Tuesday, August 25, 2015

Drill, Baby, Drill!

You may remember Sarah Palin's famous exhortation during the 2008 general election that the answer to all our economic woes was to open up the Arctic Circle to oil drilling.  Everyone was complaining about the skyrocketing gas prices at the pump, as Bush's "Ownership Society" was teetering on the edge of a housing market collapse.

In October, 2008, the proverbial sky fell, as did the oil prices, but still the Republicans were clamoring for more offshore oil leases and an oil pipeline from Canada.  After the new year, GOP legislators blamed the new President Obama for holding up the process with his pesky environmental regulations.  The belief was that all the President had to do was approve the Keystone XL pipeline and magically all these new jobs would appear, ignoring all the studies that failed to back up their projections.

One would think the BP Oil Spill in 2010 would have given Republicans pause, but no.  They still peddled their oil panacea and became ever more insistent that Obama approve the Keystone XL pipeline.  The price of oil slowly crept back up to $100 a barrel and the high gas pump prices became a campaign issue again in 2012.

The President had called for a new energy policy, but it stalled in Congress.  Still, his Stimulus Bill provided subsidies for solar and wind farms, as well as trading in cars and appliances for more energy-efficient ones in his much derided "Cash for Clunkers" program.  While Republicans attacked wind farms for killing birds, they seemed to have no problem with the rapid growth of fracking, which contaminated fresh water supplies.

There was this long-standing belief that if the price of oil got too high this would spur the so-called energy companies to explore alternative forms of energy.  Instead we saw the highly contentious rise of shale oil and gas production, which led to economic booms in North Dakota and Texas.  Canada exploited dirty tar sand oil, which it wanted to pump to refineries on the Gulf of Mexico.  Royal Dutch Shell lobbied the White House to approve offshore oil exploration in the Arctic Circle of Alaska, with the Obama administration relenting earlier this year.

It doesn't seem to matter as oil prices are currently so low it isn't in Shell's interest to do anything more than peg potential sources, and hope that oil prices increase in the coming years.  Arthur Berman says not to get your hopes up, as there is currently such a glut of oil that it will be a long time before we see prices at $100 a barrel again.

When the going was good, everyone wanted to get in on the oil boom.  This even led to a reality show called Black Gold, which followed crews of roughnecks hoping to strike it rich like Jed Clampett.  All of the sudden oil was everywhere, leading many persons to believe that the idea of "peak oil" was a hoax.  However, Berman notes this is largely a misunderstanding of what "peak oil" means.

The term simply referred to easily accessible oil, and was first mentioned in 1956 by M. King Hubbert, when he estimated the amount of oil available based on extraction methods at the time.  Now we have fracking and deep-water oil drilling that allow so-called energy company to explore previously unreachable depths.  Of course, it comes at a price.  Berman estimates that to make these processes lucrative oil needs to be at about $90 a barrel.

So, why not explore alternative energy sources?  Berman sees solar and wind energy as representing too small a share of the overall energy picture and that there isn't the technology in place for any appreciable gain in the next ten years.  Unfortunately, this is the type of short-term thinking that puts us in these crises, rather than develop long-term strategies.  Royal Dutch Shell may call itself an "energy company" but it continues to put most of its effort into oil exploration.

The Obama administration has walked a thin line in promoting alternative energy sources while still offering concessions to the oil companies.  I suppose he thinks this buys him time, but there is nothing to indicate that the succeeding administration will have the same interest in alternative energy sources that he does.  To hear the GOP candidates, they would free up all federal land and offshore oil rights.  This despite the massive loss of jobs due to the oil glut.  Even Hillary has been lukewarm on the President's alternative energy strategy.

California solar farm
Oddly enough, the energy sectors that see an increase in job opportunities are solar and wind energy.  These two alternative energy providers added nearly 80,000 jobs between 2008 and 2012, and as of 2014 there are more than 173,000 solar jobs!  These are far more jobs than Keystone XL was ever projected to create.  There are also bio-fuels to consider and other sources of energy that would reduce our demand on oil.  Not to mention better efficient cars and appliances, and the increasing viability of electric transportation.  All fast growing industries.

Still, the Republican believe you can drill yourself out of any bad situation. Jeb Bush and Marco Rubio both want to end a ban on oil drilling within a certain distance of the Florida Gulf Coast.  Bush also wants to open up more federal land to oil drilling.  If nothing else, these free market advocates should recognize that the market doesn't support increased drilling, but rather a shift toward alternative energy sources if you want to create more jobs.  But, this is what happens when you allow yourself to be controlled by oil companies.

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