Tuesday, March 20, 2012

Obama plays fast and furious with oil production data

President Barack Obama calls fossil fuels – coal, oil and natural gas – the “fuel of the past,” and heralds wind, solar and algae as the fuels of the future. But he ignored talking about the fuel of the present, as if it really doesn’t matter. But it does matter. The fuel of the present must exist in sufficient quantity, with sufficient infrastructure to get it to consumers, and be affordable. And there is only one source that meets those requirements: fossil fuels.

Despite his apparent disregard of this obvious fact, it does not take a rocket scientist, a community organizer, or even a law school lecturer to understand the importance of today’s situation: Fossil fuels work; green energy does not.

Favoring an impossible scenario, Mr. Obama resorts to being the class clown, offering playground humor to deflect the harsh criticism his foolish energy policy has earned. He told a fawning audience, "So do not tell me that we're not drilling. We're drilling all over this country. There are a few spots we're not drilling. We're not drilling in the National Mall. We're not drilling at your house."

Now, that’s a real knee-slapper. But the joke’s on those that believe this hogwash, and dream of plentiful wind farms standing motionless among dead birds waiting on a breeze, and seas of solar panels waiting in the dark for a cloudless sunrise.

Mr. Obama might have mentioned that we also are not drilling for oil off the Mid-Atlantic coast, off the Florida Gulf Coast and generally in the Gulf of Mexico, in the Arctic National Wildlife Refuge, on federal lands in the Rockies. You know: places where billions of barrels of American oil await an American company with American workers operating drilling rigs. In these areas, drilling leases are down 70 percent under the Obama administration’s fairy-tale energy strategy. And while the president yuks it up in campaign appearances, Americans still get pummeled at the gas pump and are ignored in the presidential narrative.

But humor was not the only trick up Mr. Obama’s sleeve. He also slipped in a large dose of taking credit where credit is not due, and added a substantial measure of distorted facts. “Under my administration, America is producing more oil today than at any time in the last eight years. That's a fact. That's a fact. We've quadrupled the number of operating oil rigs to a record high. So do not tell me that we're not drilling. We're drilling all over this country.”

Well, sort of. While that statement may be technically true, it turns reality on its head. By saying “under my administration” he suggests that it is because of his policies that drilling has increased. Actually, he had absolutely nothing to do with the policies that prompted all that drilling, which is being done on private land where he cannot stop it, as he has with drilling on federal lands. Oil production has increased in spite of his policies, not because of them. For the increase in drilling he can correctly blame George W. Bush.

The president should have stopped with the ridiculing of the clear thinkers who want to harvest our own oil and natural gas and build energy independence. But he just had to distort more facts for good measure. “America uses more than 20 percent of the world’s oil,” he declared. “If we drilled every square inch of this country …. we would still have only two percent of the world’s known oil reserves.”

Not so fast, Mr. President. The Institute for Energy Research reports that “in classic fashion, he’s using a technicality to skirt the facts and keep the myth of energy scarcity alive. The reality is that the U.S. has enough recoverable oil for the next 200 years, despite only having 2 percent of the world’s current proven oil reserves.”

Even The Washington Post decries the president’s tactic. “The president should drop this fact … or he runs the risk of misleading Americans about the extent of the U.S. oil resources.” It’s too late; he has already misled us.

According to the American Petroleum Institute’s online publication, Energy Tomorrow: “The market sees 87 percent of our offshore acreage off-limits, it sees Federal permits lagging in the areas we are allowed to develop in, both offshore and onshore.  It sees a million barrels a day from ANWR sitting on the sidelines, and it sees the U.S. blocking upwards of 800,000 barrels a day from Canada. The market sees that the U.S. could secure 100 percent of its liquid fuel needs by 2024.”

The CIA World Factbook lists the U.S. third in world oil production in 2011 at just below 9 percent of the total, a little behind Russia at 10.06 percent, and Saudi Arabia at 12.01 percent.

Apparently, Mr. Obama feels comfortable spreading falsehoods to the public, knowing that his fawning followers will believe anything he says, and the media, paralyzed by his charm, will not fact-check what he says.  But while he’s busy being fabulous, wowing the throngs, the country continues to suffer under punishing unemployment and gas prices predicted to set new records this summer.


CK said...

i still dont think that drilling more oil will reduce prices... if people pay top dollar for fossil fuels, why would companies sell it for less than the going rate? Doesnt seem like something a capitalist would do to people in the industrialized world who "require" their products...

...and its only going to get worse as more and more countries industrialize and require more and more energy... and one of the reasons green/renewable energy isn't more prominent is that its difficult to profit from it...

and yes to Obama sort of "cooking the numbers" ... almost all politicians, news organization and businesses regularly practice such tactics...

I'd like to see your analysis cover issues on both sides of the aisle if I'm being honest. But at least this is a good start...

James Shott said...

Producing more domestic oil increases the world supply, thereby relieving the upward pressure on prices imposed by smaller supplies.

People who buy oil will buy as much as they can at the lowest possible price; companies will sell their product for what the market will bear. Company A can only sell its product for about the same price as Company B. The lower price attracts more customers than a higher price.

More customers raise the demand for a static amount of product, increasing the price. Increasing the amount of product on the market will lower the price in a static market, and keep upward price pressures lower with a growing customer base.

The reason green energy isn’t popular is that it isn’t affordable, and it isn’t affordable because it is still evolving. No one wants to buy it, so voila, it isn’t profitable. You cannot expect a company to sell something that it loses money on for very long, and it is wrong for the government to prop up a company or an industry that cannot survive on its own, particularly when there is a viable alternative. A viable alternative like fossil fuels is still preferable economically to the newer, not-viable alternative, even though it may not be popular. Most people cannot and will not pay more for something like green energy when they can pay less and use a time-tested, less expensive and plentiful alternative.

Eventually, some company will develop something that will be affordable and efficient, and it will attract consumers, and the company will make money.

My analysis covers the practical aspects, which is what really matters.

CK said...

I understand basic economic theory and your notion of supply and demand but still do not believe this is how it REALLY works when everything is said and done.

and I do think the gov't should invest in research on greener energy. As your fav POTUS recently suggested, this should be our generations "Sputnik Moment" as we discover/invest/invent new techs to help reduce our dependence on fossil fuels.

We were on the moon in a decade after the Russians launched Sputnik and during WWII we compiled our greatest minds in the desert to construct one of the worlds greatest weapons. Many of our greatest inventions came from gov't/military research and investments. Many of these failed but the few that were successful dramatically changed the world...

James Shott said...

If you understand basic basic economics, you understand how more American oil puts downward pressure on oil prices, hence gasoline prices. And, by the way, it is not my “notion” of supply and demand, it is a law of economics. And it IS how everything works.

The reason the government should not invest in green energy is that it is not one of its Constitutional prerogatives. The market determines what works through the approval of millions of buyers of things that people need and want, and when the government, with its vast resources of tax money becomes a player, the market is no longer a level playing field. The government, as we hear so frequently these days, should not be picking winners and losers.

Do we want to use energy sources that are more expensive and less efficient just because some bureaucrat, or collection of them, thinks that is what’s best for us? No.

I can’t argue with the success of the space program, but a little recognized fact is that there was a lot of private money in the pre-NASA days leading up to space exploration, and as Matt Ridley asked, “Can you doubt that if NASA had not existed some rich man would by now have spent his fortune on a man-on-the-moon programme for the prestige alone?” No question about that. Anything that people want, or in which there is a benefit that can be done at a profit will eventually be created by the free market.

Outside of the military, the atom bomb and the space program, government’s role as a “doer” is dismal. But you know what they say: “occasionally, even a blind pig finds an acorn now and then.”

And the idea that government knows best is repugnant to people who believe in the human spirit and human ability to find and create things that better our lives. This has occurred throughout our history, quite independent of the federal government.

That is the force that built America into the world leader, and it is truly sad that so many people do not understand that, and put their faith instead in government.

CK said...

I guess I dont have as much faith as you do when it comes to trusting the market and corporations who hold profit as their main incentive, and not the betterment of man or helping a nation, unless it also helps their bottom line.

Just like your call to go back to "old morals and values" ... it sounds all well and good in an ideal world, but in the REAL world, it just doesnt happen like that...

I guess we'll both keep drinking our koolaid...

James Shott said...

Why do you lack faith? Are you not aware of the wonders the US achieved prior to your birth? We didn’t need government to help Eli Whitney invent the cotton gin, or for the Wright Brothers to invent the airplane, or Henry Ford the automobile and assembly line, or the invention of the suspension bridge, or the fire hydrant, Morse code, anesthesia, the smoke detector, the telephone, the hearing aid, the periscope, the automatic transmission, the bulldozer, the liquid fuel rocket, the digital computer, the electric guitar, the microwave oven ... The list is long. And, all of these things were invented by individuals and groups before someone decided that nothing of use can be accomplished without government intervention.

Profit must be the prime mover for business. Profit is not a bad thing; without it, there would be no jobs, no products and services, no tax money. The responsibility and the benefit of business is not to accomplish some social goals, that is the job of society. The job of business is to produce jobs and goods and services. Period.

If businesses want to contribute to worthy causes and do things to help society, that's fine. But since that is not a primary goal, we should not expect it. They serve humanity well, anyway.

The betterment of man is the responsibility of people, not business or government. Business gives people the means to better the plight of man, and government stays out of the way and allows it to happen.

The only thing stopping us from restoring morality and values is the will to do it. However, so long as people are more concerned for their own ease and convenience than for the “betterment of mankind” and the good of the society in which they live, we’ll only sink further into abyss.

This is one great value of religion: it helped instill morality and responsibility in people; two things that are hugely lacking today.

No Kool-Aid on my end. Some wine and an occasional Scotch, though.

CK said...

... said the Wealthy Capitalist

James Shott said...

"Wealthy capitalist?" Me? You don't know me very well, obviously.

And, is that the only comment you have?

CK said...

i dont know you at all, but your ideology sounds like that of the elite, the one they use to justify their status atop society and characterize themselves as "job creators" ... you know... the people who get big corporate tax breaks and loopholes and immediately reinvest all their profits into new jobs... or at least they do in your ideal world...

enjoy your scotch...

James Shott said...

I’m trying to understand your point. The elite pawn themselves off as job creators to defend taking advantage of the tax breaks and loopholes in the tax code that they use to make profits which they then say they are using to create more jobs.

Is that what you are saying? If so, you obviously either dislike the capitalist system that built our country, or you do not have an accurate understanding of it.

That system worked quite well for about 150 years, at which point people started changing it. America owes its position as a world leader to its capitalist foundation. And in fact, the problems we see today are not because of capitalism but because we have not been faithful to it. We began making changes that weakened it and it has become a hybrid capitalist/socialist environment that does not work very well.

You may have noticed that almost nobody is satisfied with the way things are.

Let me suggest that if you are interested in developing a logical personal philosophy grounded in reality – as opposed to merely embracing a philosophy that sounds good – you should spend some time studying the history of our country from the beginning. Focus especially on the reasons the colonists risked everything to escape the tyranny of King George. And then notice what great things happened under the system they created.

What I advocate – my ideology – is essentially the same philosophy under which America became America as it was before the assault against its core tenets began in earnest somewhere around the 1960s.

The path we are on does not lead to Nirvana or Utopia, because those conditions are unattainable, a point more than amply illustrated by countries like Greece, that are on the verge of total collapse.