Drill Baby Drill?

(What ever happened to that war cry?)

Note: I am back blogging by popular demand…. Actually one person suggested I climb back on the horse. Seemed sufficient. A lot of stuff going on right now so there are plenty of subjects to write about. Here’s a start.

Oil prices hit $104 per barrel today up from the 80s a few weeks ago. Speculators are nervous about all the protests in the Middle East. A weakening US dollar isn’t helping either. A popular uprising that started in Egypt and Tunisia and has now spread to Libya, Yemen and a number of other ME countries has folks worried that oil supplies may be disrupted. Even Saudi Arabia, Bahrain and Algeria, all major oil producers, are potentially lined up for conflict with the same poisonous formula of a Sunni elite historically dominating a Shi’ite majority. A disruption of supply from Saudi Arabia could easily push oil prices beyond $200 per barrel. Naturally, Iran wants to stick its long nose into these conflicts and stir up as much trouble as possible.

Gas prices escalate quickly as oil futures rise and gas is now at around $3.60 nationally and creeping upward. Before the blow up in the ME, analysts were already predicting that gas prices would rise to $4.00 pg this year and hit $5.00 next year as the world-wide recovery gained momentum and demand grew, especially in China and India.

The rule of thumb on gas prices relative to oil prices is, if you divide the oil price per barrel by 30 you get an approximation of what the gas price will be. Steven Chu, Energy Secretary, once opined that he would like to see US gas prices as high as European gas prices. At the time gas in Europe cost $8.00 a gallon. At $250 pb ol’ Stevie would get his wish. His opinion on how US voters would feel about $8 gas has not been reported.

The Obama Administration has done everything they can to make conventional carbon based energy more expensive. They claim they want to “reduce dependence on foreign oil” which to them does not mean drilling for oil on US soil or waters, but expanding use of corn, wind, solar and electric cars. Speaking of the Chevy Volt…. GM quietly released sales figures on the Volt for February. They sold 281 vs. 321 in January. Not to worry, Nissan sold 87 of their electric “Leaf” models. In other words, this electric car thing is really catching on. Yeah, right.

If a $40,000 compact that gets 30 miles on a charge is not enough to move you to buy one to save the planet, how about this? The state of Washington is considering an extra tax on electric cars because (drum roll please)… the electric cars are not paying their “fair share” of the gasoline tax that maintains the highways. That should do the trick.

According to Nick Loris and John Ligon of the Heritage Foundation, Obama’s energy policy cannot possibly succeed. Wind and solar only generate 1% of the electrical need in the US and the ethanol initiatives costs taxpayers $4 billion to produce 2% of the gasoline requirements. Furthermore, turning corn into gas drives up food prices worldwide. Part of the unrest in the Middle East results from rising and painful food price increases. On top of all that, it may even be worse for the environment than regular gasoline.

Since Obama took over he and his Interior Secretary, Ken Salazar, have been doing everything possible to cut domestic energy supplies. (Stats courtesy of Heritage)

· Salazar cancelled 77 leases for drilling in Utah in his first month in office. It is estimated that 800 billion barrels of recoverable oil exists in this oil shale deposit called the Green River Basin. That’s three times greater than the reserves in Saudi Arabia.

· In April Obama exploited the blow out of the Deepwater Horizon well in the Gulf to shut down all drilling there. They modified a report by a commission of experts from the National Academy of Engineers to make it sound like the commission supported the Administration’s moratorium on drilling. The engineers did not support such a ban and were more than a little pissed that Czar Browner had rewritten their report.

· In June LA Federal Judge Martin Feldman overturned the Obama Admin moratorium on drilling. So the Interior Department simply cancelled that one and issued another essentially identical ban. An annoyed Judge Feldman in February ruled the Obama Administration in contempt of court for ignoring his ruling. Last week the Administration issued the first drilling permit for the Gulf since April. Experts predict that the offshore moratorium will reduce domestic output by 13% this year.

· Secretary Salazar also placed the eastern Gulf and the coasts of the Atlantic and Pacific, including Alaska, off limits for any drilling for oil. That puts an estimated 19 billion barrels out of reach.

· Of course, ANWAR can never be exploited under this Administration. That’s another 10 billion barrels.

· Interior also stopped the development of the Keystone XL pipeline. The first two phases of this 4 phase project are complete and pump oil from the rich Alberta oil sands to refineries in Cushing, OK. The next two phases were to pump 500,000 barrels per day to the refineries located on the Texas Gulf coast. Together these two pipelines would reduce dependence on Venezuelan and Middle Eastern oil by 40%. Gee, that seems way too sensible… get a reliable delivery of oil over land instead of by tanker and from a friendly neighbor?

I guess what surprises me is that as we rapidly approach $4/ gallon gas nationally (already achieved in some places), where’s the outcry? Where are the chants of “Drill Baby Drill”? Four dollar gas is supposed to be the tipping point but we seem on a path to blow right through that and hit $5.00 soon. At the moment no one seems to be raising much of a fuss, even as the cost of fuel will soon put a big damper on a slow economic recovery. It may also trigger a dreaded round of inflation. Obama does not seem worried. They are still talking about increasing taxes on oil companies. They must figure the voters don’t give a damn. Do you?