194 comments on A Compromise on the Drilling Question
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If we are going to compromise, let us start the royalties now.
You won't get the royalties now, but you will get money from the lease sales up front. You put blocks up for competitive bid, and the high bidder has the opportunity to drill. When the oil starts to flow, you get the royalty. For instance, let's say you bid $500/acre up front, then the government gets that money right away.
You could also put in royalties based on an escalating scale. A royalty that is 15% at $80 a barrel could go up to 40% if oil is $200 a barrel. There are all kinds of workable solutions here. But as the next poster noted, if the demands are too high, oil companies will deem the risks too high and they won't bother.
In order to be energy independent in ten years time the USA probably needs new domestic flows >10 mbpd.
Nobody knows how much oil is in the currently off-limits areas but, even if we did know, the reserves have almost nothing to do with flow rates, let alone the required flow rates (if indeed any oil discovered is thin enough and the rock is porous enough to allow flow.)
Whether these areas are developed (and produce any royalties of consequence) will depend on the oil companies making a profit and the US consumer being able to afford the price - if you don't know what the price will be in ten years how can you predict the flows or propose that the flows will be adequate in any meaningful way?
Why can't you leave some potential oil for your grandchildren as a deliberate insurance 'plan B'?
Why can't you leave some potential oil for your grandchildren as a deliberate insurance 'plan B'?
That was the take home message from Gail's previous essay: This oil is expensive and difficult to produce. If we wait, we may be in too deep of a hole to ever be able to extract it. You leave a trillion dollars in the ground, and instead send it to Saudi Arabia.
The plan I have for my grandchildren is that they won't need oil. At least that's my dream.
So, no 'plan B' then, with your 'plan A' grandchildren (and all later generations) have no option, no oil it is! ... and this oil will last you how long? ... and KSA will let you have all the oil you want for how long? ... Do you actually plan to have any surviving grandchildren? IMO this plan says 'NO' to a very high degree of certainty!
IMO your plan has way too many unknowns and is therefore very, very risky and too short term - if this ? ... and ? ... and ? ... and ? ... and ? ... then all might be well for a very few years.
Several thousand million people in the world would say that your plan of burning all the oil as fast as possible is the exact opposite of what is required - importing all you desire form other countries is never going to be a solution, even in the medium term.
Another plan would be 'Rapidly learn to live sustainably with much less oil' - it isn't BAU but it is an inevitable inconvienient truth - the sooner the USA starts the easier it will be for everybody.
So, no 'plan B' then,
I am proposing Plan B. That's the whole point of using the revenue to make a major push into alternatives. I could make a very long list of things that could be done with the oil revenues that would make a major dent in our oil demand.
Another plan would be 'Rapidly learn to live sustainably with much less oil' - it isn't BAU but it is an inevitable inconvienient truth - the sooner the USA starts the easier it will be for everybody.
You are proposing a concept. I am proposing a road map. As I said, I am pragmatic. Your "plan" isn't pragmatic. It isn't even a plan. What is going to prompt people to live sustainably? Well, ultimately price and supply shortages will force it on them, but they aren't going to voluntarily do it in large numbers. And while it is forcing it on them, we will make our oil-exporting neighbors rich while we sit on our endowment and squander away any chance of ever using it to affect positive change.
Again, I can assure you that when Joe Public is paying >$5/gal for gasoline, those areas are going to get drilled. Joe Public will demand it. I see a chance to make some positive change, but that window may close by the time Democrats start caving on the issue.
Oh, I am sure those areas will get drilled and I am sure that people like KSA will not willingly supply the USA with the oil it needs for long term BAU growth.
Being pragmatic and proposing a middle path you are missing a critical point - oil is just one part of the total economy.
A workable pragmatic economic plan for the future must consider all the limitations, not just the problem of oil in isolation.
What you are proposing is a faith based compromise attempt at BAU high growth for as long as possible, party on, burn the oil ever more quickly 'til it's gone, the 'just-in-time-fairy' says alternates funded by this bonanza will be perfectly adequate to allow exponential economic growth forever - what lucky people our grandchildren will be.
At some stage less oil will be consumed, and if this leads to deflation (as seems possible) then since the banking system MUST have growth to function normally there will be less and less resources to invest in anything - let alone sustainable, adequate, energy alternatives - what unlucky people our grandchildren will be!
Oh, I am sure those areas will get drilled
Then you will have lost the opportunity to use that oil money at an early stage to push us down the alternative energy path.
What you are proposing is a faith based compromise attempt at BAU high growth
How so, when what I am proposing could move us away from oil? When prices may be $300 a barrel by the time the oil could flow? Do you think it will be BAU at $300?
Robert is right -- there is going to be more and more political pressure to drill in ANWR and the OCS -- better to head it off now into something constructive. I'm opposed to drilling, if it will only be used to perpetuate BAU -- and the temptation to do that will be overwhelming. If OCS or ANWR oil revenues can be earmarked for a major push into renewables, that is more palatable -- Rep. Roscoe Bartlett (R-Md.) realizes that, I think that is why he is starting to change his mind about drilling in ANWR. We should have probably done exploration work in ANWR and OCS a lot earlier, if only to find out exactly how much is out there. Hubbert, in Congressional testimony in 1974, doubted that OCS oil would make much of a difference -- and that was 34 years ago, when our domestic oil production was a lot higher than it is now...
RR,when are you and people like you going to realize that it is a whole new ball game.Thinking in terms of the past just will not cut it.
Developing and applying new low emission energy has to be started now regardless of the BAU crowd.The alternative is for the whole ricketty show to fall flat on it's face,sooner rather than later.
Drilling in currently restricted areas is going to make stuff-all difference to the outcome either way.Compromise is not an option.
I'm sorry to say that you are just blowing smoke.
Developing and applying new low emission energy has to be started now regardless of the BAU crowd.
And of course high prices are giving it a good boost. However, let's get real. When gas gets too high, people are going to be ready to throw environmental laws out the window, will the polar bears, and to hell with the ice caps. That is the reality when this starts deeply affecting pocket books. I can tell you that at that point, you will wish you had seen the wisdom of compromise. Because people who insist on holding their ground at all costs are going to be steam-rolled. Momentum is building now. You may get a reprieve if gas prices back off, but it won't last. And you will have lost an opportunity.
Drilling in currently restricted areas is going to make stuff-all difference to the outcome either way.Compromise is not an option.
Those sorts of arguments are just silly. Drilling won't make any difference. Thus, we must stop drilling? If drilling won't make any difference, just collect the money from the oil companies for the rights. They will be big losers when they come up empty, and alternatives will get a boost.
RR, I appreciate the motivation behind your proposal, but I think your words here sum it up. In other words, I think that any compromise made now will be thrown out the window once gas prices start to rise; any promises made will be unmade. I've dealt with legislation and compromise, among other things, and it's shifting sand. That's what I have against CO2 sequestration too: it's nice in theory but ultimately it won't be done. In retrospect it will just have provided a rationale to do what's easiest.
There may be future civilizations. Be nice to leave a little reasonable-EROEI oil on the planet in case they actually want to do something useful with it. We won't, I'm afraid. (and the climate up there may be pretty temperate by then).
cheers
I don't know about people living more sustainably, since after all burning even gram of any depleting resource is unsustainable; but people may live conservatively, or frugally, or less wastefully.
Currently, people are happy to burn fuel to move themselves and a tonne or two of steel fifteen minutes' walk to the shops. Just recently on TODANZ someone was telling me,
That's a wasteful attitude, and is very common. The US uses around 25 barrels of oil per person annually, countries like Australia, France and Germany 12-15bbl, and countries like Croatia or Hungary 7bbl or so. The US also produces 9.25bbl. So if the US used oil like France and Germany, it would cut it imports from 16bbl to 3-6bbl each, saving the country hundreds of billions of dollars annually. If it used oil like Croatia it would be an oil exporter again.
While the examples of Croatia and Hungary may not seem appealing to most Americans, I daresay Australia, France and Germany are fair examples. Why is it that we have two sets of countries, both with very similar lifestyles and qualities of life, yet one with a much larger oil consumption than the others? The significant difference is waste.
This is nothing new. Wealthy and militarily dominant countries tend to be wasteful with resources. Imperial Rome, Louis' France, Victorian Britain, Mughal India, Ming China - none of these countries were known for their frugality.
But it need not be so. It's been shown time and again that Westerners in general, and Americans in particular, will respond to calls in time of need. Laws and regulations and taxes combined with strong advertising explaining the need for them in an honest way produce this kind of hard work and frugality.
That is, in WWII people were told that conserving fuel by sharing vehicles would help the war effort and the defeat of fascism. A very similar argument could be made today about radical Islamic terrorism, since it's funded largely by people in countries which are oil exporters. "When you ride alone, you ride with Bin Laden!"
Laws, regulations, taxes and an honest advertising campaign describing the reasons for conservation - these have proven effective in reducing water consumption in Australia, smoking across the West, and energy and resources in wartime in many countries.
It's fashionable to imagine that "the masses" are politically apathetic and utterly inert and useless. Aside from these ideas being the root of fascism and thus deserving of rejection, they're simply wrong. People do respond to calls for action.
Of course you may feel that "the masses" are fat and lazy and can never possibly change their behaviour. In which case, since peak oil and climate change are facts, the world is doomed; whatever we do can only put off the inevitable collapse in Mad Maxian anarchy by a few years. But I don't believe it's so, and even if it is it does no harm to try.
Oh, Fer crimminies sake, Puleeeze! Can we get real here, huh?!!
There are many reasons to fight terrorism, Islamic or otherwise, but if you truly buy the above argument you are full of it to the point of being more likely to explode than a cartoon of Mohamed with an explosive device in his turban.
You want a scapegoat look in the damn mirror, hasn't it become clear enough yet that we have met the enemey and he happens to be us!
Ride a Bike or take a Hike!
Don't look at me, I walk, ride, and use public transport, and don't even own a car - my spouse does, and it does one-third the average kilometres of an Aussie car (4,500km to the average 14,700km).
I'm the one advocating the one tonne CO2 lifestyle, and trying to live it - personally, if I can't manage it as a household (try making your spouse do anything...!)
But if you are going to burn petrol, be aware that it's putting money into the pockets of radical Islamic terrorists. That's not "scapegoating", that's a fact. We're responsible for how much fuel we burn, and for the consequences of its burning.
No offense Kiashu, your argument however well intended does not hold water.
Even if some of the money that goes to Islamic oil producing nations does end up in the hands of Islamic terrorists, it does not in any way follow that it is directly supporting them. Unless you can back that statement up with hard empirical evidence, which I very much doubt that you can.
Osama Bin Laden is too convenient a boogey man, if I'm not mistaken even the Saudis have officially disowned him. Then again maybe they have a master plan since a terrorized poulace in the western world tends to drive less there will be more oil left over for them right?!
Then again how about if you drive alone you drive with, Dick Cheney, Putin, Hugo Chavez or any of a rather long long list of possible alternative scapegoats. We don't need scapegoats we need to accept responsibility for our own actions, I'm certainly with you on that.
Cheers!
Maybe it holds oil.
Perhaps you dislike the presentation of the argument, but I agree with its validity. T Boone Pickens has called what's occurring, "the greatest transfer of wealth in history". This is not difficult to see, if we import 9 million barrels of oil a day that is, at present, some one Billion one hundred twenty five million dollars that flows out of the US that day, or over 400 billion dollars per year.
While I disagree with the premise and execution of the "war on terror" a significant portion of this 400 billion dollars goes to nations that are opposed to the United States. If conservation reduces this cash outflow to nations which, we are told, intend us harm, it is not only a frugal action, it is patriotic. Such civic mindedness needs encouragement not derision.
Dismissing the role of oil in current geopolotics, no offense intended, just strikes me as silly. Where did Bin Laden, a "prince" of the house of Saud obtain his 100s of millions, a tiddlywinks factory?
You know there are even some who speculate that the war on Iraq and the current aggression towards Iran on the part of the US are directly related to securing access to Mesopotamia's oil.
Conservation efforts which negate the need for this oil, along with increasing where possible domestic production, are not only patriotic it, to the extent they might decrease oil related international strife, they also show a humble and responsible attitude towards other nations.
eeehh, shiver, if I saw that on a bumper sticker it might be enough to get me bicycling to work.
First of all I'm actually open to the possibility that the war in Iraq had quite a bit to do with oil.
That is *NOT* exactly the same as proving beyond a shadow of a doubt that burning fossil fuel in America is supporting Islamic Terrorist Acts.
Some of that wealth is being transfered from the American middle class to the likes of Exxon and Shell oil too, are you saying they are making bank transfers to Osama? How about the oil that is bought from other oil producing nations? Where does the money go that is ending up in the hands of oil refineries in the Gulf states of the USA? Are all of them also sending their weekly contribution to Islamo Terrorists?
How about the fundamentalist Islamaic religious grass roots organization around the world that get contributions directly from their followers at the local mosque? Maybe they get their money directly from the American gas station owners?
The statement made by Kiashu is a simplistic one to say the least and plays on the basest of fears. Any one out there have a dollar figure as to how much money spent at the pump actually ends up in the hands of Islamist Terrorist?
I do: x>$0. And the more Mexico declines and we import from KSA the higher x goes. Which makes Kiashu right.
BTW, where do you think all that money in the mosques comes from?
I do: x>$0. And the more Mexico declines and we import from KSA the higher x goes. Which makes Kiashu right.
BTW, where do you think the money in the mosques comes from?
Driving cars isn't the only evil.
Buying lots of crap made of plastic, imported from China, from huge supermarkets which you have to drive to is another part of the problem. Consumption for the sake of consumption (or to prop up an economy based on ridiculous principles)
I'm all for boycotting WallMart, even if you have to tell them they are supporting the boogeyman. They won't change to save the environment or for any other ethics.
Kiashu, you're not a kook (or maybe you are and don't care).
I made a decision to conserve 5 years ago, bought the highest efficiency hybrid 45 mpg available and I work from home.
I reduced my
mileage to 4500 miles a year(7200 km), so I'm at 880 kg per year just driving. Not much of a bike rider though.
Power, I'm good (my utility is a nuke-HA!), gas not so good at 118 kg(winters are cold here). Food (I have no idea but I'm on a diet so I put down 0). So spining things in as self-serving
way possible I am proud to say I'm a 998 kgC!
Hey,
That is a great poster. We had rationing, which should be considered Plan A, but more to conserve rubber than fuel in WWII. You are correct that there are finacial ties that make an even stronger case today.
I think we need to do all we can to discourage any further drilling and to do that we should force the price of oil down. This frees up money immediately to put towards alternatives. Robert's idea about royalties will be strangled because it will be claimed that they boost the price at the pump. We need to cut consumption now to a level that promotes $20/barrel oil so we actually have the funds right now. http://mdsolar.blogspot.com/2008/06/oil-is-too-expensive.html
Chris
Great post.
Conservation, while not as sexy as all these whizz bang renewables, holds a ton of value. Especially in any transition period.
We are not totally boxed in...yet.
I thought you might be interested in this:
http://www.amazon.com/When-You-Ride-Alone-Laden/dp/1597775134
I have a comment in regards to ANWR. At the present time the Trans Alaska Pipeline is operating and its operating costs are supported by existing oil fields. If we wait until 2025 to allow drilling in ANWR I suspect the oil may be effectively unrecoverable.
Declining production from existing fields will eventually not provide enough revenue to fund the operations of TAPS. If this occurs before drilling in ANWR it is likely that TAPS physical plant will be deteriorated requiring massive investment to either repair or replace it(I saw the original effort required to build TAPS and would not care to have to estimate costs for major repairs or a rebuild in todays environmet).
If ANWR is found to have merely a large amount of oil these fields may not be large enough to fund the effort needed to bring TAPS back on line. While if the drilling occurs sooner the existing fields can continue to produce for a longer period of time because ANWR will help fund the TAPS costs. This should increase the URR from the existing fields feeding TAPS.
Based on what I know we should drill in ANWR now and not count on huge finds for future use.
Alaskan pipeline throughput has fallen from about 2 million barrels per day to less than 700,000 barrels per day. I have read that if throughput falls below 300,000 there is a danger that the pipeline might freeze during the long cold Alaskan winter. Is this true?. If so should ANWR be explored soon so that any economic oil can be produced and transported while the pipeline is still functioning? Any oil situated off the beach in Santa Monica can be saved for our grandchildren.
When will the results from KIC-1, the well drilled in ANWR during the 80's, become known?
http://anwrnews.blogspot.com/2005/04/aint-it-kic-story-of-anwrs-only-wel...