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Skyscrapers in the Amazon
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Having just gotten back from the NFIB’s Small Business Summit in Washington, D.C. where an audience of business owners were addressed by the likes of Senator John McCain, Meg Whitman (former CEO of eBay), legendary quarterback and entrepreneur Roger Staubach, and several others, I went on the obligatory “Capitol Hill visits” with our Florida delegation. At a time when oil is at $135 a barrel and gasoline costs $4 a gallon, you’d think our elected representatives would be working overtime to combat these realities and steer our economy back from the brink. Think again.

In office after office, we heard familiar refrains: “It’s an election year, so nothing will get passed between now and January” . . . “It’s really difficult to get the parties to agree on a common direction for the country any more” . . . “There’s no reason to draft legislation that has no chance of getting passed this year” . . . “There are some pretty complicated issues out there right now” . . . etc. As a decisive, well-informed, and forward-thinking business owner, I turned many different shades of green and struggled not to vomit. If I ran my business like they run our government, we’d be out of business. But, I guess that should only be expected as merely a prudent American family or business would balance their budgets or risk going bankrupt from crushing debt. Those same, common-sensical rules don’t apply in Washington, where politicians think the “good times” last forever and find it the epitome of civil discourse to make sport of partisan disagreements. It must be nice to live with such delusions . . . on our dime.

In each Congressman’s office we visited, I pressed for the obvious: “When will you and/or your party put forth a comprehensive energy plan?” To me, it doesn’t really matter which political party gets its act together sooner; I just want our economic course to be set once again for growth, not retraction. I want our country to continue to be great, not flop into a slow and painful decline of their doing. As naïve as it may sound, I sort of thought that occasionally politicians do what’s in the best interest of the country as a whole, irrespective of what it might do to them in their next election. Well, the answers I got were pretty grim. It became obvious that these staffs — and even some of the Congressmen themselves — had long-ago forgotten that simple, foundational concept from Econ 101: Supply versus Demand.

First, let’s address supply: with nearly 11 billion barrels of oil in that artic no-man’s-land, otherwise known as the Artic National Wildlife Refuge (ANWR), just sitting there waiting to be drilled, we continue to be more concerned with the caribou than our economic future. This, despite evidence that caribou herds, other wildlife, and vegetation in frigid climates actually flourish near the warmth of oil pipelines. This, despite overwhelming support by the residents of Alaska to drill in ANWR. This, despite ANWR being so remote that virtually no one lives on this barren moonscape. Oh, and I almost forgot: this, despite $4-a-gallon gasoline.

By perfecting the refining of solid shale rock into diesel or gas, American engineers may have the largest oil supply in the world on our hands — in the American West with 1.8 trillion barrels estimated. That’s enough to meet present U.S. demand for over 200 years! But can we get at it? Unfortunately, we can’t. Some Congressmen thought it wise to prohibit the leasing of federal interior lands that contain at least 80% of our shale.

Our Outer Continental Shelf is estimated by the Interior Department to contain some 86 billion barrels of oil and nearly 420 trillion cubic feet of natural gas, but 97% of the Shelf’s 1.76 billion acres is undeveloped and 85% is off-limits to drilling. At least 8.5 billion proven barrels of oil sit off our Pacific, Atlantic and Gulf coasts, but our esteemed legislators won’t let us get at it to attempt any semblance of energy independence. The primary argument always put forth of “oil on our beaches” or some other environmental concern is speculative at best. One only has to look to Hurricane Katrina’s decimation and note that no significant oil leaks occurred despite wrecked oil rigs all over the Gulf. Any industry insider will promptly explain that the “problem” only occurs from leaking, sinking or wrecked tankers, not from the platforms themselves — the technology these days is just that sensitive and superior. So “oil on beaches” is a fairly far-out hypothesis and putting rigs 40+ miles out is far enough that beach-going tourists will never even see them against the curvature of the Earth. Besides, as I type this, the Chinese are preparing to drill in Cuban waters less than 60 miles off the Florida coast — so is it just better to continue bickering on the sidelines about this or perhaps DO SOMETHING?

As for demand, we know that isn’t exactly slowing down. China and India’s lightening-quick growth of their middle-classes and the infrastructure that accompanies it is a tremendous development for our economy, the world’s economy, and the world’s stability over time . . . but their demand for oil will continue to grow even when our demand starts to plateau in the future. Sure, we’ll develop (and are developing) alternative energy sources, but relying predominately on one source is a doomed strategy that oil over-reliance has already taught us by now. Variety is what we need. Hybrid and electric cars are but one part of the long-term solutions. Solar, wind and hydro-electric energies will continue to come down in costs and wide-spread adoption will ensue with proper market pressures and incentives. But, nuclear energy needs to be included, as do new oil refineries. We can no longer afford to take a back seat to the French, a country with nearly 85% of its power from nuclear and virtually energy independent. They once learned from our revolution; we need to adopt this particular one now from them.

Of course, some people will argue that it takes nearly a decade for a new refinery to come on-line or a nuclear power plant to be built and become operational, but immediately lifting the bans on these sends a very strong signal to speculators and OPEC that the weaning will commence. Allowing drilling in ANWR and along the coastlines, and letting the individual states decide to drill or not to drill, would cause the price of oil and gas at the pumps to plummet overnight as the perception of tight supplies in the future would evaporate. And with 57% of Americans now favoring “drilling in U.S. coastal and wilderness areas now off-limits” in a recent Gallup Poll, it would appear that our demand for a change in energy policy is accelerating. We cannot let this massive transfer of our wealth to other countries (including totalitarian dictatorships and absolute monarchies) continue and hope to still be an economic powerhouse in the future.

As I see it, we have an obvious leadership crisis, not just an energy one, on our hands. With comments like those above, is it any wonder that the so-called “best and brightest” don’t go into politics anymore? Is it any wonder that some of the current proposals to address our energy crisis involve suing OPEC or increasing taxes on “windfall” oil company profits? Sounds like more of the blame politics of victimhood to me, and last time I checked, only true Socialists have such problems with “profits.” Many leftists have the same problem with pharmaceutical companies until a pharmaceutical company’s R&D efforts (fueled by profits) save a relative’s life. So how about proposing something that might actually WORK in the real world . . . say, away from Washington? Essentially, my recipe is above IF anyone has the courage to act on it. Whether it can get passed or not at the moment is irrelevant — since politicians follow the polls, it’s only a matter of time before these measures become law. But any smart politicians should be leading this charge, not catching up to it much later. And the time to take action is NOW!

Finally, you may have heard one of the largest discoveries of oil has just been found in recent weeks off the coast of Brazil. But do we see the legislators in Brasilia hemming-and-hawing about speculative environmental damage? Of course not. They’re busy preparing to launch their country into the upper echelon of world oil players! Our politicians, by contrast, are busy looking for someone or something to blame and talking-up the “greening of America” as THE solution. Hoping on one magic bullet is a risky strategy. Sadly, we look to be on a long-term economic decline due to our misguided representatives who long-ago forgot their Econ 101 lessons and even who they represent. And I used to think South American governments could learn a thing or two about capitalism. I guess I should’ve just dropped the “South.” It’s only a matter of time until Brazil starts acting and looking like the U.A.E. Skyscrapers and ski-jumps in the Amazon, anyone?

25 Comments

  1. Scott says:

    Well said! Where is the heart and soul of those who “lead” us. Apparently in trouble.

  2. Mike S says:

    Oil companies, inorder to protect their cartel, have controlled the “opposition” for some time now by funding the “green” organizations which lobby against common sense exploration and refining so as to use the force of government to prevent the laws of the free-market to stabilize prices. Therefore you have no new refineries for the past 30 years, and all the smaller ones have been bought up by the big boys… Then, “sky-rocketing demand” can be blamed for the massive run up in prices… when it is primarily the fascistic (corporate control of government) environment we live in today…
    Well, actually the run up is due in part to that, but also a weak dollar– Bush comes in at $30/barrel and leaves at $140-$150– Oh yeah, he is an oil man, but talk to Greenspan and Bernanke about the tanking dollar too!! Peak oil is a scam, but speculators don’t run up the price on something that is plentiful– so, employ the Malthusian philosophy of limited resources and voila— the word “sustainable” become household…You people out there are pretty stupid if you buy what the mainstream media on the right (or Left) want to sell (errr, I mean “tell”) you….

  3. Chris G. says:

    I couldn’t have said it better myself.

  4. Alfred Acitelli says:

    Basic economics are in play: with higher demand and price will come the conversation, then the discussion, then the proposals, then the legislation. Better late than never.

    One can only hope that business, government, and those concerned about keeping the nation’s environment looking good will all work together and realize that in America one CAN have it all – drilling, shale to oil conversion, coal – and still be clean and profitable if there is an energy policy and leadership that supports the creative energy and intelligence of the nation’s citizens.

    There is no reason this country can’t lead with the proper technologies for accomplishing all this, even while experiementing with all the new technologies for reducing reliance on oil.

    Leadership and guts is needed.

    Not needed: Oil company subsidies, more regulation, more delay, one sided viewpoints.

  5. Dave Pearson says:

    ditto and Mike S is on to something as well.

  6. Cindy H. says:

    How sad that you share the same short sightedness of the very people who you were complaining about. Yes, here on US soil we have resources that could produce enough oil, but the end result of using that oil is further pollution and global warming. Or are you on the G.W. Bush denial bandwagon? The impact of the limited warming that has already taken place is creating record droughts and floods that are in turn affecting agriculture in a big way world wide. The answer isn’t to find a new source to supply a bad habit, it’s to invest our time, energy and money into creating economically viably alternatives that don’t give us a few years more to enjoy our oil gluton ways at a price of economic, environmental and political disasters just a short distance down the road. That’s what the politicians do – make the consituents happy today, don’t worry about what will happen tomorrow, that will be on someone elses watch. We need stong leaders both in Washington and in our economic institutions who have the guts to stand up and say enough is enough, like it or not America, you have to change your ways!

  7. Scott D says:

    My suggestion is that we demand passage of an energy policy that includes drilling everywhere we must to generate 12+ M barrels/day and become independent. Then build refineries and nuclear plants and develop alternative energy sources

    If not, the citizens must employ a “no incumbents” policy when it comes to elected officials. Until each and every one of them has been turned out – sent home – back to the regular world, and the lesson has been learned that it is the people, not the pols who run this country.

  8. John Armstrong says:

    The price of oil and the reasons or blame for it have been on the front page for the last month. I wonder if anybody noticed the 180 billion dollars that congress was going to pass for the so- called war in Iraq. I believe that we should have term limits in congress,much like the president.Can you imagine Bush being in office for twenty years???

  9. Michael Gravette says:

    There is one Democrat, and others who agree with him, who wants to Nationalize the oil industry.

    John Galt where are you?

  10. Eric says:

    Mike is right but at the same time regardless of what happens it is a ll about greed. Even IF they were allowed drill in Alaska or in the states shale or otherwise do you really think they would lower the price. They would say the price remains high due to everything from exploration cost to increased production and everything else under the sun. If they could charge for air we breath they would. There is probably some greedy nut out there trying to think of a way to do that now even if it meant contaminating all the air first and then charging for the solution.

  11. Eric says:

    I didn’t say anything about moderation. this is what I said.
    Mike is right but at the same time regardless of what happens it is a ll about greed. Even IF they were allowed drill in Alaska or in the states shale or otherwise do you really think they would lower the price. They would say the price remains high due to everything from exploration cost to increased production and everything else under the sun. If they could charge for air we breath they would. There is probably some greedy nut out there trying to think of a way to do that now even if it meant contaminating all the air first and then charging for the solution.

  12. Steve Pickering says:

    Energy is one of the most politicized issues of our time. Chris has been very accurate with the facts, something that politicians and professional news organizations have refused to do. They would rather follow the sensation and emotional path.

    Our country currently needs strong leaders in business, Congress, and the Presidency to work through the issues logically and wisely, without swaying to the flawed thinking that seems to be prevalent. We need to have a firm commitment to provide our country with the necessary energy it requires to grow and flourish. Anything less is unacceptable.

    Thanks Chris for taking the time to visit our local Congressional delegations. Too bad it was such a waste of time!

  13. Mike S says:

    Cindy,
    I am afraid you have taken the obvious bait, and now march steadfast towards our own destruction albeit with altruistic intentions. Let’s see, our leaders (Scientists, better known as the church of the men in white coats) have somehow hood-winked us into thinking CO2 (Carbon Dioxide) emissions—you know, the gas that plants LOVE, and we exhale—is BAD????? Are you kidding me??? They have convinced the masses that what we learned in 5th grade about the relationship between oxygen/CO2, etc… is a bad thing! Can you believe that?? And now, guess what the solution is…??…. a tax… You can’t make this stuff up.
    Listen, for every scientist that says the sky is falling, I can get another that says data points to the opposite. Cindy, all that we are in right now is a cycle….you know, the earth does, in fact go through cycles as well as the sun—which is all that we are experiencing. More CO2 emissions come from your run of the mill volcanic explosion than man has EVER produced, period. Further, scientists (those from a different denomination than the ones you believe in) have evidence from ice-core samples indicating a CO2 concentration level up to 14 times what we see today in the atmosphere…guess what? Plants love it.
    I agree pollution is bad, but you and I make no difference in our day-to-day activities—the real pollutors are government and multi-national corporations that trash this place on a scale we can’t fathom….BUT, our media tells us all the things we should do everyday to limit our usage of fossil fuels, waste, carpooling, recycling, you name it. You are being conditioned and you dont even know it.
    Short answer– get the government (and their laws that favor the Cartels in the name of “the environment”) out of the free-market, Return our nation to an honest money system (like 1789-1913), Take the profit out of war (look at the huge defense contractors, arms merchants, and ancillary industries), and require ALL government functions/spending to be based solely on taxes collected (ie: no more deficit spending)–The transparency that would create would have the rats in DC jumping ship, and avoiding public office like AIDS, herpes and VD.

  14. Allan N says:

    Interesting banter but that is all it is. Simple rhetoric and we all know nothing will come of it during an election year. Immoral big oil profits? What a joke. Obama would have us believe that we need to tax those profits and yet they only a generate a 4 % return with those profits and still have to finance new oil ventures. What logical investor would w throw money at a 4 % ROI. Iraq is pumping almost 3 million barrels per day .Where is that oil going ? I don’t imagine the gas stations in Baghdad charging 55 cent a gallon at the pump means anything. Mexico graciously agrees to increase gas prices to $2 per gallon so that southern Californians will stop clogging those border crossings on fuel trip to Tijuana. Alberta, Canada oil reserves more then double Saudi Arabia and yet we insist on buying Arab oil while they sell to China? Untapped oil reserves and our current supply can only last 60 years? Wait a minute. I’ll be dead long before that and I’d hope the next generation will have the smarts enough to come up with alternatives.

    Maybe the real modern day terrorists are those Wall Street Commodity traders and the media bombarding us with nonsense.

  15. B. L. says:

    Howdy Chris:

    like most of us, you’re out of your expertise, looking and listening at the usual channels of muddied info and you don’t know what you’re talking about.

    You sound like “Guru Almighty” or just another talk show host.

  16. Bruno says:

    Rebuttal:

    Mike: Oil prices is Not a Conspiracy, just plain old supply and demand. Trust me! I was a member of the John Birch society and I went to the Council on Foreign Relations in NYC.

    Cindy: I see you are a female lib. More worried about the phony Global Warming, oops… I mean Climate Change (since I seems to be getting colder!) than Muslim Terrorist.

    Liberals always want to mother verything …until it Dies!

    The real battle is against the anti-capitalist Left Democrats (aka commies).

    It seem Joseph McCarthy did not finish the Job.

    Free Market Capitalism is very good…this is why people are always trying to get into this country.

    Don’t let the left ruin it and your future.

  17. Kristen C says:

    We all can debate the “issues” forever: abortion, gas prices, saving the environment, etc. The bottom line is we have forgotten what Thomas Jefferson once said, “A government powerful enough to give you everything, is a government powerful enough to take it away.” I completely agree with Chris when he says that if we ran our businesses the way our politicians run our government, we would be out of business before the end of the year.

    They are in public office, and they are public servants. Many politicians have forgotten the fact that being a congressional representative is not a career.

    I say we put them all out of business at the end of this year.

  18. Mike says:

    We have to tell the environmentalists too bad! We can’t be concerned about 70 or 80 years from now!!!!!! The next few years are critical and we have to start drilling and create completion for the oil companies.

  19. David says:

    What an incredibly ill-informed comment on the energy situation!

    Are you aware we, as a country, use 25% of the world’s current output of oil? Are you aware that we produce 2%? So even if the oil wells Big Oil has capped were put back into production we would still be using 25% of the world’s supply. Are you aware Big and Little Oil have millions of acres of productive gas and oil leases they refuse to exploit leading some members of Congress to propose a Use it or Lose It amendment to these leases?

    Aren’t you curious to find out what happened at the meeting between a former Halliburton Exec and oil executives 7 plus years ago? Aren’t you at all offended by the numerous actions taken by officials of OUR government that are buried (along with everything thing else embarrassing to this administration) from public view. Are you surprised your Governor last week said “no” to drilling off the coast of Florida and this week decided to change his mind because he is part of the vice president sweepstakes?

    You live in sunny Florida. Do you have solar collectors on your house? Are you aware that Jimmy Carter put solar panels on the White House and set a goal of 20% of our energy to be from alternatives to carbon based fuels by the year 2000. Are you aware Ronald Reagan took the panels down and did away with the tax credits?

    Are you aware that today it was announced that Exxon, Chevron, Total, and Shell would be operating the oil fields in Iraq? Who do you think will be protecting the oil fields?

    Do you know who controls the largest amount of oil in the United States? No it is not an oil company. It’s JP Morgan. Do you know anything about the destruction of commodities regulation and the Enron exemption? Are you aware of the actions of Phil Gramm? Do you know McCain’s principal advisor on these matters is Phil Gramm.

    Did you listen to executives of Big Oil testify recently that they had no intention of building new refineries in the US. So where is all this oil going after new leases are granted? Anywhere but the US. They also stated their refineries were operating at about 85% of capacity.

    Have you seen the estimates of the cost of speculation in a barrel of oil done by a number of international economists studying the problem that unregulated commodity trading has created. $60 dollars. It is not supply/demand that has oil at roughly $140 a barrel this week.

    The next time you want to blame Congress remember it has been in the control of Republicans during the period when Exxon’s profits rose from $8B to $40B. You should not overlook the fact that there is a president in the White House who comes from a family that is beholden to the Saudis and whose supporters in Texas are the same oilmen who have said publicly they have no intention of doing anything to ease the pressure on not only our economy, but the World Economy as well.

    The next time you feel like making a political statement do so after you have done your research and truly understand the subject matter!

    One other thing. I am not a Democrat. Just someone who came from a government career and believes Public Service is just that and not an opportunity for personal enrichment at the expense of those we serve. The public has a right to know how their money is being spent. If any of my employees ever said they could not remember taking certain actions, or refused to appear before the representatives of the public they would have been fired on the spot.

    Stick to what you know and leave political commentary to others.

  20. Chris says:

    David –

    Thanks for your response. No really, you’re quite pleasant. Sure you’re not a Democrat! Actually, you kind of sound like a conspiracy theorist. Regardless, you DID seem just a tad offended that I, as a citizen, would even bother to comment on such things, and that I’ve been so seemingly irresponsible in my research. Actually, I think you’ll find virtually all of the stats I cited as facts available in many locations – just Google them if you want. Blogging really isn’t the communication medium in which to list footnotes or endnotes – it tends to break-up the brevity of the piece.

    The tone of your response seems like a fairly sad indictment of your view that those in public service are somehow more “correct” than those not in public service. Silly me, I thought public servants worked for the public. Your bunker mentality is the reason so few citizens view bureaucrats in a favorable light – rather than trying to help solve things, it’s far easier to blame others. I certainly recognize that Big Oil has many fingers of blame pointing at them, but I was merely showing how much supply we really do have and prodding our politicians (and our citizens) to do something. I sort of thought that was my right as a citizen living in our Republic. You may be an elitist, but I’m certainly not. We’ve had quite a few responses that contradict yours (most support what I said and even went further) — hope you can handle that.

    And just to respond to a few of your questions, so you don’t think I’d possibly dodge you: in fact, I do have solar cells on my house that heat my pool; I have triple-pane, reflective, heat-diminishing “tape” on my windows; extra caulking; extra installation; and many other basic energy-saving measures. Do you? Last time I checked, the Democrats have been in control of Congress during the time you cite that Exxon’s profits have risen so much. For me, it really doesn’t matter: both parties and the oil companies have been complacent for far too long, hence they shoulder most of the blame. Next time you want to jab at someone, you might want to think about it before treating others so “kindly.”

    Good luck with things.

    Chris

  21. Joe M. says:

    If I hear global warming one more time I may just PUKE! Someone needs to read the report of the enormous waste of resources from Al Gore’s home in Tennessee. Then compare it to the minute amount of waste fro GW’s place in Texas.
    I’m with Knute, DRILL HERE, DRILL NOW, PAY LESS!
    In 2005 Congress passed an energy exploration bill and had the Department of Interior locate undiscovered oil and natural gas both on and off the coast of the US.
    The report was finished in 2006 and it showed 139 BILLION barrels of oil and more natural gas than all the oil in the middle east!
    As far as Jimmy Carter goes,,,that’s exactly what he needs to do is go! Get the hell out! He has not credibility to critize anyone in government. I remember 22% mortgage rates under his control. Billy was smarter than he was.
    Pelosi and Reid should be shot. I’m in favor of throwing the whole crew out and start over. I can no longer tell very much difference between the Republicans and the Democrats. Oh yeah, now I remember, one uses KY to screw us with and the other does not,,,just can’t seem to remember which one does what anymore.

  22. Mike S says:

    Bruno
    –Just because you went to a meeting and used to be a Bircher doesn’t mean that behind the secens forces desire and plan to set up policy/laws in their own favor. You obviously don’t understand how powerful greed is. Ask any relative of the Tuskegee Experiments if “conspiracies” exist where people conspire (ie: plan) to achieve a desired outcome without telling everyone else. So, assuming they do exist, why do you seem to think oil/prices are immune from such planning? You must understand, that much like a forest fire or avalanche– the market response to forces at work has been, to some extent, organic– but it still is controlled to some degree— at least where it matters… But, don’t think the $140/barrel is just oil compnay profit– my point was that it is also inflation. Go to the grocery store and buy a gallon of milk and OJ and come back here and tell me we don’t have inflation… Let me guess, that is a conspiracy too??
    Look, Bruno– The government has changed the definition of what inflation is to “cook” the books (ie: be able to sell you) and report all is well, while Rome burns…
    Wake up Bruno… 1 meeting in NYC and an expired Bircher card doesn’t make you head chief in charge of oil/inflation concerns…

  23. Ray Beihaghi says:

    The politics of oil are more based on speculation at this time than anything else.simply the demand for oil all the sudden don’t jump to 30to 40 percent in just a few months.So it is obviou that some of the moneis goes to buying commodities such as oil, Rice,Corn,………
    However I agree that the FEDS energy policy like their foriegn policy are full of mistakes!
    I beleive if the majority of people change their habits and use public transportation,or alternative energy we could get out of this mess.

  24. Joe says:

    HiYa Chris,

    Thanks, for sharing your blog posts.

    You’re right on the money (literally) when pressing those in Congress for answers to our energy issues.

    Well done!!!

    Keep the press,
    Joe

  25. Peak Oil says:

    I understand that Hubberts peak is accurate and that we are now past the point of peak oil. I believe many of the current events have to do with this downturn and it won’t be long before the main stream media and population wake up and understand what is going on. For me and my family, we are preparing for the next era.

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