Category Archives: Oil and Gas Exploration

Senate Meddles in Energy Market

The Associated Press reported last week that “Democrats celebrated a step toward reducing U.S. dependence on oil as the Senate approved a bill calling for more ethanol and the first boost in gas mileage in decades.” What the Democrats are really celebrating is their move to micromanage the energy market. They would like to micromanage all the markets. That way they can get more campaign contributions from all the industries that want to play in their markets.

We don’t need additional controls on the energy market, we need fewer. If the government would get out of the way private industry and a free market would eliminate any energy problems. The government is currently preventing the building of nuclear power plants, preventing the development of new domestic oil fields, and preventing the building of new oil refineries. Right here in my state Senator Mel Martinez boasts frequently about ‘protecting’ our gulf waters from becoming oil fields. There is no pressing need to reduce our dependence on oil in general; what we need is to reduce our dependence on foreign oil.

There is no real environmental gain from using ethanol instead of gasoline. The only benefit from ethanol is that it can be produced domestically and, therefore, reduces to some extent our dependence on foreign oil. We should welcome the development and production of alternative energy sources like ethanol, but leave them to the free market. If there is demand for ethanol someone will supply it. And there will be demand for it when oil prices get high enough. But ethanol is not the final answer.

The ultimate renewable energy source is the sun. When the sun stops shining we won’t need any more energy. If the government wants to sponsor some far-term basic research into new sources of energy it should put its money and effort into developing revolutionary ways of capturing solar energy. I’m not talking about capturing it through the production of corn and then extracting energy from the corn. I’m talking about more direct methods like the current use of solar cells to produce electricity. There has to be some breakthrough solution out there; we just need to get enough of the right people thinking about it.

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The Senate bill calls for price gouging provisions that make it unlawful to charge an “unconscionably excessive” price for oil products, including gasoline. Are they kidding? How do they expect to measure what is unconscionably excessive? Some court will throw that out the first time it is challenged. Perhaps they know that and are just trying to make some political mileage.

Britain Should Retaliate Against Iran

When the British hostages are recovered from Iran, Britain should immediately launch an attack against Iran. They should punish them severely from the air and sea and then quietly withdraw. Iran should not be allowed to take such a hostile action without consequences. Britain should not accept the humiliation that the USA accepted (that is, Jimmy Carter accepted) during the embassy hostage situation in 1980. If we had retaliated appropriately then (yes, Ronald Reagan could have done that after he took office in 1981), Iran might not be the troublemaker that it is today.

Whether or not the Brits wandered into Iranian territory is irrelevant. Rational nations don’t initiate international incidents over miscalibration of GPS devices. If the Iranians sincerely believed that their GPS coordinates were correct and the Brit’s were wrong, then a simple warning to the Brits on-scene should have been sufficient to deal with the breach. It is clear that the Iranians wanted to provoke an incident.

Since this is a maritime incident, Iranian ports would be appropriate targets for the attack. But no, they can’t do that because it might disrupt the flow of oil from Iran. In fact, attacking any target in Iran might provoke them to shut off the flow of oil to Western Nations. Maybe the Brits aren’t willing to be held hostage to their thirst for oil. But many in the USA would rather have pretty beaches than energy independence. Maybe the Brits will have the courage to weather some short-term consequences of an attack to gain the longer-term benefits. After all, Iran is as dependent on selling its oil as the West is on buying it.

Martinez Takes NIMBY Stand on Drilling

Senator Mel Martinez vows to fight a proposal to drill for oil and natural gas off Florida’s coast. Here is his press release:

March 13, 2007 - Washington, DC - U.S. Senator Mel Martinez (R-FL) today issued the following statement in response to the announcement of a new effort to open oil and natural gas drilling off of Florida’s coastline. Senators Byron Dorgan (D-ND) and Larry Craig (R-ID) have announced legislation to open offshore drilling as close as 45 miles to Florida’s coast, including Cuban waters for U.S. competition.

Senator Martinez said:  “This is bad policy. It attacks Florida’s protections, it violates the embargo with Cuba, and it would put drilling rigs in the Gulf military training area. This proposal goes back on everything the Congress dealt with last year – everything we did to create a long-term buffer for Florida. I will fight this proposal every step of the way.”

The bad policy is Martinez’s ‘not in my back yard’ policy. Florida uses oil and natural gas so why shouldn’t it bear it’s share of the burden of producing it? There’s a lot of talk about becoming less dependent on oil from the middle-eastern countries but very little action.

How many people want an embargo with Cuba to stand in the way of less expensive fuel? Does Martinez think that relations with Cuba are more important than the availability of energy?

The “Gulf military training area” is not a critical issue. The military can continue most of the training and testing exercises in the presence of oil rigs and move the others farther into the Gulf. Anyway, the Air Force wants to move much of the testing now done at Eglin AFB to California.

Most of those who oppose off-shore drilling say that it will spoil the beautiful coastline. They talk about the chance of oil spills and the ugly, polluting industry that supports the drilling and processes the oil and gas from the off-shore wells. They want you to believe that all the tourists that now visit Florida will immediately leave and never return if we allow the oil and gas industry to come in. This is just a smokescreen for their real agenda: thwarting all new industrialization in general and energy production in particular. I say ‘energy production in particular’ because it supports other industries.

Florida also discourages on-shore drilling. An exploration company is planning to drill a well here in Northwest Florida about 25 miles inland from the Gulf of Mexico. A company representative told me that they have encountered a lot of roadblocks in the state permitting process. He said that process has become one of the major expenses in exploring for new oil and gas fields in Florida.

(Full disclosure: I have a very small financial interest in the proposed inland well. My only interest in the off-shore drilling is to keep oil and gas available at the lowest possible prices.)