Empty Promises - More Drilling NO Renewables!

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Empty Promises - More Drilling NO Renewables! Empty Empty Promises - More Drilling NO Renewables!

Post by  on Sat May 14, 2011 4:15 pm

What happened to the promises of renewable energy that was made at election time?

With gas costs high, Obama to speed oil production
Press Darlene Superville And Dina
Cappiello, Courtest of: Associated Press

WASHINGTON – Amid growing public unhappiness over gas prices,
President Barack Obama is directing his administration to ramp up U.S.
oil production by extending existing leases in the Gulf of Mexico and
off Alaska's coast and holding more frequent lease sales in a federal
petroleum reserve in Alaska. But the moves won't calm spiraling prices
at the pump any time soon.
Obama said Saturday that the measures "make good
sense" and will help reduce U.S. consumption of imported oil in the long
term. But he acknowledged anew that they won't help to immediately
bring down gasoline prices topping $4 a gallon in many parts of the
country, and an oil industry analyst agreed.
"There is practically nothing that Washington can do
that would materially change the price of fuel in this country," said
Raymond James analyst Pavel Molchanov, noting that the United States
produces about 5 percent of the world's petroleum while consuming about
20 percent. "Given that imbalance, there is simply no policy shift that
could plausibly come from the federal government that can significantly
change that dynamic."
An oil industry group praised Obama's move as a first
step with a "couple of positive nuggets" but contended that more was
needed to boost oil production. Erik Milito, upstream director for the
American Petroleum Institute, called in a statement for more access to
key shale reserves and construction of a pipeline that would import
crude from Canadian oil sands.
Sen. Robert Menendez, D-N.J., who is opposed to
drilling off the Atlantic coast, expressed concern about possible
dangers to the environment. "I think it is disappointing he would pursue
a strategy that comes with considerable risk while offering no hope of
driving down gas prices," Menendez said in a statement.
Obama's announcement followed passage in the
Republican-controlled House of three bills — including two this week —
that would expand and speed offshore oil and gas drilling. Republicans
say the bills are aimed at easing gasoline costs, but they too
acknowledge that benefits won't come fast.
The White House had announced its opposition to all
three bills, which are unlikely to pass the Democratic-controlled
Senate, saying the measures would undercut safety reviews and open
environmentally sensitive areas to new drilling.
But Obama is adopting some of the bills' provisions.
Answering the call of Republicans and Democrats from
Gulf Coast states, Obama said in his weekly radio and Internet address
that he would extend all Gulf leases that were affected by a temporary
moratorium on drilling imposed after last year's BP oil spill. That
would give companies additional time to begin drilling.
The administration had been granting extensions case
by case, but senior administration officials said the Interior
Department would institute a blanket one-year extension.
New safety requirements put in place since the BP
spill also have delayed drilling in Alaska, so Obama said he would
extend lease terms there for a year as well. An oil lease typically runs
10 years.
Lease sales in the western and central Gulf of Mexico
that were postponed last year will be held by the middle of next year,
the same time period required by the House. A sale off the Virginia
coast still would not happen until 2017 at the earliest. But Obama said
he would speed up environmental reviews so that seismic studies to
determine how much oil and gas lies off the Atlantic Coast can begin.
To further expedite drilling off the Alaskan coast,
where such plans by Shell Oil Co. have been delayed by an air pollution
permit, Obama said he would create an interagency task force to
coordinate the necessary approvals. He also will hold annual lease sales
in the vast National Petroleum Reserve on Alaska's North Slope.
Officials said the most recent sale was last year, but that they had not
been held on any set schedule.
The moves come as Americans head into the summer
driving season and gas prices remain high. A gallon of regular cost
$3.97 on average nationwide Saturday, according to the AAA, Wright
Express and Oil Price Information Service. That's up from $3.81 a month
ago and $2.88 a year ago, but it's about a penny less than a week ago.
The price of gasoline increased every day between
March 23 and May 6 for a total of about 30 percent, essentially tracking
a 35 percent rise in crude oil prices that started in mid-February as
investors pushed more and more money into commodities. Refinery
shutdowns also contributed. And gas prices tend to rise every spring as
refineries follow federal regulations to produce summer gasoline blends
that evaporate less readily but are more expensive to make.
Molchanov said global oil prices also have risen
because the global supply and demand picture has tightened the past few
months due to volatility in the Middle East and North Africa.
Even if the U.S. government started offering new
leases in Alaska and new areas of the Gulf or off the East Coast, it
would probably take at least a year to start drilling and then another
five years for that to translate into barrels of production, the analyst
said. Wells that can produce quickly tend to be small.
"Even if all that works out, it still would not
materially change global oil supply, and therefore would not materially
change fuel prices in this country or any other," Molchanov said. "In
the grand scheme of things, none of this changes the reality of $4
gasoline at the pump."
House Natural Resources Committee Chairman Doc Hastings of Washington,
sponsor of the three measures that recently passed the House, said it
was "ironic" that Obama "is now taking baby steps in our direction"
after the White House and congressional Democrats criticized the bills.
"The president is finally admitting what Republicans have known all
along, that increasing the supply of American energy will help lower
prices and create jobs," Hastings said.
Philip Johnson, a petroleum engineer and University of Alabama
professor, cautioned that new leases offer no guarantee that a company
will find oil. Leases give a company permission to explore an area and
set limits for what the company can do.
"You've got strong suspicions because you know what the underground
structure looks like," he said. "But until you stick a hole in it you
don't know what's in that structure."
Johnson noted, for instance, that while there are about 3,000 producing
wells in the Gulf of Mexico in U.S. waters, about 50,000 wells have been
drilled including many that have been emptied.
Obama on Saturday also reiterated his call on Democrats and Republicans
to vote to eliminate $4.4 billion in taxpayer subsidies to oil and gas
companies. Industry advocates, including most Republicans in Congress,
have argued that doing away with the tax breaks will raise companies'
cost of doing business, crimp their investment in exploration and
production and lead to higher gas prices.
The 41 U.S. oil and gas companies that break out their federal taxes
said they paid Uncle Sam $5.7 billion in 2010, more than any other
industry, according to data compiled by Compustat. Exxon alone paid $1.3
The industry's federal tax bill would rise 70 percent without the
subsidies, but it would remain highly profitable: Oil companies'
combined pre-tax profits could hit $200 billion this year.
In the weekly Republican message, Alabama Rep. Martha Roby said it's
time for Washington to get serious about the challenges facing the
country, including straightening out its finances and tackling the gas
price issue. She praised the House for passing measures to expand
domestic energy production "because when we're talking about energy,
we're talking about jobs."
"The greatest threat to our economy, job creation, and the future of our
children is to do nothing," Roby said. "We have to act. It is what we
were sent to Washington to do."

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