Wednesday, February 23, 2011
Killing the U.S. Oil Industry Since 1980
By Alan Caruba
As President Obama’s term drags into its second half, it is increasingly being compared to the failed presidency of Jimmy Carter. Having increasingly thwarted the ability of the U.S. to access its own vast reserves of oil, successive administrations now burden Americans with billions more in costs at the gas pump.
My “go-to guy” for information about the U.S. oil industry is Seldon B. Graham, Jr., the author of “Why Your Gasoline Prices are High”, a man with more than fifty years experience in the oil industry, first as a petroleum reservoir engineer and later as an oil and gas attorney.
The turmoil in Libya, a member of the Organization of the Petroleum Exporting Countries (OPEC), the oil cartel, is causing the price of a barrel of oil to rise due to the usual speculation that occurs on Wall Street and around the world by those seeking to cash in on the prospect of reduced oil production and supplies.
What it most demonstrates, however, is the inane and unnecessary dependence on foreign oil that America has imposed on itself thirty years after former President Jimmy Carter’s energy policies began this insanity.
As Graham notes, “As to the actual price of oil, last week (Feb 13-19) the average OPEC oil was $97.20 a barrel while the average U.S. oil price was $90.13 a barrel. Let’s stop for a minute and savor the fact that U.S. oil was $7.16 cheaper than OPEC oil.”
“U.S. oil is always cheaper than OPEC oil. Most Americans don’t know that.”
There’s a lot that Americans don’t know about their domestic oil industry and for that we can thank a succession of U.S. presidents since Carter who have misled Americans on the subject. We have arrived at the latest President who, like Carter, is doing everything he can to kill the U.S. oil industry when not bowing low to the King of Saudi Arabia.
If America could drill for its own, domestic oil and replace dependence on the Middle East and other foreign sources, “it would save American gasoline consumers an estimated $28 billion annually,” says Graham, “as well as put millions of Americans to work.”
On April 2, 1980, Carter signed the Domestic Crude Oil Windfall Profits Tax, a direct attack on U.S. oil companies. “The result,” says Graham, “was that half a million oil workers lost their jobs. In January 1980, U.S. oil production was 8.7 million barrels a day. Foreign oil imports went from 2.9 million barrels of oil per day in February 1983 to the current 9 million barrels of oil per day.”
You don’t have to be a mathematical genius to understand these numbers. From 8.7 million barrels of oil a day in 1980, U.S. oil production has fallen to 5.6 million barrels of oil a day today. That’s a lot of oil that remains untapped domestically and offshore of America.
Like Carter, President Obama keeps blathering away about “alternative” or “green” energy sources such as ethanol, an additive to every gallon of gasoline that insanely burns a major food source, corn, as fuel. His administration has thrown billions at solar and wind energy producers despite the fact that coal represents half of all the electricity we use daily and despite the fact that both of these "alternative" energy sources have failed miserably in European nations that turned to them.
How crazed are Obama’s oil policies? Steve Maley, an operations manager for a shallow-water Gulf of Mexico oil and gas production company located in Lafayette, LA, noted in a Human Events.com commentary on February 18 that “Obama’s Fiscal Year 2012 Budget proposes to increase the tax liability of energy companies to the tune of $46 billion over the next ten years.”
Maley compared “recent quarter (2Q 2010) oil and gas industry profit (net income) to a sales ratio of 7.1%, versus 8.7% for all manufacturing companies. In terms of return-on-investment, oil and gas usually lag in the S&P 500.” The myth of huge oil and gas profits simply does not stand up to Obama’s State of the Union claim of “huge profits.”
Then factor in the Obama administration’s moratorium on both deep-water and shallow-water oil drilling in the Gulf of Mexico. Under the administration’s new Bureau of Ocean Energy Management, Michael Economedes, an internationally respected expert on the oil industry, notes that “offshore permitting has come to a virtual standstill”, adding that “thousands of companies in the energy sector are nearing the point of collapse after almost a year of inactivity.”
U.S. courts have twice demanded that the Obama administration end its moratorium and continued to be ignored.
The U.S. was an oil and gas producing giant before successive White House administrations declared war on this vital sector of our economy. The industry, representing the potential of millions of jobs and millions of barrels of oil and cubic feet of natural gas, has been stalled by appallingly stupid energy policies since the 1980s.
U.S. dependence on foreign oil producers, mostly state-owned in places like Russia, Saudi Arabia, Venezuela and elsewhere, makes us vulnerable to events in far-off places when we could be producing our own oil and natural gas more cheaply right here in places like the Gulf of Mexico, in Alaska’s ANWR, and off-shore of our coasts where estimates are in the billions of barrels and cubic feet of our own untapped energy reserves.
We can thank the environmental organizations whose war on America’s energy sector has been going on now since the 1970s. It is their anti-coal, anti-oil, and anti-nuclear campaigns that will literally leave America at a standstill and in the dark if they are not reversed.
© Alan Caruba, 2011