How to drill our way out of the enrgy crisis

[Flectarn]

We've been hearing a lot about opening up US coastal waters to drilling for oil recently. As every one knows, or should know, none of that oil will see the light of day for years, and all of it will go straight into the market (which is comparatively huge), making approximately zero impact on the price or crude or gasoline. However, what those oil fields are going to do is make money, lots and lots and lots of money. The Government estimates that there are 85.9 billion barrels of crude buried under the continental shelf, that works out as follows.

85.9 billion barrels of crude @ 125 Dollars a Barrel (conservative estimate)
10,737,500,000,000 dollars
Ten TRILLION Dollars

Now it's costly to build and operate an Oil Well, particularly an offshore one, but anyway you slice the margin, your looking at between hundreds of millions to billions of dollars in profit annually.

Now, what if all that money didn't disappear into the coffers of oil companies (sorry shareholders), but instead went into a fund that would help us all out of this crisis.

I propose that not only do we allow drilling in currently banned areas, we REQUIRE it. Then we take 90% of the profits and put it into a fund. That fund will be used to finance development of renewable energy and mass transit systems nationally. It will provide extremely low interest loans to fund development of wind, solar, bio-fuels, light rail, buses, whatever technology is necessary to ween ourselves off of oil and stave off climate change.

The Oil Industry and their Republican friends can either use their considerable resources to help the country get through this crisis, or they can quit down about domestic drilling and work on a real solution.

[2046]

You want to nationalize oil? I mean you're only taking 90% of the profits.

Granted, most oil-producing nations do feature nationalized oil production, which is all sorts of ironic given that its sold at free market prices and thus governmental inefficiencies actually produce more profit for said countries, but whatever.

I was totally with you on the yes-drill part, though. As the recent jokes have said, let's line up the ANWR caribou and send the tip of the drill right through their skulls, followed by catching dolphins and tying them on the tips attached to offshore drilling platforms.

Bush ended the executive ban on drilling and prices dropped over ten percent that week, with an additional drop this week, meaning we're now at something like 85% of the high from just a couple of weeks ago.

But Pelosi informs us all that we can't drill our way out of this. Which, of course, is why she is arguing for the floodgates of the national oil reserve to open, because oil that was previously drilled for doesn't count, and supply-and-demand only counts in the limited categories (e.g. the oil reserve) that she dictates. Oh yeah, and that would leave the US without its oil reserve intended for hardcore emergencies and military use, but don't let the Republitards tell you that Democrats like Pelosi are weak on defense. Just ask Juan from OpenBordersAmigo!.com, or Barack "I Make The French Look Brave" Obama.

(I wonder . . . is that more acceptable to him than his actual middle name? I mean, they get ticked when you say the real one. I'm just askin'.)

[Flectarn]

I'm not talking about nationalizing oil per se. Only the profits from the newly opened areas. which, I didn't elaborate on this in the post, should probably go to to a federally charted, but independent entity (the fund I mention) set up as a development bank.

Specific taxes for specific purposes

[Jedi Master Spock]

With the profit margin mostly going to someone else, you can rest assured that administrative costs will likely be unusually high and profits unusually low for those particular offshore platforms. They may even manage to lose money on the governments' dime - off-shore drilling can be a very risky proposition with a long time to the big payoff.

Meanwhile, the coastal states - most especially Florida, but including the Carolinas, California, and even New Jersey, all of which get lots of beach tourism money - will be sweating blood over their threatened tourist dollars any time anybody drills near their piece of the coast.

Let me explain why. South Carolina has something like a $16 billion tourism industry - about 10% of its gross product. Most of that is dependent on people not making a mess off the shore of South Carolina; one relatively minor accident upstream of Myrtle Beach could single-handedly put the state into a recession.

It's out of self interest more than concern for local wildlife and wetlands that the beach states have heavily fought efforts to allow drilling off their coastlines; even if the states themselves operated the oil rigs and pocketed the profits, it would not be a very good bet for them to make. With someone else operating the drills and the profits going into a federal fund, they're looking at the short end of the stick.

[Flectarn]

Oh I have no doubts that states won't like this, and for good economic reason. But i'm fairly confident that a lift of the congressional ban will go through regardless, particularly if the recent drops in the price of crude reverse. I just would like to see the money go to something that will actually have the supposed consequence of lifting the ban, that is relieving the pressures of a long term energy crunch.

as for unusually high costs... that requires more thought.

[Praeothmin]

I'm actually for a nationalized oil industry.
Look at the ungodly amounts of profits coming in every month to the (very) few major shareholders of big oil companies.
If all these profits were instead going directly in the government's pockets, it would definitly mean better lives for all the citizens of our country.
Sure, governments aren't the most efficient spenders, but with all that money coming in, they'd have the means to be inefficient and still get rid of the national debt in a few years...

And yes, I'm from Canada, we're a Capitalist-Socialist country, and I like it that way.
Never take away my free Health care... :)

[Ted C]

Actually, I heard an interesting suggestion for utilizing the oil fields on Federal property.

The government would license oil companies to drill and extract oil from these fields for domestic sale only. That might cut down the potential price of that oil (although I doubt it would reduce it by much), but the government could essentially contract the bidders to explore and extract for cost plus a percentage, basically guaranteeing them a profit margin.

That keeps the oil in the domestic supply, reduces oil prices as much as any plan would (if the US is getting oil from these fields, it will be buying less on the open market, reducing prices there, as well), and give the government good grounds to oversea the operations for environmental safety.

And we might as well get started. It's not like the need for oil is ever really going to go away. Even if we stopped using it for fuel, we'd still needed it for plastics and other industrial products.

[Mike DiCenso]

And we might as well get started. It's not like the need for oil is ever really going to go away. Even if we stopped using it for fuel, we'd still needed it for plastics and other industrial products.

Actually, even that's not entirely true. There are biodegradable corn-based plastics now available that can at least reduce or eliminate petroleum-based plastics for some applications.

The only real downside to this is that it does require growing corn crops for the sole purpose of making the alternative plastics. So in some parts of the world, where food is scarce, it may not be a viable alternative. But at least it is a step in the right direction.
-Mike

[Jedi Master Spock]

"Not entirely" may be an understatement. A lot of plastics are manufactured using natural gas, not oil.

[Flectarn]

ce or eliminate petroleum-based plastics for some applications.

The only real downside to this is that it does require growing corn crops for the sole purpose of making the alternative plastics. So in some parts of the world, where food is scarce, it may not be a viable alternative. But at least it is a step in the right direction.
-Mike

http://nymag.com/news/features/30020/

http://www.wired.com/science/discoverie ... 5/09/68888

I think the best option is to use Tower Farms for industrial purposes, like bio-fuel and plastics, and robust permaculture farms for food (and sequestering carbon)

[Cocytus]

But Pelosi informs us all that we can't drill our way out of this.

Big Oil man T. Boone Pickens has been saying the same thing recently.

Here's some quick facts. Saudi Arabia may be the world's largest exporter of oil, but the largest supplier to the US is Canada. We get most of our oil from our own continent. Additionally, the US has the world's largest proven reserves of coal, and the price of coal is also way up. Why?

China. (And India to a lesser extent.) The demand from the burgeoning economic superpower is driving the cost of fossil fuels through the roof, and no amount of offshore drilling is going to bring the prices down to the level we enjoyed a few years ago.

There is no one solution to the nation's energy problems. It will take a concerted effort from government, business and the general public, as well as a lot of time and money. The fossil fuel the nation needs desperately to be rid of is coal. Coal is the worst polluter of any fossil fuel, and it supplies the majority of this country's energy. We need more development of nuclear power, which offers the most bang (hurr hurr) per unit of land area. We need more research and development of alternative fuels, particularly cellulosic ethanol and methanol, which can be derived from a variety of biomass. Corn, unfortunately, is a really lousy, land- and energy-intensive way to make ethanol. Look at Brazil, for example. They supply the majority of their automotive fuel requirements with ethanol derived from sugar, which is much easier to grow than corn. Too bad the US doesn't have the climate for it. Architecture will also play a major role in helping alleviate the nation's overall energy problems by removing buildings from the coal-supplied grid. There are numerous projects underway both at home and abroad to incorporate green features such as vegetated roofs, energy efficient facades, solar arrays and wind turbines, either into new buildings or existing ones.

And thanks to JMS for his point. For further proof, look at this proposal, which is also taking flak from shore residents and beachgoers. It's for an offshore wind farm.
http://www.philly.com/philly/health_and ... Shore.html

[Flectarn]

We need more research and development of alternative fuels, particularly cellulosic ethanol and methanol, which can be derived from a variety of biomass. Corn, unfortunately, is a really lousy, land- and energy-intensive way to make ethanol. Look at Brazil, for example. They supply the majority of their automotive fuel requirements with ethanol derived from sugar, which is much easier to grow than corn. Too bad the US doesn't have the climate for it.

I'd personally argue for Butanol as a better alcohol fuel. 1 to 1 replacement for gasoline, so not mileage loss, and it can run in existing auto-engines. Though really i'm waiting for Diesel Hybrids, and Bio-Diesel derived from Algae to hit the market

[Jedi Master Spock]

I'd personally argue for Butanol as a better alcohol fuel. 1 to 1 replacement for gasoline, so not mileage loss, and it can run in existing auto-engines. Though really i'm waiting for Diesel Hybrids, and Bio-Diesel derived from Algae to hit the market

Actually, I was just chatting a couple days ago with someone who happened to be a retired Ford engineer who worked on projects related to their alternative-fuel fleet. E-85 vehicles are mostly considered a bust these days, but not all gasoline engines can simply have alcohols poured into them and run.

Although butanol is not as chemically reactive as ethanol (or methanol), it probably still does a number on rubber hoses and the like over time; alcohols in general are harsher than alkanes. It's also a lot more viscous (similar to diesel fuel) - which again could easily cause problems with some engines' fuel delivery systems. I doubt it will run with 100% equivalent efficiencies in all gasoline engines over the long run.

[Flectarn]

I think the rule of thumb with any switch to bio-fuels is the replace any natural rubber hoses with synthetic ones. least that's hows it is for bio-diesel. Hadn't heard the viscosity bit before, but at any rate it will run in more engines more easily than any other gasoline replacement i've heard of. Enough so that BP has a couple plants churning the stuff out in UK now.

[2046]

But Pelosi informs us all that we can't drill our way out of this.

Big Oil man T. Boone Pickens has been saying the same thing recently.

I've heard his radio ads (which reminded me of H. Ross Perot ... what's with the letter crap anyway?).

They are unhelpful, because we *can* drill our way out of this.

What Pelosi pretends to be ignorant of is supply and demand. She wants to increase the supply via the national reserve . . . Republicans want to increase the supply via production. Given market forces (e.g. human irrationality), even the threat of production has its benefits (e.g. 11% drop in oil prices the other week after Bush's maneuver, with no other particularly noteworthy oil news AFAIK until the following week).

Her way is illogical. Releasing the reserve is merely a temporary move of something from the "demand" column (i.e. filling the reserve) to the "supply" column (i.e. un-filling the reserve).

To put it on a personal level, it's the equivalent of taking money from savings. That is to say, if the price of some monthly bill goes up, one of your available choices is to stop putting money into savings. But if it goes higher than your monthly input into savings, you have the option of taking the existing savings and paying for the increase that way.

But of course, that's stupid, because then when the stuff you were saving for happens, you don't have the money. And eventually you're going to have to put money back into savings, which means you'll have to pay the current higher bill plus the monthly savings input.

It is only a temporary solution.

Further, it is not a solution, but a band-aid. The Strategic Petroleum Reserve has about 700 million barrels of oil, with the ability to pump back out about 4.5 million barrels per day. That's around 20% of US oil consumption, and would last around 6 months. Even if we confined that to the US, and assuming $4 gas, that's just dropping it to $3.20 for six months. Does it help? Sure. So would dropping the taxes per gallon. But it is only a temporary help.

What is needed is additional supply. Peak Oil arguments aside, we have extra supply available.

Not coincidentally he's invested heavily in that "wind pihre and solar pihre" he barely seems able to pronounce. He's also been on the Peak Oil train for awhile.

Here's some quick facts. Saudi Arabia may be the world's largest exporter of oil, but the largest supplier to the US is Canada. We get most of our oil from our own continent.

So? We still pay world market price for it, or thereabouts. (NAFTA is also involved in there somewhere, though whether in the amount of oil we get the pickings of or a slight discount I don't remember.)

Additionally, the US has the world's largest proven reserves of coal, and the price of coal is also way up. Why?

China. (And India to a lesser extent.) The demand from the burgeoning economic superpower is driving the cost of fossil fuels through the roof, and no amount of offshore drilling is going to bring the prices down to the level we enjoyed a few years ago.

China's demand, according to reports, has increased eight percent per year since 2002. That's around a fifty percent jump in this decade. But even so, they're still at less than a third of our levels, and since 2000 world oil consumption per day has only increased maaaaybe 15%. That's including us, China, and everyone.

Even if we were near refining capacity, that doesn't justify a doubling of price. For that you also have to factor in the falling dollar and so on.

But I'm just sayin', you increase production, and you have a surefire way to hold down price, even in world markets filled with idiots.

There is no one solution to the nation's energy problems.

Agreed.

Coal is the worst polluter of any fossil fuel, and it supplies the majority of this country's energy.

I don't have a problem with coal, and I have even less of a problem with so-called clean coal technologies. The US has approximately one metric f***ton of coal available, and it would be silly not to use it. We're like the OPEC of coal.

If there's profit in so-called coal-to-gas tech, I'm all for that, too.

We need more development of nuclear power, which offers the most bang (hurr hurr) per unit of land area.

This I agree with you 1000% on.

Speaking of nuclear . . . why is it that the same hippies who don't want us strip-mining for coal or drilling through the skulls of caribou for oil won't shut up about how evil nuclear power is?

We need more research and development of alternative fuels, particularly cellulosic ethanol and methanol, which can be derived from a variety of biomass. Corn, unfortunately, is a really lousy, land- and energy-intensive way to make ethanol. Look at Brazil, for example. They supply the majority of their automotive fuel requirements with ethanol derived from sugar, which is much easier to grow than corn. Too bad the US doesn't have the climate for it.

Renewable fuels sound neat, but there are limits to what you can do with that. I mean, you basically burn up your food supply each year . . . is it any wonder food prices have increased? And who does that hurt the worst? The poor and third-world countries.

Ironic that the same hippies who demand ethanol are also starving the children, no? But then we shouldn't be terribly surprised . . . that whole DDT thing went the same way.

Anyway, though, to abbreviate my long-windedness a smidgen, let me just say that I'm all for developments in energy, planetary conservationism (not environmentalism .... different thing), and so on.

I want solar cells on my roof powering LED lights in my home . . . I think that would be just insufferably badass. I want better solar cells that could power more than just lighting, too. But I want these when the market means they make sense . . . I'm not going to go in debt for them today.

I'm the same way on larger scales. I don't want "advancement" that costs more than what we were doing to begin with. I don't want ethanol if it causes food and fuel prices to rise. I don't want wind if you have to build a coal plant as backup anyway (and, by necessity, have it running just in case the wind slows, 'cause that's not like a car you can stop and start).

Take Gore's recent national challenge on going all-solar by 2020 or whatever the hell he said. The idiot failed to recognize that unless you built enough solar cells to wrap around the planet and created a worldwide grid (preferably also improving transmission tech (e.g. photonics)), you can't use solar. Solar rocks by day and sucks by night, and we don't have the ability to store enough energy to make it a single evening that way.

We already know that a planetary grid makes a lot of sense . . . hell, Bucky Fuller figured that out real quick back in the day. You ease the peaks for all. That alone would be a boon.

But I digress . . .

You know, if we'd started drilling in ANWR back in '95 when they said "No, you can't do that, it'd take ten years to get any oil out of there!", we'd f***ing have it now?