Posted by: Debby Durkee | February 27, 2011

Chaos in Middle East — drill here now.

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Chaos in Middle East – drill here now.

Deroy Murdock over at National Review Online says that the escalating chaos in the Middle East requires the United States to start drilling for our own energy supplies now. Gas prices will continue to rise, especially with Gaddafi threatening to set his own oil rigs on fire. It isn’t just oil prices that could go sky high, but virtually everything with it.

Citing a Libyan source, former Middle East CIA officer Robert Baer wrote at Time.com that Gaddafi has instructed his operatives to sabotage Libya’s oil fields, supposedly to show Libyans that without Gaddafi, things could get really crazy. Libyan production already is down 25 percent, and Italy’s Eni and Spain’s Repsol have suspended operations there.

Nearby, relatively calm and reasonable Morocco suddenly faces its own woes. On Monday, Interior Minister Taeib Cherqaoui announced that among some 37,000 demonstrators, at least 128 people were wounded while five charred bodies were found in a bank that protesters had torched.  Snip —

With Bahrain experiencing its own upheaval and Yemen under threat from al-Qaeda, things could spin out of control in both those area as well.

Next door, the House of Saud — simultaneously loyal U.S. allies and two-faced sponsors of Islamofascist mosques and Wahhabi terror — nervously watches these developments.

So do Israelis…  Snip –

Petroleum futures Thursday reached $103.41 per barrel, their highest price since September 2008. Unleaded gasoline averages $3.24 per gallon — up 55 cents, year-on-year…

Amid all of this, the Obama administration treats America’s domestic-petroleum supply like the Smithsonian’s Hope Diamond: something to be observed and admired, but not touched.

“The Bureau of Land Management has created a lot of uncertainty related to onshore leases,” says the American Petroleum Institute’s Erik Milito. “They have added redundant steps in the land-use-study process. They are adding layers that delay opportunities for oil and gas development on federal land.”

The picture at sea is no better.

“The administration has at least 40 exploration plans and 40 development plans that have not been acted upon,” Milito adds. “We understand that dozens of oil-spill-response plans require action as well. This is in addition to the environmental assessments that must now be completed for the exploration plans. They cannot approve permits to allow drilling to commence until they address those items.”

“In addition, this may be the first year since 1964 where we will not have a lease sale in the Gulf of Mexico,” Milito continues. “A recently announced supplemental environmental-impact report for the Gulf may not be ready until 2012.  Holding these lease sales is critical to our economic and energy security because they provide the opportunity for long-term investments in American jobs and energy sources.”

Short-term delays can cause long-term stasis. A Wood Mackenzie study commissioned by the API found that a one-year delay in granting permits could render “sub-economic” 13 out of 25 deepwater oil and gas fields. Those 13 fields represent 2.7 billion barrels in potential oil reserves (which would satisfy about five months of U.S. demand) and 540,000 barrels of daily output. Such a loss would slash Gulf of Mexico production by 27 percent. Snip –

…America relies heavily on oil today, for jobs, commerce, and our very existence. As bad luck would have it, oil comes mainly from an area that is as stable as a prison riot. “Precarious” barely describes America’s predicament. And yet, a huge part of the solution — domestic oil and gas — lies just beneath our feet, if only Uncle Barack would let us open the basement door and light this dormant furnace.

Murdock asks the question: May we drill now? I honestly don’t think Obama will hear even the most polite of questions about drilling. He wants to “fundamentally transform the United States of America.” How much more fundamentally can you transform the country than by rendering it unable to move by literally pricing it out of gas and oil? I’m sure he sees this as great. The United States will be forced to ride trains, bicycles and walk. How’s that 30-mile commute to work going to affect you? Read all of Murdock here:

http://www.nationalreview.com/articles/260684/middle-east-chaos-demands-us-oil-production-deroy-murdock

Irwin Stelzer of the Weekly Standard looks at the Libyan situation and wonders about the effects of a Libyan oil shock. He looks at the best case, a bad case and the worst cast scenarios.

In the best case, whatever government emerges from the Libyan chaos will need the revenues from resumed production and will promptly open the valves, in which case the price spike will prove no more than that​—​a temporary increase. In the bad case, the trouble spreads to Algeria, removing almost 2 million barrels per day from the market, thinning excess capacity to levels not seen since the Gulf war. Then, say the economists at Nomura, we will have to adjust to oil at above $220 per barrel.

In the worst case, the Saudi regime is the next domino to fall. King Abdullah’s decision last week to allow a $37 billion “royal gift” of the kingdom’s riches to trickle down to civil servants, students, the unemployed, and to new infrastructure fails to appease the dissidents. And the country’s brutally repressive secret and religious police forces prove no match for demonstrators intent on overthrowing the House of Saud. If that happens .  .  . well, maybe it won’t.

One thing seems certain: The U.S. recovery is under threat. James Hamilton, a member of the economics department of the University of California, San Diego, has studied the effect of oil shocks from 1859 through 2010. He finds, “All but one of the 11 postwar recessions were associated with an increase in the price of oil. .  .  . The correlation between oil shocks and economic recessions appears to be too strong to be just a coincidence.”

…Higher oil prices are hitting the economy at a time when monetary policy is already loose and, combined with eye-watering fiscal deficits, threatening to unleash an inflationary wave. With the printing presses already running at top speed, and a flood of red ink pouring over the national ledgers, policy-makers, even those wise enough to avoid past errors, have little room for maneuver should oil prices stay at anything like current levels.  Snip —

Stelzer says that many sets of “Ifs” are involved in how our economy will ultimately be affected by the happenings in the Middle East. If the “ifs” go one way, we’ll be okay. If they go another, we’ll be up the proverbial creek. And, does he think that any of these looming disasters will convince our president to open up the oil spigots here in the United States? Sadly, (and I’m in agreement with him) no.

…My guess is that the ideology that supports uneconomic subsidies for wind and solar, which have nothing to do with the transportation needs of America, will trump the reality of the nation’s continuing need for oil.

Read all of Stelzer here:

http://www.weeklystandard.com/articles/libyan-oil-shock_552544.html

Steve Everley of American Solutions says that basically Obama’s oil policy is to put huge barriers to drilling in this country while relying on the unreliables: Venezuela and Iran for needs we might have in the future. Huh? What planet is this guy on?

What is the Obama administration’s response to this spike in prices?

Treasury Secretary Tim Geithner says we shouldn’t worry because the economy will be able to absorb the higher costs, another way of saying that consumers will just have to accept paying more at the pump. Yesterday, a top official in President Obama’s Department of Energy said that the administration’s stance is to hope people like Venezuela’s Hugo Chavez and Iran’s Mahmoud Ahmadinejad “will continue to support our economic recovery” with their “ample supplies” of oil. Snip –

There are an estimated 86 billion barrels of oil in America’s Outer Continental Shelf, but the Obama administration has banned most production from this resource and refused to issue permits in the few areas where Americans are allowed to drill.

America is also the world leader in oil shale resources: the Green River Formation in parts of Colorado, Wyoming, and Utah contains more than one trillion barrels of oil, which is more than three times the proven reserves of Saudi Arabia. Recent technological developments have also allowed us to obtain even more shale oil from existing fields; a new estimate for the Bakken shale formation in the Dakotas shows available resources are about 20 billion barrels of oil, five times larger than estimated in 2008 and an astounding 130 times larger than estimated in 1995.

It’s difficult to imagine a more dangerous and more inappropriate response to rising oil and gasoline prices than that of the Obama administration: Banning domestic production, not worrying about rising consumer costs, preventing job creation, and hoping that foreign dictators will keep our best interests in mind.

If our country can make to 2012, even if I have to crawl to the voting booth on my hands and knees, I will take the greatest pleasure in voting for anyone other than Barack Hussein Obama. This man is unconcerned about the plight of the American people. Let’s show him how unconcerned we are about his future as well. Read all of Everley here:

http://www.americansolutions.com/drill/2011/02/is-the-obama-administration-concerned-about-rising-oil-prices.php

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Responses

  1. I am afraid that we are in much trouble as long as we have that dunce in the Oval Office and the ” greenies ” with their influnence with the liberal mass media. Maybe when the planes are grounded, the trains are stalled and moma can’t get to the shopping mall something will be done.

    • Yes, Bob, I believe you are correct. There’s a movie coming out on tax day — April 15 (very appropriate) called Atlas Shrugged…basically about all of the producers in the country going on strike because they can’t make a profit due to government interference. If it’s anywhere near you, go see it…it’s only part 1. They need our support!


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