Friday, September 12, 2008

Newt Gingrich's Absurd "Drill Here, Drill Now, Pay Less" Myths

When disgraced former Speaker Of The House, Newt Gingrich isn't using God to endorse his own ideas, he still finds some other way to generate donations, make some noise, keep his name in the news, sell books, or support his Republican Party with some sort of new nonsense. With a new nonsense battlecry of "Drill Here, Drill Now, Pay Less", Gingrich is giving a phony new election year argument to his Republican Party that few serious economists or even oil industry experts really even believe. The phony battlecry is merely meant to neutralize all of the public anger against high oil prices from hurting the GOP this year and using it to hurt the Democrats instead. It's partisan political nonsense of the worst variety that doesn't even seriously address the nation's increasing oil needs or consumer needs for lower prices.

The fact of the matter is that when Newt Gingrich and the Republicans had control of Congress and the Senate both, there wasn't really very much interest in promoting more oil drilling, especially offshore drilling because of environmental concerns as well as the fact that there is really no way that the very limited supply of American oil could supply all of this nation's growing oil needs for many years at best. Even South Carolina Republican Senator Lindsey Graham was opposed to any new oil drilling off the scenic resort and hotel beaches of his state, but now supports such drilling since he is involved with the McCain Campaign which is all about favoritism to the big oil industry, even though it is doubtful that the big oil companies are all that interested in the cost and effort of a massive new exploration process when plenty of oil can be purchased on the wholesale market from Canada, Mexico or elsewhere with a lot less expense and effort.

The truth is simply the U.S. has at best has but just 3% of the world's oil supply, but consumes 25% of the entire world oil supply output according to an oil industry expert like T. Boone Pickens. If at best every drop of oil could be discovered within American held territory and ocean limits, there is only a 60 year supply at best. But the reality is that only half or less of this is likely to even be found, limiting the supply to just 25-30 years at most, and then there is no more American oil at all. It's all gone.

Governor Sarah Palin is a huge advocate of new oil drilling in Alaska. But she is simply not forthright about some very serious health and quality concerns with much of the oil coming from Alaska. Much of this oil is heavily contaminated with hazardous levels of toxic benzene compared to most other world supplies of oil. This benzene contamination problem is so serious and such an expensive problem that American oil companies have been given until 2014 by the Bush Administration controlled EPA to resolve the problem with extremely high cost new refineries that cut down this health risk to the public. So far only the British owned BP has stepped up to build a very expensive newer refinery that filters the toxic benzene contamination from the Alaskan oil. Normal automobile air pollution systems simply do not catch this benzene contamination and it passes right out in the exhaust gas creating a serious cancer risk to the general public.

Governor Palin has a heavy special interest in the success of the oil industry in Alaska in order to subsidize deficit spending in the state. In 1976, the voters established the ALASKA PERMANENT FUND which has bailed the Alaska government out of years of red ink by using invested oil royalty funds to prop up the government of Alaska any time it ran into financial problems paying for services to this state with a tiny population but a huge land mass. There was also another 2 billion dollar fund available to the government of Alaska due to a lawsuit against the oil industry as well. Yet in just 18 months in office, Palin has asked the federal government for over $450 million in funds to prop up programs and projects in Alaska when plenty of oil revenue royalties or other income to state were available. Palin was also on both sides of issues such as the famous "Bridge To Nowhere" project as well, asking taxpayers all across the U.S. to fund it despite Alaska's huge oil revenues for the state.

Benzene that passes through automobile exhaust systems can accumulate in the blood, attack the bone marrow and even result in leukemia among other deadly illnesses. It is indeed outrageous that the Bush Administration controlled EPA would give the oil industry a pass until 2014 to continue to allow unhealthy levels of this highly toxic substance in oil coming from Alaska without first mandating that it be refined or filtered down to safer levels.

The Bush Administration also hardly believed that it was possible for the U.S. to self-reliant with oil as well as witnessed with the 2003 Iraq War which was far more involved with placing the Iraq oil supply "under international control" according to testimony of Paul Wolfowitz to Congress before in an attempt to lobby for the Iraq War to the Republican controlled Congress as far back in 1997 when Bill Clinton was still president. Iraq is thought to have up to 225 billion barrels of undiscovered oil which would be a 98 year supply for the U.S., and far more oil than that in the U.S. by far. However, all of the violence associated with the war has made both the salaries and safety concerns so high that only a week ago Secretary Of State Condoleezza Rice was in Libya looking to open up their oil supply to the U.S. It is incredible that the U.S. is looking to a former sponsor of state terrorism for new oil supplies, but with demand only growing in the U.S. this is what things are coming to. But it is just one sign of the desperation of the U.S. to find new oil supplies because the American appetite for oil has become so large compared to much of the world. Americans just don't want to give up their huge SUVs and horsepower rich cars in favor of smaller vehicles like Europe or Asia. Americans just like to waste far more than their share of the world's resources. And when they need more resources they invade some poor weaker nation like Iraq under phony national security pretenses.

It is a well known fact that for any new oil wells or offshore rigs to produce even one drop of oil would take about a ten year process of permits, exploration, construction of new rigs or drilling equipment and the costly construction of new refineries. Yet often the big oil companies are not even operating their existing refineries up to full capacity or even making full use of land in which they already own mineral contracts on. It is nonsense to assume that if the oil companies had a free hand to explore and drill as they please that it would produce even one drop of new oil in the short term.

The fact of the matter is that since 1968 the Republicans have had either control of the White House or one or two branches of Congress many of those years, yet any new effort to massively open up new oil drilling in the U.S. was never a really a high priority either for them or the big oil companies. In fact, many of the big oil companies have been perfectly content to purchase raw oil supplies at wholesale commodity prices from foreign sources including Canada, Mexico or the Mideast for many years. It is only because it is an election year that Republicans have seized on false claims of blaming the Democrats for current oil price and supply problems. And you know that OPEC would certainly cut their world production levels to keep prices over the $100 a barrel mark if more supply or lower demand would drop the prices. Even Russia's recent wealth is almost entirely oil related and they also have a huge financial interest in higher oil prices. No one including the American oil companies, the foreign oil companies, has had any real interest in creating a huge supply of new oil on the world market as it reduce their prices. None of these major oil concerns is all that interested in producing more product for less money. It's just not in their interest. It is only the Republicans running for election who have made an election issue out of this and are using footsoldiers like Newt Gingrich to make their phony case in favor of more American drilling reducing oil prices or putting more American oil on the market. But you know that's not really what the big oil companies really want. This is merely a phony election year issue to keep control of the White House and keep the big tax breaks coming for the oil industry which were recently figured at $18 billion while the companies have record profits as well.


At 4:42 PM, Blogger LVTfan said...

You don't have all your facts quite straight about the Alaska Permanent Fund. It was started back in the 1970s, and paid its first dividends in 1982. Revenue from oil and gas royalties is used both for funding a lot of state government spending (they don't use sales or income taxes, as far as I know -- smart, since those would burden the economy, and royalties don't) and for an annual deposit into the Alaska Permanent Fund. The APF is invested in a broad portfolio, and its income (averaged over the preceding 5 years) is used to provide an annual dividend check for every man, woman and child in the state. A fine idea, in my eyes. It suggests that even back in the 1970s, someone had the foresight to realize both that the oil would not last forever, and that it rightly belonged not just to Alaska's then-current residents, but, in an important sense, belonged to Alaska's future residents, too. Very wise ... in the tradition of John Locke and Henry George, two of the classical economists we don't hear much about right now, even in the tradition of the OT land laws.

There has been talk that part of why we are fighting in Iraq is to secure for the Iraqi people, not as residents of particular regions, or as adherents of various religions or members of tribes, but as individuals, created equal, their equal shares of the revenue from Iraqi oil, which, to date has not been distributed. Seems like a decent idea to me, though I'm not sure why we're involved there, if we haven't gotten to the point of recognizing that America's natural resources belong to the American people in the same way.

The Alaska Permanent Fund does not bail out state government; it exists to provide a dividend to every individual.

And this year, in addition to the APF payment, there was so much oil revenue that Alaska will pay an extra $1,200 per person, which amounts to about $750 million. I agree with you that this should have been used to fund the infrastructure spending that is currently being funded by federal government pork; we have a lot of other uses we can put those funds to in the lower 48, where private individuals are permitted to pocket the value of the natural resources under their soil, just as if they'd created them. (Jed Clampett.)

At 7:09 AM, Blogger Paul Hooson said...

Ivtfan, actually you know far more about how the Alaska Permanent Fund functions than what I addressed here. I only mentioned it in a casual way here. I deeply appreciate all of your information on this subject here. The main point of this political blog is to educate and sometimes entertain a little as well. You did a great job educating here. A job well done. Please feel free to comment here anytime.


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