Shall We Drill?

Debate now rages amongst the Congerscritters as to whether we should expand domestic petroleum production - offshore, in ANWR, and western oilshales. The answer one reaches depends on the ultimate goal of an energy strategy. If it is to eliminate our dependence on foreign oil, no amount of drilling is going to accomplish that goal. But there is an immediate need to halt the growth in the flow of cash used to buy foreign oil, and possibly reduce it. So expanding our drilling is likely to be an essential component of a short-term strategy to buy us some time - say, twenty years - to develop other energy sources, particularly for transportation fuels.

Let's look at the likely reserves and production rates for ANWR, offshore, and new oilshales, and when their production could begin:

• ANWR. The Energy Information Agency states a mean estimate for technically recoverable oil in the ANWR "1002 Area" (the most promising region of ANWR and constituting about 20% of its total acreage) of 10.3 billion barrels. A USGS assessment from 1998 states that the mean amount of economically recoverable oil from the 1002 Area is 7.7 billion barrels. Peak production from the region is estimated by the EIA to be about a million barrels a day, about 5% of our current total daily petroleum consumption. Using the smaller mean reserve estimate, this means ANWR oil would last at least twenty years. Production could not begin for 7-12 years, primarily because of the time required for lease sales, permitting and environmental reviews. These steps could be accelerated.
• Outer Continental Shelves (OCS). The Department of Interior's Minerals Management Service estimates the mean total OCS oil resources to be 85.9 billion barrels (technically recoverable) for the Atlantic, Pacific, Alaskan, and Gulf of Mexico Shelves. The GOM and Alaskan Shelves constitute about 41 and 27 billion barrels, respectively, of this total estimate. The total OCS reserves that are currently unavailable to production because of state or federal moratoria is 18 billion barrels (Eastern GOM, Atlantic and Pacific). So most of the OCS is open to development. The GOM OCS is developed, with nearly 1600 leases producing 1.4 million barrels per day. If one prorates a potential Alaskan OCS production rate based on this number and the relative size of the Alaskan OCS resource, this yields a production of 0.9 million barrels per day, another 4% of our current daily consumption. If the GOM and the Alaskan OCS production rates were 150% of their current (or estimated) rates, it would add an additional 2 million barrels per day to current production, or 10% of our current consumption. Studies for Alaskan OCS development uses a target peak production year of 2030; perhaps this development could be accelerated.
• Continental Oilshales. A study by the RAND Corporation in 2005 estimated a lower limit to the amount of technically recoverable oil from western oilshales to be 500 billion barrels. RAND estimates the timescale for development to production of 1 million barrels per day may be twenty years or longer. The production rate could be as high as three million barrels per day, or 15% of our current consumption. The lifetime of continental oilshale production is very long, perhaps hundreds of years.

Here is what we can "take away" from the discussion above:

1. Assuming all of the three petroleum resources described are developed to peak production, they would probably add no more production than 30% of our current oil consumption. We cannot solve our dependence on foreign oil solely on increased domestic drilling.
2. Nevertheless, this increased production could nearly halve our current imports of foreign oil, ultimately keeping an additional $300B per year in the United States.
3. A controlling factor is the production that can come from each of these sources; apparently no more than 1-3 million barrels per day is likely to be the peak production from these sources. If we commit to increased drilling as a transitional step to alternate transportation fuels, finding solutions to increase production from oilfields will be essential.
4. The development of ANWR and the Alaskan OCS, and the expansion of production from the GOM OCS is likely to reduce our dependence on foreign oil by 10-15% within ten years, if the rate of leasing, permitting, and production can be accelerated.
5. Continental oilshales may provide a tremendous supply, and may be produced at a rate of 15% of our current consumption, but the timescale for development is long, perhaps twenty years. This resource should be developed, however, because it is likely we will still need a substantial amount of petroleum in 20-30 years.

Will the price of oil drop with this increased production? Perhaps, but not precipitously. But a good chunk of change that leaves the U.S. could be retained if increase our domestic production.

Marge, get me Halliburton on the phone!

What this Country Really Needs...

is a United States Postal Service as good as FedEx.

What's in the Box? III - Energy.

Barack Obama has unveiled an energy plan, so let's check it for substance:

• A $300 rebate for families to offset rise in gas prices. From the same man who dismissed McCain's proposed suspension of the federal gas tax for three months. I guess the difference is that the taxes keep coming in, and instead we borrow the money to fund the rebate.
• A $150B federal investment for ten years in to renewable energy programs. No increased energy production, and no guaranteed results, but it will be exciting!
• Reduce oil consumption by 3 Mbbl/day by 2018, and by 10 Mbbl/day by 2030. How, exactly? The "plan" calls for improving petroleum use efficiency by 50%. That's fifty percent. How? Magic? Because we want it to be so?
• Development of "current leases" on federal land, with the claim this would double current domestic production - without the need for more offshore production nor ANWR. The Wall Street Journal has already shown that this frequently-parroted claim is a canard, relying on a fantastic extrapolation of current production on federal land. However, at least the Obamites concede that more domestic petroleum production is needed. They just need to realize that one has to drill where the oil is, rather than where one would like it to be.
• "End excessive speculation in the oil markets". This is a bone to throw to the conspiracy and class-warfare cranks. It does not result in the production in a single additional barrel of oil.
• Windfall profits tax on oil companies. See the previous point. The collected tax would then be doled out to the citizens to offset higher energy costs. Obama may want to break this gently to many of these same families whose 401Ks are invested in energy companies. Taking from one's pocket to give it right back - after Uncle Sam's cut of pork and waste.
• Doubling the CAFE standards...within 18 years. I think the private sector can handle than one quite well now, thank you.
• Nuclear power? No more nukes until Harry Reid allows the Yucca Mountain Waste Repository to be opened. Like we said...no more nukes.

That's it. Very little in the way of rapidly increasing domestic energy production, but a great deal of central planning, research and study, taxation, and wishful thinking.

Not That Thing Again!

The calls are picking up for reinstating a 55 mph speed limit to conserve gasoline. For those of us that did a good deal of long-distance driving during the Sad Seventies when this federally-ordered limit was in place, it made for great discomfort and irritation. A typical fuel efficiency curve shows a decline above about 60 mph, but other variables such as aerodynamics and weight are also important.

For Americans that drive as part of their employment - like truckers - this 55 mph limit is onerous. It means an additional 21% time on the road to deliver a given value of goods, and is physically gruelling for truckers. For a two-hour business trip (140 mi) in a vehicle that gets 30 mpg at 55 mph, the loss of fuel economy driving at 70 mph is 5 mpg, or less than a gallon of gas for the trip. The time lost at the slower speed is over a half and hour. If the employee-driver is making minimum wage, the savings in fuel costs for a 55 mph limit is lost in additional employee wages in the increased drive time, and a half-hour productivity improvment is lost (it takes more to execute a business transaction of a given value rather than using that time to execute additional business).

We believe that finding additonal sources of transportation fuels - oil, natural gas, electricity, bio-fuels - is a more important task than Share-the-Misery ideas like a lower speed limit.

Maybe It's Too Obvious?

T. Boone Picken's plan to divert the natural gas (NG) used for electricity generation to fuel vehicles requires a supply of NG-powered vehicles, and NG refueling stations. There do exist a limited number stations (even a home-based refueling system), providing for the corporate NG vehicle fleets. What is astonishing is how the major automakers have cut their North American NG vehicle development efforts in the last few years, despite rising gasoline prices. Ford has cashed out of this business; apparently GM has no NG vehicles in the works for North America. Only Honda is offering a NG-powered passenger vehicle, the Civic GX-NG, in the United States.

Boone Picken's Plan.

T. Boone Pickens is kicking off a national campaign to reduce our $700B foreign oil habit (now approaching 70% of our oil consumption) by selling large-scale wind power generation. How? The goal is to produce 20% of our electricity needs with wind farms in the Great Plains, displacing the natural gas that is currently used to produce this electricity. This gas can then be used for cars and trucks (real CNG and LNG vehicles - not glorified golf carts - exist; GM sells them in Europe). If 20% wind generation can be achieved, and the gas applied to vehicles, Pickens then estimates that 38% of our foreign oil imports can be eliminated.

Note that the wind-electricity infrastructure will need to be large-scale; 200,000 megawatts will need to be generated. This translates into almost as many industrial-grade wind turbines on large "farms" stretching from Texas to the Canadian border. It will not be achieved with an ensemble of hippie communes with a windmill and some car batteries. Picken's plan will also require easements on land for transmission lines to reach out from the US interior to link with the rest of the grid.

We guess that these two aspects of Picken's plan - large corporate development and operation of the wind farms, and large-scale land development for grid expansion - will make the neo-Luddites and the Extreme Green crowd apoplectic. As Picken's plan is debated, we will watch with interest whether the Sierra Club, NRDC, and the other usual suspects embrace it or attempt to kill it.

Obama's Cynical Iraq Ploy.

Barack Obama now claims to be "refining" his position on Iraq, causing the Hard Left to void their bowels. He gained their rabid support because of his virulent anti-war stand, with an effective pledge to unilaterally and unconditionally withdraw US forces from Iraq within sixteen months...a "nuance-free" position. This was the issue with which he snatched the Democrat nomination from Hillary.

The Hard Left has nothing to fear: Obama's "refined" Iraq position is much more likely than not to be bait for sane Democrats and Independents to think that he's not such a delusional guy on Iraq. Obama was born and raised into the Hard Left, has made his national political bones with an extremely radical leftist view of Iraq, the War on Islamofacism, foreign policy, wealth redistribution, nationalization of health care, etc. As to the Radical Agenda, he is a True Believer. Once in power, he will throw the "refined" stand on Iraq under the bus. When he does so, he will no doubt give a very eloquent speech that will make Chris Matthews and Keith Obermann weep. And moderate Dems will be left holding guaranteed leases to the Brooklyn Bridge, and we can all contemplate the loss of thousands of brave Americans for nothing.

We fear that too many of our fellow Americans will be snookered by this fellow.

If it Quacks like Uranium...

Just so there is no misunderstandings nor disavowals: Iraq did have nuclear material, 550 metric tons of "yellowcake" uranium, that is now being removed and sent to Canada. To us that is a substantial component of a WMD program. Why wasn't this fact mentioned a few years ago when the various Iraq review reports were being advertised as refuting the existance of a serious WMD program?

Petromath.

In the last few weeks much hot air has swirled around the suggestion that "speculators" have driven the surge in oil prices. Yet a review of the record on oil consumption and production for the last two decades clearly shows the hole that we chose to dig for ourselves:

• World Oil Production Mbbl/day: 65.0 (1990), 85.0 (2007) (31% growth)
• US Oil Production Mbbl/day: 7.5 (1990), 5.0 (2007) (-33% growth)
• World Oil Consumption Mbbl/day 66.6 (1990), 87.0 (2007) (30% growth)
• US Oil Consumption Mbbl/day: 17.0 (1990), 21.0 (2007) (24% growth)

The world demand for oil has grown by 20 Mbbl/day since 1990, of which the U.S. consumption growth has grown by only 4 Mbbl/day, and at a rate less than the world consumption growth. Meanwhile, we have crippled our own petroleum production during the same period of time. Furthermore, world oil production has now stalled at about 87 Mbbl/day, while world consumption growth continues unabated. The world's excess production capacity has also collapsed in the last several years (it has become utilized capacity), from 7 Mbbl/day to 2 Mbbl/day.

When we chose to destroy our ability to produce our own petroleum resources by banning expanded offshore drilling (despite dramatic improvement in drilling technologies in the last forty years) , what did we think was going to happen?

Revolutionary Music Video!

The great Fife and Drums of York Town entertain for Independence Day 2007.

Proclaim Liberty Throughout All the Land Unto All the Inhabitants Thereof - Lev. XXV, v. X

Whither Michigan?

The Michigan Department of Labor and Economic Growth has released the state's unemployment rate for May, and it was grim: 8.5%, a 1.6% increase from April. As Rick Haglund of the Grand Rapids News observes, the state government really can do little to stem the loss of unskilled and semi-skilled manufacturing jobs. Certainly not with emergency programs to stimulate one industry or another. It could choose to bring some sanity to the state business and fuel tax structure, perhaps reduce the business tax rate (our fair state chose to add a 22% surcharge to the new Single Business tax, shafted some businesses with tax increases and favored others with reductions, and raised state income taxes in the teeth of our own state's severe recession...so Hooveresque!). Governor Granholm has hawked a miriad of "Cool Jobs" schemes (a reference to her "Cool Cities" program"), from IT to medicine to alternative energies to movies. Nothing has really stuck, and for state policy makers there is a very important message in that fact. Perhaps a change of strategy is needed: cut business regulation and taxes, make it brain-dead simple for people with a good ideas to start up a business...and then just stay out of their way.

PS - Tom Shields' column makes the same case for the "State of the Morass".

Today's Readings.


Genesis 21:8-21
Psalm 86:1-10, 16-17
Romans 6:1b-11
Matthew 10:24-39



The O.T. reading and the Psalm refer to the plight of Hagar and Ishmael, her son by Abraham; God protects those shunned or persecuted by others.

The Epistle speaks to the totality of the union of us in Christ. Jesus was made human, suffered in his human life, and we are bonded to him in that common suffering. Yet our souls are also bonded to him in his defeat of death by resurrection.

In the Gospel Jesus asks the most difficult task of us - displacing the nexus of our lives from our loved ones on Earth to him. This is not abandonment or disowning those around us, rather it is transforming our connections to our loved ones to pass through Christ. As Abraham trusted in God to provide for Ishmael, so we must trust in Christ to provide the ultimate and permanent bond between human beings.

Huh?

This cannot be true; from PostPolitics (Nashville Post):

Since taking steps to make his home more environmentally-friendly last June, [former Vice-President Al] Gore devours an average of 17,768 kWh per month –1,638 kWh more energy per month than before the renovations – at a cost of $16,533. By comparison, the average American household consumes 11,040 kWh in an entire year, according to the Energy Information Administration.

The report must have slipped a decimal place...right?

Weekend Miracles.

Not only did Tiger Woods play the most "Transplendent Golffe" at Saturday's third round of the U.S. Open, but as he passed the gallery, the lame threw their crutches down, the sores fell away from the lepers, and blind gained their sight. Yowzers, he's good!

P.S. - Rocco made him work for the trophy today, but we worry that Tiger's knee may be in very serious condition. Don't expect to see much of him until the British Open.

A Bold and Courageous Action.

With tonight's endorsement, Al Gore has cinched the nomination for Barack Obama! Uh...yeah, that's it...yeah...

Farewell to a Decent Man.

Tim Russert was a good, decent man, and our public life was enriched by his service. His life on Earth was short, but rich and robust. May we all live as well. R.I.P.

Speaking As a Child.

The Supreme Court ruled yesterday that Gitmo detainees have the right to haebeus corpus petition. It was a strongly divided decision, 5 to 4, and there are core beliefs in this decision that appear irreconcilable; and a thoughtful person acknowledges them. The decision will have a huge impact on the prosecution of the Global War on Terror; according to a report on Gitmo by General McCafferty a large fraction of the detainees are considered extremely dangerous, a portion of these combatants will likely be released and undoubtedly return to their efforts to kill Americans and some will be successful. Those that are cheering the Court's decision are deluding themselves if they do not acknowledge this likelihood.

The candidates have made statements about the decision. One statement respresented a thoughtful, balanced and mature view, the other statement was puerile politics. From the Washington Post:

McCain, the presumptive Republican nominee, told reporters in Boston that he had not yet read the opinion, but he expressed concerns about the rights it might impart to the people being held there. "These are unlawful combatants, they are not American citizens and I think we should pay attention to Justice [John] Roberts's opinion in this decision," he said, referring to the chief justice's dissent. "But it is a decision that the Supreme Court has made. Now we need to move forward. As you know, I always favored closing Guantanamo Bay and I still think we ought to do that."

Obama issued a statement expressing support for the decision, saying it strikes the proper balance between fighting terrorism and "protecting our core values." The Illinois Democrat said that "the court's decision is a rejection of the Bush administration's attempt to create a legal black hole at Guantanamo -- yet another failed policy supported by John McCain. This is an important step toward reestablishing our credibility as a nation committed to the rule of law."

Mr. Obama's statement is yet another example of his tendency to unilaterally find fault with his own country's actions to protect its citizenry while failing to acknowledge the realities in dealing with a foe that uses the shield of civilization to pursue the annihilation of that civilization.

What's In the Box? Part II: Taxes

Barack Obama appeared on CNBC to talk economy and taxes:

...Obama told CNBC that he would raise taxes on Americans making $250,000 a year or more and raise the capital gains tax for those in higher income brackets while exempting small investors. He said the U.S. economy has been "out of balance for too long."

This is insane. Right now the high price of petroleum, coal, and natural gas is spurring a great deal of investment to displace these traditional energy sources. Raising the capital gains tax on investors not considered to be "small" will stifle this investment. Of course, Mr. Obama has a solution to that: take the taxes collected at the increased rate and provide government direction of investment in alternative energies. Like the enthanol boondoggle? A theme begins to take shape: expanding government-supervised industrial policy funded by increased taxes on private investement.

Other questions come to mind: $250K is certainly within the income levels of many small "S" corporations, small entrepeneurships that declare their income on the owners' personal 1040 returns. Will some elaborate tinkering with the tax code be required to patch up this bug? And what in the hell does he mean by "out of balance"? What is an economy that is "in balance"?

Last, but not the least, Mr. Obama wants to institute a windfall-profits tax on "Big Oil". The definition of this term is vague. How much profit is "too much"? Shall such a calculation take into account the actual profit margin of the enterprise ("Big Oil" has suprisingly modest margins)?Shall only the large integrated oil companies be taxed? Should the tax also include the drillers, refiners, or natural gas and coal companies? Such issues must water the mouths of left-wing socio-economic planners.

End the Enabling.

We at Deaddrifts recieved a weekend solicitation phone call from the RNC. After explaining to the "salesman" that we would be confining our political contributions to Misters McCain and Walberg (our Congerscritter) directly, the salesman attempted to persuade us otherwise. We were not amused.

The RNC must accept the fact that it had, expressed in the idiom of test pilots, "screwed the pooch" in the last seven years. Not in the manner in which the Left shrieks, but in dismantling an exciting movement of conservative ideas and philosophy of governance for forty pieces of silver and the incessant pursuit of ever-increasing political power. They have, we are sad to say, met the enemy, and they is them (hat tip to Walt Kelly).

One of our principal complaints is the noxious triad of expanding government, drunken-sailor spending, and the inevitable corruption that accompanies it. Tonight Fox News presented "Porked: Earmarks for Profit", and highlighted the shenanigans of several Republican congerscritters in adding earmarks to spending bills that ended in personal profit for the pols, including former Speaker of the House Dennis ("Mr. Permanent Minority") Hastert and California Representative Ken Calvert. Fox also discussed how the current House Republican standard-bearer, Mr. Boehner, squashed the appointment of Jeff Flake, the Arizona Republican and sworn enemy of earmarking, to the House Appropriations Committee. The reason given that Boehner gave to Flake was, well the obvious: it would put the pigs off their feed.