Saturday, July 9, 2011

Obama's war on oil and the South

Canada wants to sell us oil. The problem is, Obama and the Democrats don't want to allow it in this country and are stopping the construction of a pipeline to Gulf Coast refineries. The Wall Street Journal reported yesterday:

"EDMONTON, Alberta—In a 21st-century oil boom, this sparsely populated Canadian province has become one of the world's newest petroleum powerhouses. Foreign investors are piling in, and Alberta plans to double production over the next decade.

The problem is that the U.S.—the biggest consumer of Alberta petroleum—may not want the additional oil.

Most of Alberta's 1.5 million barrels of daily exports are extracted from oil sands, or bitumen. Turning this tar-like substance into oil is an energy-intensive process that generates lots of carbon dioxide, a gas suspected to contribute to global warming. Almost all the oil produced ends up in the U.S., where environmentalists and some powerful Democrats have lined up against importing any more of the stuff...

The global oil industry is watching Alberta closely. Some of the world's biggest petroleum players, including Exxon Mobil Corp., Royal Dutch Shell Group and Norway's Statoil have invested in their own oil-sands projects and are expanding production. Foreign companies have made roughly $40 billion in oil-sands deals since 2005, according to data provided by Calgary investment bank Peters & Co

The province has 170 billion barrels in oil reserves, ranking it third behind Saudi Arabia and Venezuela and geared up to ship oil to America:

"Last year, TransCanada Corp. started up its Keystone pipeline, running from Alberta to the oil-storage hub of Cushing, Okla. It has applied to boost capacity from some 591,000 barrels a day to 1.1 million, and extend the line to reach Gulf Coast refineries. The State Department needed to sign off since the line crosses the U.S. border, and a decision looked likely by the middle of last year..."

That part about the State Department signing off on the deal? Well, that turned out to be a problem.

"Rep. Waxman, at the time the chairman of the House energy committee, urged Secretary of State Hillary Clinton to reject the expansion of the pipeline. Fifty other Democratic lawmakers also wrote to her, urging more environmental studies.

Later that month, the Environmental Protection Agency urged a more thorough environmental-impact study, prompting the State Department to delay its decision until this year.

Then, in April, President Barack Obama weighed in for the first time, telling attendees at a town-hall meeting in Pennsylvania he wanted to investigate "how destructive" oil-sands operations may be to the environment before approving the line.

Last month, the EPA said the State Department's environmental assessment still wasn't thorough enough, threatening more delays and further exasperating Alberta officials and oil executives. "There's growing frustration, but there's also acknowledgment that a process has been laid out," said Mr. Liepert, the Alberta energy minister. He says the province will live with the end-of-year timeline, but wants "no more delay

However, don't worry about the oil coming to the Gulf Coast if the State Department has its way. China, big surprise, is trying to get its own pipeline built and grab the oil for itself:

"Industry executives and lobbyists are sending a message: If the U.S. doesn't want Alberta's oil, Asia—in particular, China—will buy it. Enbridge Inc., the company proposing to build the line to the Pacific, has used Washington's delays as ammunition in its own public-relations battle. It's trying to win support for its project from federal, British Columbia and native officials.

"Right now, all our eggs are in one basket: the U.S. market," Stephen Wuori, president of Enbridge's liquids pipelines division, told a group of executives at an industry lunch in Calgary in May. "That basket is not getting any bigger, and some of the folks holding the basket are starting to complain about the chickens
." Article

Shutting down the offshore oil industry, stopping Boeing from moving to South Carolina, trying to get tax increases based on cost of living in the much-cheaper South passed in Congress, and now this. Its pretty clear what Obama and the Democrats think of the South.


Green Leaf said...

The oil embargo, presented in the article, is certainly disappointing. Here we have an ally, a life-long partner, and we are unwilling to enact normalized trade with our largest import.

Not to mention, wouldn't construction be somewhat of a "job-creation" effort?

The Green argument can be overcome with basic science and probably development of technology to improve the emissions, but no, we don't want to invest in future technology and new jobs!?!

If the article is factually correct across all claims, this is a damning argument against the President's attempt to turn up the heat in the economy. Even I can figure out that transport costs are much lower from my next door neighbor than half-way across the world!

I really think he will lose ground on this one.

And for the record, I'm an Independent Conservative (with some whacked out views at times), and I'm incensed over this type of political wrangling.

Don't get me started about the Boeing situation. I lived in Seattle just before they relocated to Chicago. I remember the 80's when the town coined the phrase, "Last one out, please turn off the lights."

The Boeing situation has been going on for a while regarding the move.

On a final note, is it me, or does it appear that every idea floated lately is a veiled attempt to increase taxes?

Anonymous said...

I am a bit confused. How does a pipeline to Oklahoma stop shipping to Gulf Coast refineries?

A pipeline is not the only way to get oil from point A to point B ...just the cheapest one for the oil companies.

There's no question oil can be produced and transported with acceptable risks but there's more than a little evidence to show that the oil industry was given an inch and took a mile with the reduced oversight during the Bush administration and ignored the few violations they received. The Times Picayune has covered this extensively.

Our choice isn't between letting industry/business have free reign to take short cuts that put others at risk or to drive them out of business. Only a fool believes where money is concerned that everyone will behave honorably and care more about their fellow man than their wallets. Self regulation doesn't work. Government has a role in keeping the competitive playing field level and overseeing public health and safety and protecting the property of others.

One might as well argue that having a football game without referees to enforce the rules would work as all the coaches and players are good guys. Indeed, it seems some argue no rules/no referees at all.

Nor do I think Democrats have a corner on political favortism. Surely, you noticed that the GOP strongholds did well, especially Texas, during the Bush years. Rewarding supporters is hardly new.

Sadly, I'm old enough to remember when common sense had a chance and we didn't act like crabs thrown into a pot of boiling water.

Anonymous said...

Anonymous @ July 10, 2011 11:18 AM --- here's a clue: "the cheapest one for the oil companies" is the cheapest one you and me (i.e. the consumers).

Anonymous said...

Anon 11:57

Since when does the reduced cost of producing oil or less demand result in the lowering of gasoline/oil in this country?

To prove my point, when was the last gas pricing war in your neighborhood?

Anonymous said...

FrankMickens, you have proved nothing. But have made clear your limited understanding of the free market.

That said, when QT lowers its cost at the pumps, so do the guys down the street...its called competition. And they (QT) do it because the cost to them has come down (i.e. the costs that include refinery, pipeline, delivery and crude costs).

Your blather would have us believing that the oil companies NEVER lower prices they charge to their customers...that they only raise their prices. Simply not true.

Anonymous said...

FrankMickens - you must have been sleeping the past two weeks. Walmart is now offering a prepaid card with 10 cents off per gallon at their stations for Murphy stations. Kroger responded by increasing the discount on their cards from 10 cents a gallon to 30 cents a gallon, up to one dollar per gallon off if you accumulate 1000 points on your Kroger card.

Welcome to the free market. This is how capitalism works. A dollar per gallon discount qualifies as a price war in my neighborhood. I kind of doubt we'll see the return of a free dish or glass with every fill-up as I remember from childhood though ;-)

Anonymous said...

When you do cost/benefit you have to include the costs of clean ups.

And, those of you who assume oil company cost savings in production and delivery are passed along to the consumer at the pump are naive beyond belief. The oil companies are not altruistic. They call those savings " profit". They charge what the market will bear.

Pump price is related to the cost of a barrel and if you look at government oil price charts over decades, you'll see seasonal jumps in prices as well. Apparently, oil companies can't plan for predictable increased demand by increasing supply so the price at the pump gets jacked up during seasonal travel periods.

The bottom line is that oil companies will use any justification to raise prices and increase profits that will work for them. That's what business IS people.

Anonymous said...

Anonymous @ July 11, 2011 10:58 AM said: They charge what the market will bear.----

That is correct. And "the market" tells them when they have maxed out the price they can charge once consumers start cutting back gasoline usage. To sell more gasoline, they lower the price (and people start feeling like they can afford to take that trip to Florida again). The cycle begins again.

FWIW, the exact same principles are in action when the company that makes your favorite smart phone sets pricing (...and I bet you do not think of them as evil or with any ill will at all).

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