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Wednesday, June 04, 2008

John Gard, et al., don't get it (and they have their facts wrong)

by folkbum

In my Janesville post below, I never offered up drilling ANWR (or offshore, or oil shale, or whatever) as a way to solve GM's problems--nor did I offer up the environmentalists and others who have blocked ANWR exploration as potentially at fault. A couple of commenters noticed the oversight.

But I left it out for two main reasons: One, suggesting a supply-side fix for our inevitable fossil-fuel decline is classic denial. When you keep doing what you have always done you will always get the same results. Two, there's just not that much oil there:
Drilling for oil beneath the pristine tundra of the Arctic National Wildlife Refuge would do little to ease world oil prices, the federal government's energy forecasters said in a new report issued in a week that saw oil surpass $130 per barrel for the first time.

Congress has fought bitterly for years over whether to allow oil companies access to the Alaska refuge's 1.5 million-acre coastal plain, a habitat for seabirds, caribou, and polar bears. Oil company executives, called to Capitol Hill for a grilling over high oil prices, pointed to the untapped resources of ANWR and off the U.S. coastlines as evidence that Congress was as much to blame for the tight global supplies of crude as the petroleum industry.

But the U.S. Energy Information Administration, an independent statistical agency within the Department of Energy, concluded that new oil from ANWR would lower the world price of oil by no more than $1.44 per barrel—and possibly have as little effect as 41 cents per barrel—and would have its largest impact nearly 20 years from now if Congress voted to open the refuge today.
At $1.44 less per barrel, gas prices would fall seven cents a gallon.

John Gard, who is trying again to beat eighth-district Rep. Steve Kagen, showed he doesn't get it, either:
In remarks at a Green Bay news conference, Gard this afternoon cited "the United States Congress" as the main obstacle to lowering gas prices. [. . .]

Gard's plan calls for more drilling in the Arctic National Wildlife Refuge in Alaska, something Kagen has opposed, as well as more off-shore drilling and development of "shale oil sites" in western states. He also advocates cutting "red tape" on oil refineries.
The whole deal with oil shale is that it's only profitable when oil prices are high. And the refinery tale that he's spinning is a flat lie:
One reason for the drop in the number of U.S. refineries is that the petroleum industry began shutting down older, inefficient refineries and concentrating production in more efficient plants, which tended to be newer and larger.

Consolidation within the industry has also played a role in refinery operation. For example, the merger of Gulf Oil Corporation into Chevron Corporation in 1984 led to the closing of two large refineries, one in Bakersfield, California, and the other in Cincinnati, Ohio. In 1998 Exxon merged with Mobil Oil and BP merged with Amoco. BP Amoco then bought Arco in April 2000 to create the world's largest non-OPEC (Organization of the Petroleum Exporting Countries) oil producer and the third-largest natural gas producer. In the May 2004 article "Effects of Mergers and Market Concentration in the U.S. Petroleum Industry," in GAO Highlights, the General Accounting Office noted that "over 2,600 mergers have occurred in the U.S. petroleum industry since the 1990s."
All that "red tape"? A lie:
From 1975 to 2000, the U.S. Environmental Protection Agency (EPA) received only one permit request for a new refinery. [. . .] A congressional investigation uncovered internal memos written by the major oil companies operating in the U.S. discussing their successful strategies to maximize profits by forcing independent refineries out of business, resulting in tighter refinery capacity.
The oil companies aren't falling over themselves to build new refineries because keeping tight reins on the supply is what keeps prices high. The blame for tight refinery capacity lies squarely at the feet of the oil companies themselves.

But the widespread use of these red herrings--ANWR, oil shale, refineries, ocean-killing coastal drilling--suggests, again, mass denial among conservatives from bloggers to candidates for Congress. The American experience of automobiles (and energy generally) is done. It must change. The Republicans are falling further and further into the past, further and further into irrelevancy. It's why Gard will lose again in November, why McCain will too: It's time to lead, which implies a certain amount of going forward, not backward. And it would help if they stopped lying.

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