook of environmentalists who want to mislead Americans. Rep. Tim Ryan (D-OH) is not alone in the claims he makes. (And here’s a weblink to his comments)

    Evidently, talking points are being circulated encouraging a lot of Congressmen to make claims like this. Here’s another example from a floor speech by Rep. David Wu (D-OR): “WHY SHOULD WE OPEN LAND FOR DRILLING WHEN BIG OIL ISN’T EVEN DRILLING WHERE THEY HAVE LEASES?” (Mr. WU asked and was given permission to address the House for 1 minute and to revise and extend his remarks.) Mr. Wu goes on: “Madam Speaker, it is no wonder that the only Republican solution to our record high gas prices is more drilling. Who would expect anything less when two former oil executives occupy the White House? The problem is that this has been the Republican energy plan for the last 7 years. It was created in secret by Vice President CHENEY and oil executives. And it is responsible for the record high oil prices that we all face at the pump today. Republicans claim that we could lower the price at the pump if we would only approve more and more drilling leases. That is their rhetoric. Here are the facts. Oil companies do not need new areas to drill. They need to focus on areas that are already opened to them. Of the 42 million acres of Federal land currently leased by oil and gas companies, only about 12 million acres are actually being drilled to produce oil and natural gas. Madam Speaker, if the Republican claims about more drilling are correct, why aren’t they demanding Big Oil explore drilling on the 30 million acres of Federal land that are already open to them but that they refuse to explore?”

    Believe me, with oil at $130 per barrel, they would drill on those lands if it made sense to do so! No, not all oil and gas leases are “being used”, because not all of them have production-worthy quantities of oil or gas. Lots of people have property that is not being used, but government doesn’t use it as an excuse to take it away, or to forbid the owners from buying other property.

    First, a company may lease property, but never have the funds to properly explore it or drill an exploratory well. Second, after paying for further tests (such as seismic), they often decide the lease isn’t worth the high, high costs of drilling after all. Or they may hold onto the lease for years until either higher oil prices or new technology makes it feasible to drill. Third, a company may lease property but drill on another tract (which drains a “pool” that covers multiple leased tracts), so perhaps they’re counting it as “not used” if no well is sunk on that particular piece of property. Fourth, they may try to drill and be blocked by government bureaucrats, environmental lawsuits, etc.

    Finally, not all acres are alike. Some have lots of oil. Others have virtually known. Saying they’re not drilling for oil everywhere is like faulting them for not digging a gold mine on every acre.

    I’ll also check around to see if there’s a more specific comeback to that.

    Thanks for writing. –Ernest Istook

  4. John Konop says:

    Three Jack

    Unlike you I care more about my country than being a mindless talking point groupie for any party. Once again instead of dealing with the issue at hand you fall back on attacks.

    The Wall Street Journal brought up the same issue I have talk about on the site. Drilling for oil does not mean the oil company will sell the supply to lower prices. In fact the history has shown the opposite behavior from oil companies via the 65million acres that are capped.

    As I told the Job of a CEO is to make the highest ROI for shareholders. The question is simple if we grant more leases should we force oil companies to use the old and new supply? The other question is are you capable of answering a question thoughtfully or do you just fall back on mindless talking points?

  5. Three Jack says:

    i learn something new everyday. ceo’s are supposed to make a profit to satisfy shareholders. thanks konop.

    pelosi and your fellow dems are facing unhappy voters in their home districts. the gop can only hope they continue to avoid the subject right through november.

  6. John Konop says:

    Three Jack

    You Claim;

    ….with oil at $130 per barrel, they would drill on those lands if it made sense to do so……

    If Exxon is making a higher gross contribution margin why would they increase supply if it would lower their contribution margin?

    Exxon would lower prices if they felt competition from competing sources that leaves them with to much supply. The reason gas prices dropped were people are using less gas. A company will lowers prices to gain back market share. A smart company would not lower prices and increase supply to destroy their contribution margin.

  7. John Konop says:

    Three Jack

    You calling me a liberal is laughable when I was the one warning about the falling dollar and the economy years ago while you were campaigning for the largest expansion in government in America ever! Face it, mindless hacks like you are why the GOP is in trouble!

  8. Three Jack says:

    since you ignored it previously, i will post rex tillerson’s comment again which completely debunks your allegation against evil oil:

    Tillerson (Exxon CEO Rex Tillerson) also explained that Exxon’s more than $5-billion annual investment in exploration would be bigger if the company has more access to exploration opportunities. “We have very, very robust exploration programs that span the globe. We would do more if we could gain access to more areas to apply our technology, let our geoscientists go to work,” he said. “Certainly we have the financial capacity to do more. Much of what’s driving the pace of what we’re doing is access to those opportunities.”

  9. Three Jack says:

    oil company ceo’s don’t control the price of oil konop.

    if supply increases which it would if america used its vast resources without so much enviro bs and liberal do gooders getting in the way, the market would react. in fact, it already did just on the exec order issued by president bush a month ago.

    the free market works konop in spite of overzealous regulators like your friends running the dem party. what’s the worst that could happen if oil companies are allowed to drill at anwr, offshore, etc.? why are you against america being self sufficient?

  10. SavannahDem says:

    Three Jack –

    The most optimistic projections for oil found in the OCS would be 3% of the current world demand for oil. (Also note that it will take about 5 years to reach that capacity.)

    Now, it seems to me that if demand for oil in the world market is growing faster than 3% per annum, then we are at best keeping oil prices from rising as quickly as they would if we did not drill. That’s far different that lowering prices. And a far cry from America being “self sufficient” as you argue.

    Also, the idea that some have put forward that we could force companies to “only sell this oil in America” is so impossible in so many ways that it makes my head hurt.

    Drilling is a cheap political ploy (which may be bought by the voters – we’ll see), but it is not a solution to the problem.

    BTW – you should read more of Konop’s posts before you try to pigeon hole him with a label of your choice. You may, however, refer to me as a Democrat all you like.

  11. Icarus says:

    “Drilling is a cheap political ploy (which may be bought by the voters – we’ll see), but it is not a solution to the problem.”

    Call it cheap politics if you want, what do you have to lose if you and your fellow dems allow it then?

    Why not look at this as an opportunity to get something in return? Tax incentives for hybrids/diesels/hydrogen powered cars, wind power, solar power, etc?

    The dems refusal to continue to put anything on the table shows their solutions are just as hollow as the Bush energy plan has been for the first 6 years of his term.

    I re-ask the question, what do you guys want in exchange for the drilling that, though you all claim won’t help the problem, is wanted by over 70% of Americans?

  12. SavannahDem says:

    It polls at 70% when people don’t know that it will not reduce prices and that it will take 5 years to have any effect.

    As for what the Dems in Congress want, I think they’re trying to strike a deal similar to what you put above. That is: Dems allow drilling (which will not solve the problem), in exchange for Republicans allowing money to be spent on research (which might solve the problem).

    Dems avoid the possible backlash while actually moving the country forward. Oil companies continue to make large profits, and the only thing that gets hurt is the planet. The GOP should be proud.

    Without bashing the Bush Administration for years and years of lost opportunity, I’ll simply say that right now we are where we are. We’ll have to pay high prices for a number of extra years while at the same time investing money in new technology.

    That will cost taxpayers money when they don’t really have it to spend. More incumbents (in both parties) will lose, and my share of the national debt will increase.

    It’s not a good political solution, but R&D is where we need to be placing our time and money. It also keeps me from having to look at oil rigs when I go to Tybee.

  13. nast says:

    “I re-ask the question, what do you guys want in exchange for the drilling that, though you all claim won’t help the problem, is wanted by over 70% of Americans?”

    How about auctioning off the exploration/drilling rights and earmarking ALL of those proceeds to alternative energy development?

    Or, how about requiring the oil company to donate a barrel (of the same quality, of course) to the US Strategic Reserves for every barrel sold on the market?

  14. John Konop says:

    I agree in general with Icarus. Three Jack your juvenile understanding of economics is laughable. You have a few oil companies that control much of the supply. And the amount of oil would not change the macro amount of supply that much. You have demonstrated you mindless talking point understanding of supply and demand.

    The approach must be multifaceted yet the biggest gain in the short term would be on the savings side.

    Better MPG

    Solar

    Wind

    Nuclear

    Public transportation……

    As far as R&D we must use SBA style loan guarantees instead of grants and tax breaks. If we had loan guarantees instead you not see BIO-FUELS scam via it would have to be a viable concept.

    The tax breaks and grants should only be used as off-sets to real cost. For example if you take highway money and put it toward public transportation and it off sets cost of road construction than that is a good investment for tax payers.

  15. odinseye2k says:

    “I re-ask the question, what do you guys want in exchange for the drilling that, though you all claim won’t help the problem, is wanted by over 70% of Americans?”

    A requirement for a special license certification for “light trucks” over 5000 pounds.

  16. odinseye2k says:

    “I have no doubt that Pelosi’s strategy is to grant the most limited drilling she can, while enacting a bill full of platitudes that will amount to promises of an America powered by magic unicorns by 2016. ”

    Of course, this is pretending we don’t have places like California that will be 20 percent alternative powered in just two years.

    In cultural and social affairs, the initial stance of conservatism (namely skepticism, which is acknowledgment of ignorance by a different name) may have some merit. When you’re talking technology or some other feature of life where you can actually do calculations and make predictions, conservatives usually just end up looking dumb.

    There’s a reason that the current Bush administration does all it can to harass and censor scientists. In the scientific world, reality does have a rather liberal bias.

  17. odinseye2k says:

    For example, we’ve got people dropping 2, 5, 10, and 11 billion miles driven in the past four months (numbers are March, April, May, and June 2008 as compared to year before for those months).

    If you crunch through a yield of 30 gallons of gas per barrel of crude, national average MPG of 25 (although those cutting back most are likely those with more ravenous and expensive tanks to fill), we’re talking about reducing the country’s demand by about 400-500,000 barrels per day. In other words, within a few months of record-high prices, we’ve got people conserving more than twice as much as offshore drilling will produce in a few years.

    And note that is driving reductions. Americans drive about 8 billion miles per day. Thus, an improvement of about 2.5 miles per gallon in the national fleet is worth 10% of that, or about 800 million miles per day. That translates into about one million barrels of crude oil, or about four times as much swing in the demand-supply gap that offshore drilling provides.

    Now, note that it has taken about 500,000 barrels a day of effective demand destruction with a lot of uncertainty about how much more is possible to knock oil down even $25 / barrel. If we were to instead increase supply by a puny 200,000 (with knowledge that this production capability could be held back if the Oil Cos. didn’t like the prices they were getting), I doubt we’d see all that much change at the pump.

    So, perhaps in exchange for ineffective drilling, let me see … I know that my pathetic “colleagues” across the aisle are waiting for an epic ass-kicking across the country and are humping the legs of anyone that will give them the cash to stave off defeat. I know that those having their legs humped are hoping to survive a few more quarters before the business changes profoundly and permanently.

    Ergo, I suggest that windfall profits tax and some serious lease money for alternatives and helping people downgrade their dependence to oil. As a bonus, funnel some of the cash to incentives for more efficient cars and give Detroit a serious boost in the process (and hint to them *very* strongly to use their good fortune for product enhancement to take on the Euros and Asians).

  18. Bill_k says:

    I was so embarrassed that my congressman – Westmoreland – was part of that stunt. Not that I expected more of him. At least he sent me an e-mail asking my opinion.

    I am not impressed by cries to open new areas to drilling for oil. I would prefer my shores and wilderness areas to be unsullied by oil rigs, but I feel it is inevitable that all sources of oil will eventually be tapped. Don’t tell me this will lower the price of oil, though. If there is one thing we can count on, it is that the price of oil will rise. That is what happens to all finite, non-renewable resources.

    This is our second wake-up call. We ignored the first one in the ’70’s. I can only hope that this time we will quit desperately trying to possess every last drop of oil and start putting our efforts into developing clean, renewable energies.

  19. Icarus says:

    Been covered up for the last couple of days, haven’t had time to read all the comments in detail. I hope to get to that this evening, and set off another round of Q&A for those still willing to play along at home.

Comments are closed.