Offshore Oil Drilling – The Scam Continues

Congress has gone on a 5-week summer recess.  Does it really matter?  In 3 months all members of the House will be up for re-election and 1/3 of the Senators will be doing the same.  So it will only be political grandstanding for the duration.

Some Republicans stayed behind in the darkened halls of Congress willing to debate offshore oil drilling.

President Bush has chastised Democratic members of Congress for not lifting the ban on offshore drilling.

“The high price of gas is taking a toll on summer travelers,” Bush said. “The sooner Congress lifts the ban, the sooner we can get this oil from beneath the ocean floor to your gas tank.”

What bothers me is the media completely ignores the facts.  I’ve heard the Democrats mention these facts but the media continues to spin this in favor of the Bush administration. 

Let me preface by saying that this issue has been a sore spot for me for a number of months.  I’m not just talking about the exorbitant price of oil, but the lack of direction, proper coverage and outright lies we hear. I wrote about it on June 25th when I presented the spin we were getting along with the facts.  I also discussed the real reason why the price of gas is so high – the Enron loophole and hedge funds. (Read my ‘The Offshore Oil Drilling Scam’ post here)

President Bush and now John McBush want Congress to lift the ban on offshore oil drilling.  The media seems to stand behind this as more newspapers are slanting their stories in favor of the administrations position.  They say the number of Americans supporting offshore oil drilling is increasing as well because they are feeling the pain in their pocket books.

Truth is, the facts haven’t changed here.  What has changed since then is the full-court pressure we have gotten from our politicians and the media.  In their descriptions, they intentionally provide incorrect facts and even use false terminology.

Myth:  There is a ban on offshore drilling that the Congress can overturn if they would just return to vote.

Fact:  There is no ban on offshore drilling.  We know this because we see the rigs off of the coast of Louisiana and Texas.  Every time a hurricane heads in that direction, the oil rigs are covered as concern rises that there may be damage or spills.

Then what is everyone talking about?  There is a moratorium on leasing offshore and onshore locations that currently aren’t under lease.  That means, President Bush wants to lease these areas to the oil companies – Exxon Mobil, BP, Shell, Chevron.  Offshore drilling is legal and occurring in  areas already leased to our greedy friends. 

Myth:  If we give these leases to the oil companies, the price of oil will immediately plummet.

Fact:  Sorry.  It will take a minimum of 10 years to see any benefit at the pump.  Oil rigs just don’t build themselves, drill then pump oil, refine it and put it in my gas station.  No, the price will not drop for a minimum of 10 years and some experts place that around 18 years.

Bush Myth:  “The sooner Congress lifts the ban, the sooner we can get this oil from beneath the ocean floor to your gas tank.”

Fact:  Sorry, Mr. President.  Just because you say it does not make it true.  I guess if you want to get technical:  Let’s say that the process takes exactly 10 years to the day – from the approval by Congress to the first gas stations receiving a shipment.  So if Congress votes today – it will take 10 years.  If Congress were to vote in 2 months, it will take 10 years and 2 months – so technically his words would be true.

Myth:  The Democrats are the reason that Congress can not do anything about lowering the gas prices.

Fact:  Each time the Democrats have proposed some assistance, the Republicans have prevented this from occurring.  Some of these will be discussed in the solutions section.

Solutions:  What can we do today to reduce the price of gas today?  Obviously, drilling for oil will not show any results for at least a decade.  Neither will any type of research of alternative types of energy.  The options are vast but all are time-consuming and we are out for immediate results.

There are a couple of things we can do today that will have a relatively brisk impact on the price of gasoline.

1.  We can tap into the Strategic Petroleum Reserve.  There is a 727 million barrel capacity in reserve.  Of course, this isn’t a long term solution nor will it have a huge impact.  It is always nice to have oil in reserve in case of emergency.  Is four dollars a gallon considered an emergency?

2.  Refine at full capacity.  I’ve read reports that the existing rigs are only pumping at anywhere between 70 and 85% of capacity.  We need to pump more oil to increase the supply.  Even though the main culprit of the high prices isn’t supply and demand, increasing supply should have an impact on lowering the prices some.

3.  Close the Enron loophole.  This loophole has permitted hedge fund speculators to drive up the price of oil.  Experts say that closing this loophole will have an immediate impact on the price of oil – like dropping it 60% in a matter of days.  Personally, I am a little skeptical of that number but even a 30% decrease will make our lives much easier. 

Since researching offshore drilling and the high prices back in June, many more articles have popped up discussing the loophole.  There are even sites out there that specifically are working to address the speculators.

It isn’t like Congress isn’t aware of these solutions.  Democrats have discussed and ‘tried’ to implement all of them but were met by the ‘great Republican wall’.  I put tried in quotes, since the oil lobby is so powerful, I am not certain just how much effort they gave.

It isn’t a surprise that John McCain changed his position to match President Bush.  What is surprising is Barack Obama seemingly softened his stance due to perceived popular opinion.

Some interesting reading on this subject:

Offshore Oil Drilling

How Oil Drilling Works

The political positions – see the media slant?

Obama flip-flops on offshore oil drilling – The Guardian 05-Aug-2008

McCain’s Offshore Drilling Position A Flip From Three Weeks Ago – The Huffington Post 18-Jun-2008

Schwarzenegger criticizes McCain’s offshore drilling proposal – LA Times 27-Jun-2008

Drilling for Victory – National Review Online 05-Aug-2008

Hedge funds, speculation markets & the Enron loophole

CRS Report for Congress – The Enron Loophole – July 7, 2008

Perhaps 60% of Today’s Oil Price is Pure Speculation – F. William Engdahl – May 2, 2008

US Senate – The Role of Market Speculation in Rising Oil and Gas Prices – June 27, 2006

On-line campaigns

Committee Against Oil Exploration – Campaign Against Offshore Oil Drilling

Stop Oil Speculators.  Send Congress and S.O.S.





3 responses to “Offshore Oil Drilling – The Scam Continues

  1. The only energy or oil monopoly in this country is a governmental institutionalized monopoly on our country energy market. The legislative branch has been engaging in anti-competitive energy practices from drilling to building new refineries and much more. They are in clear violation of the

    “Sherman Antitrust Act
    This Act expresses our national commitment to a free market economy in which competition free from private and governmental restraints leads to the best results for consumers.”

    Clearly the governmental restraint are in violation of a free market economy and is criminal negligence on the part of the liberal politicians who are the real cartel that profit in taxes more then 3 to 1 to the oil companies that actually work for their money and then have to pay taxes on top of that. So when Oil profits go up the tax revenue increase is 3 times that of the oil companies. So who do you think is the real cartel???

    This criminal incompetence of the democrats and legislative politicians anti free market energy economy in allowing American companies to meet American Oil needs is in need of change and with bush opening up offshore drilling it is time that we conservatives take a page from the left wing play book and for us to us the judicial system in upholding our laws and open up drilling.

    Why dose the Senate call for investigations on big oil? Because they are trying to transfer the blame off of them by placing the blame on someone else. By placing the blame on the oil companies and keep people from seeing that government is the true problem they are able to offer false hope in an effort to gain more power and money from taxes while eliminating a free market economy in our country and forcing us to send our money to unfriendly Middle Eastern countries.

  2. Jeff,
    Thanks for taking the time to pass along some of your thoughts. I suspect you and I will never agree on this issue.

    Exxon-Mobil’s profits for last quarter were $11.7 billion! I doubt they really believe that they are being violated by a lack of a free market as you claim. Now if you are suggesting that governmental restraints have prevented additional oil companies from entering the fray, I will beg to differ that it was the deregulation during the Reagan administration that has helped build this small cartel of oil companies.

    Also, we had Republicans in control of the House from 1995-2007 and mostly control of the White House since 2001. During those 6 years, gas prices began their spiral upward. I didn’t see your party attempt to do anything to control this nor did they even once attempt to lift the moratorium on offshore drilling. And why aren’t the oil companies pumping at full capacity? I am not talking about the rigs that are dry.

    Leasing out the areas currently not leased due to the moratorium will allow the oil companies to drill in more locations, but it will do nothing to drive down the price of gasoline, which is actually the purpose of my post.

    Did you really say – ‘meet American Oil needs’? I just have one thing to say: $11.7 billion!

    I agree that the Senate and the House are responsible for the high price of oil. The Enron loophole was orchestrated by Congressional Republicans led by former Senator Phil Gramm. This loophole has allowed market speculation to drive up the price of oil. It is the same legislation that allowed Enron to do the same thing a number of years ago – right before Enron collapsed.
    And why do you seem to not care about looking at alternative fuel sources? Brazil did a very good job of getting off of oil and did so very quickly.

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