Saturday, May 14, 2011
In what can only be described as a victory for Republicans, President Obama has, in the wee hours on a Saturday morning, announced that he will direct federal agencies to approve more drilling for oil and gas off the Alaska and Gulf coasts. His motives are transparent, even to Reuters:
U.S. President Barack Obama, under pressure from Republicans and the public to bring down gasoline prices, announced new measures on Saturday to expand domestic oil production in Alaska and the Gulf of Mexico.
High fuel prices have dented Obama's ratings in opinion polls and threaten to dampen the economic recovery that is critical to his re-election in 2012.
The question is, why announce a big policy reversal at the quietest moment in the news cycle? Well, because it is a reversal, which point both victorious Republicans and anti-oil liberals will be making as loudly as possible with delight and outrage, respectively. The White House wants to minimize the publicity now and leave President Obama room to campaign on the claim that he "expanded" offshore drilling (when, in fact, he unlawfully did the opposite).
Now let's bring those rigs home.
I call shenanigans!
The lead story linked above is from Reuters, is based on statements in Obama's current "Weekly Address" and has the headline: "Obama seeks more drilling in Alaska, Gulf of Mexico" So the meme that's being created is that Obama wants to drill, baby drill. This will get circulated and repeated until many of us believe it.
But it's bullshit. You can read the entire Weekly Address here: http://www.whitehouse.gov/the-press-office/2011/05/13/weekly-address-president-obama-announces-new-plans-increase-responsible-
Therein, Obama recapitulates his answer to $4.00 gas ... "steps we should take that make good sense":
1) Go after gougers and market manipulators.
3) Eliminate $4 billion in annual subsidies to the oil companies.
4) Invest in clean, renewable sources including by helping companies manufacture solar panels and wind turbines.
What's new is #2: "increase safe and responsible oil production here at home." But it's not really new -- its the same bullshit rhetorical position Obama was taking before the Deepwater Spill, when he had to do a rhetorical 180. Now he's spinning back. If you parse what he says, there's a lot of hedged and qualified language -- a coded message to his Green supporters. "We plan ... to create new incentives for industry to develop their unused leases both on and offshore." Hee Hee.
The oil companies aren't getting "subsidies." Not unless you believe that all money and wealth belongs to the government -- that they're just letting us borrow it. Instead, the argument over "$4 billion in subsidies" is a subset of the argument about what expenses oil companies can deduct when figuring out their taxes -- and especially about the timing of those deductions. Big Oil consistently pays over 30% of income in taxes, which validates that they're paying their fair share, more or less. Many multinationals play games to pay less than 10%. $4 billion is a rounding error in what we spend on oil every year (over $700 billion and climbing).
When I buy gas at the pump, the government is not a necessary participant. But it is there to take a cut of the action. The terms of how it takes that cut can never be a subsidy.
But when one of Obama's darlings wants to sell a solar panel or a new-fangled battery, the government has to be there to make a donation, else the deal will never happen. Now that's a subsidy.
I think GE CEO Jeff Immelt understands the difference. Maybe he should have a sidebar to explain it to Obama when they meet at the next session of the Small Business Job Creation Panel that Immelt's chairing at Obama's request.
Enjoyed Ignoramas insight as well.
Agreed, Obama says a lot of dishonest things.
We have to see if it is reality - also, the testimony of the Oil Execs in the Senate was rather damaging to Democrats. "Why don't you let us drill?"
Anyhow, on top of it all, this is yet ONE MORE of all the other failed Democratic Partisan policies are running away from in rhetorical terms.
They vilify every opposition, then are forced to abandon their disastrous offering. It is one big joke.
Who do the profits belong to, the corporation, the government or the US citizens that own the corporation? Obviously, the owners. The government takes a good portion of the profits that could be used for expansion. The profits could also be given to the investors, who again pay income taxes on the dividends. Double taxation, yes. Job killing, yes. Governments money, no way.
It doesn't matter one bit what he says; because his political orientation demands that he continue to tank the economy with BS green/socialist policies, and when as a result gas prices do not come down and food prices continue to escalate -- Obama and the Dems and all of those craven Repubs will get the blame that they have worked so had to earn.
A pox on all three of their houses.
Russ posted the new campaign ad from the NRSC last night.
he synops ; "So the Obama energy policy is this: higher gas prices, fewer jobs, and real environmental damage in place of harmless carbon dioxide emissions. That should be a winner in 2012."
Wonder if it touched a nerve in the WH?
Obama in Audacity of Hope (2006): "I serve as a blank screen on which people of vastly different political stripes project their own views."
Homer: "Marge, it takes two to lie. One to lie and one to listen."
Actually, Obama usually doesn’t literally lie. It’s a talent. Instead, he often omits to state material facts necessary in order to make the statements he makes, in the light of the circumstances under which they were made, not misleading. It helps to have an enabling media to get away with this, and to avoid any situation that would allow cross-examination.
Huckabee isn’t running. Get used to saying “Madame President.”
Actually, about all those "profits," 75% get reinvested in new capital, exploration and drilling. The rest goes to pay dividends, etc. Approximately 70% of all oil company stocks are owned by or on behalf of pension funds and mutual funds. Indeed, oil stocks last year made up some of the highest performers in state pension holdings. So, yeah, go ahead and soak the oil companies, Obama. Punish them for making a profit.
"The question is, why announce a big policy reversal at the quietest moment in the news cycle?"
He's hoping those eeeeevil speculators won't hear about it and respond accordingly. The last thing he really wants is for gas prices to come down on the expectation of future supply, and if it doesn't happen he can claim that argument holds no water after all.
"HE DID NOT SAY DRILL -- He said
1) to increase the number of LEASE sales and
2) extend the length of the LEASE and
3) extend the area where LEASES were allowed
--- the word DRILL was not mentioned"
A good juxtiposition of Obama's speech (drivel)and the words 'not drill' wherever "Lease" appear would look good.
Some further background that I’ve learned.
Shell had spent five years and over $4 billion to drill in remote Alaska, but last month the EPA denied a final approval because Shell hadn’t factored in the emissions from use of an ice-breaker in their environmental impact application.
The EPA has now backtracked, and says permits are forthcoming.
"Sometimes you have to sacrifice a pawn … "
I spoke to an energy banker friend some months ago, and he ranted about what a pain in the ass Petrobas and Brazil were to deal with. But he didn't disagree when I said "at least they let you drill, all's said and done." Apparently, Obama and Soros think so too.
Like I've been saying, we have to blow out the current EPA and start over.
ps Papertiger's link above to a video is a hoot and well worth watching
Either Reuters is attempting Spin on the president’s weekly address to bump his poll numbers (highly probable) or there is some careful strategic maneuvering going on here.
If this is really a policy change, and the price of oil drops even a few more dollars per barrel over the next few weeks, it can be spun as a victory for the president, as he used the power of the bully pulpit to pop the speculator's bubble.
If nothing happens with the price of oil, this announcement can be simply buried as if it never happened, airbrushed out of history.
A small percentage of the revenue the government rakes in from offshore oil leases in federal waters is designated as a conservation offset in the Land and Water Conservation Fund. Among other things. the LWCF protects historic battlefields, conserves working forests and farms, enhances recreational access to federal lands, and supports local economies and jobs through increased outdoor recreation. It does all this without a dime in in revenue from our personal income taxes.
In FY10, Offshore Energy Revenue brought in 5.25 billion dollars, of which $306 million went to the LWCF. Authorized for up to $900 million, the LWCF has only once received its full allotment of funding (This was in the 1990s, when Newt Gingrich had an important conservation project in his district). In FY11, Congress authorized a bit more than $300 million out of the billions in revenue that offshore oil leases provide. Congress diverted the remainder of the authorized appropriation elsewhere in the federal budget rather than for its intended purpose. FY12 negotiations are now underway.
I make my living as a conservation professional. I support using these funds as intended as a conservation offset, and if that means opening up more areas to offshore exploration, this is something I and a number of other conservationists would consider supporting.