http://online.wsj.com/article/SB10001424052748704784904575112144130306052.html?mod=WSJ_Opinion_AboveLEFTTop&mg=com-wsj
We were reminded today by the WSJ editorial board that President Obama, in his January State of the Union speech, promised "... a new generation of safe, clean nuclear power plants and new offshore areas for oil and gas development."
It would appear that President Obama's Cabinet hasn't jumped on that directive.
The Congressional ban on offshore drilling expired in September 2008, and the Bush Administration plan for leasing the high potential "Outer Continental Shelf" was due to begin this year. But, within a month of taking office, Interior Secretary Ken Salazar halted leasing by extending the public comment period by six months. When that period ended last September, Interior said it would take "several weeks" to analyze the results. It has yet to release those results (our guess is that 6 months is longer than "several weeks").
Last week, Secretary Salazar informed Congress that he was scrapping the Bush plan and that leasing would not begin for at least another TWO YEARS.
As we look for signs that oil prices are starting to trend up (and they are not, as yet), our thought here is that getting started with oil leases now would be good strategic planning. Actually, getting started with drilling our own oil would be good strategic planning anyway, no matter what the price is. "Spills" are no longer an issue technically and "deep water" technology has been perfected, as has been evidenced in recent years in the Gulf of Mexico and off the coast of Brazil.
Nuclear power has not made much progress either. Only 5 of 50 states have nuclear-friendly "enabling" legislation that might convince corporate boards to commit capital to a long-term project. The federal Nuclear Regulatory Commission, despite adopting a streamlined licensing process in 2005, hasn't issued key rules. Worse, nothing has been approved as a process for nuclear waste disposal. No utility is going to make large capital bets given this kind of government policy uncertainty.
We would conclude, as the Wall Street Journal has, that the government's actions show continued "hostility" to oil drilling and nuclear power. So, does that mean that we're comfortable with an oil price "range" of $50 to $150 per barrel. We're back to $80 now. Is that comfortable? Is $120 still comfortable?
Just as China is now the largest car market in the world, how soon will they surpass the rest of the world in oil demand? If China and India were to increase their rate of oil consumption to just half of America's levels, those two countries would burn thru 100 million additional barrels per day OVER the current world oil use rate of 86 million barrels per day. Do we think that's not going to happen?
Getting back to Mr. Salazar (and those he represents), how does he explain that it is OK for a China/Cuba joint venture to drill 60 miles off the coast of Miami, Florida but he's not ready to give guidelines for his own country's oil companies to drill off our coasts? Does he think the China/Cuba technology is better than what we have in the U.S.?
Peak oil theorists are not all crackpots. Matthew Simmons and Boone Pickens are well respected for their knowledge and accomplishments in the oil business. If Simmons is right about oil depletion rates, and the aging infrastructure (both people and "rust"), oil could go to $500 in a heartbeat.
Deep water drilling takes longer.
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Yeah that's not good. I'm definitely with you on this, they at the very least need to rule either way on offshore drilling and they need to do what they can to hasten nuclear plant growth.
ReplyDeleteCraig: Thank you for your comment. I'm mystified about nuclear power: and France has what percentage of its electricity already being produced by nuclear plants? And "cheaper" than oil, coal, or "gas" (especially, Putin's gas). And, offshore oil: what could possibly be preventing logical people from wanting to open up drilling? These are, of course, rhetorical questions.
ReplyDeleteNuclear "batteries" have been in usage for years in our US naval fleet with seamen working and sleeping around those reactors daily.
ReplyDeleteHowever, those self-same reactors cannot get licensed for operation anywhere in the USA. Instead, the company who manufactures those nuclear batteries sells them overseas. The only reason the company does not leave the USA is because of the stipulations in their government contracts.
When their civilian business becomes more valuable than their military contracts, they are gone ... long gone with their technology.
I wonder if China would be interested in nuclear batteries?
Dale: Great input! I had no idea. Isn't it ironic that we've figured out "nuclear" but we can't get it moving very well for civilian purposes? But, we can continue to launch "space shuttles", most recently to install an "observation deck" on the space station.
ReplyDeleteCharlie,
ReplyDeleteI may be a crack pot. All signs point to this being an almost certainty. However, I see a deep seeded undercurrent of fear in our society; the USA. We fear the government and corporations equally. We fear science and religion. Technology and the pace of change is terrifying people.
Charlie, I believe that fear is a greatest ally of the status quo. Both sides use to try and tilt the scales to the detriment of reasoned debated based upon a consensus of a fact pattern; and yes, there can be one because not everything is as arbitrary as politics makes it seem.
It's therefore no wonder that we can't make decisions about offshore drilling or nuclear power because both sides have used fear as the basis of their marketing, not evidence. If we want a solution, then one side has to unilaterally disarm, and hope that the public hasn't abandoned an even-handed approach to evidence and information gathering.
"Odase.": Your comment about "fear" is a good one but we need to remember that lobbying for or against issues can swing votes in state level and national legislation. It's a free country and economy so we all can lobby but the money spent can get issues decided in a lopsided way. One of the worst examples of that would be the larger banks lobbying against legislation that would restrict risks those banks take while they have taxpayer "bailout money" on their books. Ironic and unethical but real.
ReplyDelete