Source: http://online.wsj.com/article/SB10001424052748704471504574447090218534138.html
OCTOBER 4, 2009
'In recent years, many Americans have had cause to wonder whether decisions made at EPA were guided by science and the law, or whether those principles had been trumped by politics," declared Lisa Jackson in San Francisco last week. The Environmental Protection Agency chief can't stop kicking the Bush Administration, but the irony is that the Obama EPA is far more "political" than the Bush team ever was.
How else to explain the coordinated release on Wednesday of the EPA's new rules that make carbon a dangerous pollutant and John Kerry's cap-and-trade bill? Ms. Jackson is issuing a political ultimatum to business, as well as to Midwestern and rural Democrats: Support the Kerry-Obama climate tax agenda—or we'll punish your utilities and consumers without your vote.
The EPA has now formally made an "endangerment finding" on CO2, which will impose the command-and-control regulations of the Clean Air Act across the entire economy. Because this law was never written to apply to carbon, the costs will far exceed those of a straight carbon tax or even cap and trade—though judging by the bills Democrats are stitching together, perhaps not by much. In any case, the point of this reckless "endangerment" is to force industry and politicians wary of raising taxes to concede, lest companies have to endure even worse economic and bureaucratic destruction from the EPA.
Ms. Jackson made a show of saying her new rules would only apply to some 10,000 facilities that emit more than 25,000 tons of carbon dioxide each year, as if that were a concession. These are the businesses—utilities, refineries, heavy manufacturers and so forth—that have the most to lose and are therefore most sensitive to political coercion.
The idea is to get Exelon and other utilities to lobby Congress to pass a cap-and-trade bill that gives them compensating emissions allowances that they can sell to offset the cost of the new regulations. White House green czar Carol Browner was explicit on the coercion point last week, telling a forum hosted by the Atlantic Monthly that the EPA move would "obviously encourage the business community to raise their voices in Congress." In Sicily and parts of New Jersey, they call that an offer you can't refuse.
Yet one not-so-minor legal problem is that the Clean Air Act's statutory language states unequivocally that the EPA must regulate any "major source" that emits more than 250 tons of a pollutant annually, not 25,000. The EPA's Ms. Jackson made up the higher number out of whole cloth because the lower legal threshold—which was intended to cover traditional pollutants, not ubiquitous carbon—would sweep up farms, restaurants, hospitals, schools, churches and other businesses. Sources that would be required to install pricey "best available control technology" would increase to 41,000 per year, up from 300 today, while those subject to the EPA's construction permitting would jump to 6.1 million from 14,000.
That's not our calculation. It comes from the EPA itself, which also calls it "an unprecedented increase" that would harm "an extraordinarily large number of sources." The agency goes on to predict years of delay and bureaucratic backlog that "would impede economic growth by precluding any type of source—whether it emits GHGs or not—from constructing or modifying for years after its business plan contemplates." We pointed this out earlier this year, only to have Ms. Jackson and the anticarbon lobby deny it.
Usually it takes an act of Congress to change an act of Congress, but Team Obama isn't about to let democratic—or even Democratic—consent interfere with its carbon extortion racket. To avoid the political firestorm of regulating the neighborhood coffee shop, the EPA is justifying its invented rule on the basis of what it calls the "absurd results" doctrine. That's not a bad moniker for this whole exercise.
The EPA admits that it is "departing from the literal application of statutory provisions." But it says the courts will accept its revision because literal application will produce results that are "so illogical or contrary to sensible policy as to be beyond anything that Congress could reasonably have intended."
Well, well. Shouldn't the same "absurd results" theory pertain to shoehorning carbon into rules that were written in the 1970s and whose primary drafter—Michigan Democrat John Dingell—says were never intended to apply? Just asking. Either way, this will be a feeble legal excuse when the greens sue to claim that the EPA's limits are inadequate, in order to punish whatever carbon-heavy business they're campaigning against that week.
Obviously President Obama is hellbent on punishing carbon use—no matter how costly or illogical. And of course, there's no politics involved, none at all.
Tuesday, October 06, 2009
The 'Absurd Results' Doctrine: Turning the carbon screws on businesses so they lobby Congress for cap and trade.
MAMMOTH DISCOVERY: Companies bet big on South Texas gas find By Brett Clanton
Source: http://www.chron.com/disp/story.mpl/business/energy/6653999.html
Oct. 6, 2009
Last October, just as the economy was tilting into crisis, a small oil and gas company in Houston quietly announced the discovery of a mammoth natural gas field in South Texas that at any other time might have garnered bigger headlines.
Petrohawk Energy's find, however, did not go unnoticed in the oil and gas industry — and it didn't take long before oil companies large and small began making their moves.
Today, though the economy and natural gas prices remain weak, the Eagle Ford shale remains one of the hottest prospects in North America, and energy companies are moving forward there even as they're pulling back elsewhere.
That's because of what some companies suggest is a virtually recession-proof combination of highly productive wells and low drilling costs they say can yield profits even as natural gas prices hover near seven-year lows.
Also attractive: the flat South Texas ranch land, where obstacles are few and Gulf Coast oil and gas infrastructure is nearby; and landowners have grown comfortable with the industry after decades of oil drilling.
“You can certainly make more money from wells than cows,” said Joe Martin, whose family leased nearly 20,000 acres of land to Petrohawk in LaSalle County for drilling.
But it may still be a while before the full potential of the Eagle Ford shale is known. Though early results are promising, companies have been cautious about overstating what could be in the ground, especially since so few wells have been drilled so far.
“What we're going to find out, as with most shale plays, is there's going to be sweet spots,” said Bob Banks, chief operating officer at Swift Energy, a Houston-based oil company with nearly 90,000 acres leased in the Eagle Ford. “That's what we don't know yet, which areas are really going to work better than the others because it's pretty early days.”
Recently discovered U.S. shale plays, including the Haynesville in Louisiana and Marcellus in Pennsylvania, are expected to provide a major boost to U.S. natural gas supplies in coming years. The dense rock formations, once thought too difficult to explore, have been unlocked with the help of recent advances in drilling technology.
The core areas of the eight largest U.S. shale plays may contain 475 trillion cubic feet of recoverable resources, according to an estimate by Ross Smith Energy Group, an industry research firm in Calgary, Alberta. That's roughly ten times the size of Texas' famed Barnett shale play in the Dallas-Fort Worth area, which supplies nearly 10 percent of U.S. natural gas production, excluding Alaska.
$3.88 break-even point
While the Eagle Ford is among the smallest of the group, with some 19 trillion cubic feet of natural gas remaining, the economics is among the best, the firm said.
Producers in the Eagle Ford can break even when natural gas is priced as low as $3.88 per million British thermal units, the firm said, versus break-even prices of $5.18 in the Barnett, $3.74 in the Marcellus and $4.49 in the Haynesville.
Natural gas closed at $4.99 per million BTUs Monday in trading on the New York Mercantile Exchange, down from nearly $14 in summer of 2008, amid a recession-related drop in demand and bulging stockpiles. Consumption will fall by 2.4 percent this year and remain flat in 2010, according to the Energy Information Administration's most recent short-term forecast.
A potential boom
Yet that has not stopped companies from pushing ahead in the Eagle Ford play, which starts near the Mexican border and extends east below San Antonio across a string of counties including Webb, Dimmit, LaSalle, McMullen and Live Oak.
“It's got the potential of being a boom,” said Martin, whose family leased to Petrohawk, noting that land prices in the region have risen to $1,500 per acre in some places, 10 times what they were two years ago.
Houston's Petrohawk, with 210,000 acres in the Eagle Ford, has been the most active. It operates 17 wells in the Eagle Ford and aims to add another seven or eight by year-end, said Joan Dunlap, the company's head of investor relations. This month, the company said it will sell its properties in West Texas' oil-rich Permian Basin to an unidentified privately held company for $376 million to focus on its assets in the Eagle Ford and Haynesville shale plays.
Asked if the Eagle Ford could be as big as other major U.S. shale gas plays, like the Barnett shale, Dunlap said, “it's a big question mark.”
Other oil and gas companies including Pioneer Natural Resources, Swift Energy and Anadarko Petroleum Corp. also have drilled wells in the Eagle Ford or are planning to in coming months.
Less clear are the intentions of Houston-based ConocoPhillips and Irving-based Exxon Mobil Corp., each of which has large acreage positions in the Eagle Ford.
Houston's ConocoPhillips, with 300,000 acres, considers the region “one of the top resource plays in the lower 48” and will concentrate much of its 2009 exploration spending in the Eagle Ford and other North American unconventional resource plays, spokesman Charlie Rowton said. But he declined to elaborate.
Exxon Mobil confirmed it holds an interest in the Eagle Ford shale in La Salle and McMullen counties, but a spokesman said, “the details of the exploration program are considered confidential.”
Exxon Mobil confirmed it holds an interest in the Eagle Ford shale in La Salle and McMullen counties, but a spokesman said, “the details of the exploration program are considered confidential.”
Bob Fryklund, industry analyst with IHS-Cambridge Energy Research Associates in Houston, said highly diversified oil majors may not have the same urgency to act as independent oil and gas producers do.
“This is just one portion of their portfolio, while for a lot of the independents it's their whole portfolio,” he said.
But increasing moves by major international oil companies into U.S. shale plays, he said, suggest they may see more potential there than they once did.
brett.clanton@chron.com
Sunday, October 04, 2009
'Rock n Roll' Radio Legend Jim Nettleton Dies at 69
'Rock n Roll' Radio Legend Jim Nettleton Dies at 69
by KYW’s David Madden
Posted: Sunday, 04 October 2009 11:42AM
Cancer has claimed the life of longtime Philadelphia radio personality Jim Nettleton at the age of 69. Here is a look back at the career of one of the original “Boss Jocks” of the glory days of “Rock n Roll Radio in Philadelphia”.
Mixing personality in with more music put Nettleton’s team over Wibbage in one of the greatest radio face-offs ever.
There was Hartford, New York and Tampa, but it’s his Philadelphia work for which Nettleton will be best remembered included stints at WOGL and WPEN. Although his first stop was his fondest, as he recalled at a reunion three years ago:
“It was the best experience of my radio life; worked with, probably, the most talented group of people that, I think, ever had gotten together in one spot.”
Ironically, his last on-air gig was down the shore -- a recorded morning show for a re-created “Wibbage”.
------------------------------------------------------------------------------------
Bill's Comment: Mr. Nettleton was also one of the "Boss Jocks" for 56 WFIL-AM during the 60's and '70's. Our loss is Rock n' Roll Heaven's gain. R.I.P., Jim.
Thursday, October 01, 2009
Sun sets on Saturn: GM kills fading star brand
Sun sets on Saturn: GM kills fading star brand
By TOM KRISHER and KIMBERLY S. JOHNSON, AP Auto Writers Tom Krisher And Kimberly S. Johnson, Ap Auto Writers 34 mins ago
DETROIT – For those who expected General Motors' once-funky Saturn brand to live on with a new owner, there has been a sad twist. Saturn, once billed as a different kind of car company, appears as dead as Pontiac and Oldsmobile.
At the brand's 350 remaining dealers around the country, there were high hopes that a deal would be announced for GM to sell the brand to former race car driver and auto industry magnate Roger Penske.
Instead, Penske Automotive Group Inc. announced Wednesday it is walking away from the deal, unable to find a manufacturer to make Saturn cars when GM stops producing models sometime after the end of 2011. GM then announced it would stop making Saturns and soon would close down the brand, just like it did with Oldsmobile in 2004 and soon will do with Pontiac.
The day's events mean an almost certain end to Saturn, a brand that was set up in 1990 to fight growing Japanese imports. Instead of celebrating a rebirth, the announcements sent dealers scrambling for ways to stay open and preserve about 13,000 jobs.
"I find this hard to believe," said Carl Galeana, owner of two Saturn dealerships in suburban Detroit. "Everyone's been saying we're right at the goal line."
Saturn, officially launched in 1990, featured the iconic tag-line "a different kind of car company" and people were attracted by its low-key showrooms and no-haggle pricing.
GM's hope was that Saturn, with its dent-free plastic panels, would attract younger buyers with smaller, hipper cars. It built a new plant in Spring Hill, Tenn., devoted to Saturn vehicles.
Despite a cult-like following that drew thousands to annual reunions in Spring Hill, the brand never made money, although the company has never disclosed how much it invested or lost.
Although GM and Penske reached a tentative agreement to sell the brand in June, the deal collapsed Wednesday after Penske was told by an unidentified manufacturer that its board had rejected a deal to make cars for the new Saturn.
"It was a stunning turn of events," said GM spokesman Tom Pyden, who added that most of the details between GM and Penske had been worked out and both sides expected to announce this week that the deal had been closed.
GM had agreed to keep building three Saturn models even beyond 2011, but after that, Penske had to come up with its own products made by another manufacturer.
Penske spokesman Anthony Pordon said there is little if any chance that the talks could be reopened. Without another supplier in place before the deal was signed, Penske couldn't run the risk of taking on Saturn, Pordon said.
It takes several years to design new vehicles or engineer foreign vehicles to meet U.S. standards. Penske would risk having no products to sell once the GM contract expired.
The French automaker Renault discussed building cars for Penske but Renault spokeswoman Frederique Le Greves said in an e-mail Thursday that "the conditions for an agreement have not been found." She said the decision was made by the Renault executive board.
Penske's purchase price was never disclosed, and he will not have to pay a termination fee, Pyden said. Penske shares tumbled $1.13, or 5.9 percent, to $18.05 in premarket trading Thursday.
GM will stop making Saturns as soon as possible, but no layoffs are expected, said spokeswoman Sherrie Childers Arb. Saturns are made at plants in Kansas City, Kan.; Delta Township, Mich., near Lansing and Ramos Arizpe, Mexico.
"Those plants produce products for other brands, and we think we can increase volume on those products that will meet market demand," Childers Arb said.
Saturn owners can still go to their dealers for service. They will also be able to go to a certified GM dealer once Saturn dealerships close, GM said.
Stephen Spivey, senior auto analyst for Frost and Sullivan, said he was surprised Penske had no alternative plan for a manufacturer.
"There are lots of car companies in the world. I'm surprised they had all their eggs in one basket," he said, adding that other companies may still be interested in the dealership network.
Penske, who could not be reached for comment, said in a June interview that foreign automakers would be key to making Saturn succeed, but they would have to match GM's quality standards before Saturn's dealer network would distribute their products.
Bloomfield Hills-based Penske Automotive owns the second-largest U.S. automobile dealer chain. The company also distributes Daimler AG's Smart subcompacts in the U.S. and has race teams in the IndyCar, NASCAR and Grand-Am series.
Galeana said he's heard nothing yet from GM or Saturn, but if the plan is to phase out the brand and cut the products, he'll have to come up with other options.
"I assumed if you're at the goal line, those things would have been figured out," he said Wednesday. "We're going to try to put some plan Bs in place at this point."
Galeana said he's concerned for his employees and still hopes the deal can be resurrected.
"It's tough out there, but we'll keep fighting. That's all we can do."
GM Chairman Roger Smith first unveiled the Saturn brand in November 1983. But the project was slow to develop and the brand did not officially launch until seven years later.
As GM focused more on high-profit pickup trucks and SUVs, Saturn began to languish in the late 1990s. Then in 2006, car buyers began to find Saturn's new models more appealing. But after a good year in 2007, sales dropped last year as the U.S. car market withered. Through August, Saturn sales were down 60 percent from the first eight months of last year.
The Tennessee factory stopped making Saturns in 2007. Although it was retooled to make Chevrolet crossovers, it's now scheduled to close. A parts plant in Spring Hill will stay open in the short term, but its future was unclear.
GM has been trying to sell Saturn since earlier this year as part of its turnaround plan.
__
AP Auto Writer Bree Fowler in New York contributed to this report.
Copyright © 2009 Yahoo! Inc. All rights reserved.
Wednesday, September 30, 2009
Escape to Montana: Canadians seek a private option.
Source: http://online.wsj.com/article/SB10001424052748704471504574443253009607932.html
SEPTEMBER 30, 2009
A bipartisan majority of the Senate Finance Committee defeated the health-care "public option" yesterday, though in our view Max Baucus's bill will still reach the same destination, albeit more slowly. With that in mind, we offer as today's commentary a cautionary tale from the land of the original public option, Canada. Here are the opening paragraphs of Sunday's Los Angeles Times dispatch:
"VANCOUVER, CANADA
When the pain in Christina Woodkey's legs became so severe that she could no longer hike or cross-country ski, she went to her local health clinic. The Calgary, Canada, resident was told she'd need to see a hip specialist. Because the problem was not life-threatening, however, she'd have to wait about a year.
So wait she did.
In January, the hip doctor told her that a narrowing of the spine was compressing her nerves and causing the pain. She needed a back specialist. The appointment was set for Sept. 30. 'When I was given that date, I asked when could I expect to have surgery,' said Woodkey, 72. 'They said it would be a year and a half after I had seen this doctor.'
So this month, she drove across the border into Montana and got the $50,000 surgery done in two days. 'I don't have insurance. We're not allowed to have private health insurance in Canada,' Woodkey said. 'It's not going to be easy to come up with the money. But I'm happy to say the pain is almost all gone.'
Whereas U.S. healthcare is predominantly a private system paid for by private insurers, things in Canada tend toward the other end of the spectrum: A universal, government-funded health system is only beginning to flirt with private-sector medicine.
Hoping to capitalize on patients who might otherwise go to the U.S. for speedier care, a network of technically illegal private clinics and surgical centers has sprung up in British Columbia, echoing a trend in Quebec. In October, the courts will be asked to decide whether the budding system should be sanctioned. More than 70 private health providers in British Columbia now schedule simple surgeries and tests such as MRIs with waits as short as a week or two, compared with the months it takes for a public surgical suite to become available for nonessential operations.
'What we have in Canada is access to a government, state-mandated wait list,' said Brian Day, a former Canadian Medical Assn. director who runs a private surgical center in Vancouver. 'You cannot force a citizen in a free and democratic society to simply wait for healthcare, and outlaw their ability to extricate themselves from a wait list.'"
In other words, while Congress debates whether to set U.S. medicine on the Canadian path, Canadians are desperately seeking their own private option. At least Ms. Woodkey had the safety valve of Montana and private American medicine. Once Congress passes a form of Medicare for all, with its inevitable government price controls and limits on care, Americans might not be so lucky.
Let's hope that by then Canada has expanded its own private option, so Americans will one day be able to visit Alberta for faster, better care. Unless Congress bars that too.
Wednesday, September 23, 2009
Is Health Care Reform Constitutional?
Source: http://www.investors.com/NewsAndAnalysis/Article.aspx?id=506255
Federal Powers: Where in the U.S. Constitution does it say the government can force people to buy health insurance? And by what authority does it prohibit the purchasing of insurance across state lines?
A key part of the administration's plan to reform health care is what is called the "individual mandate" — a requirement that everyone must have health insurance either through his or her employer or purchased individually.
A good chunk of the uninsured are that way of their own volition. They are young and healthy and feel they have better things to do with their money at this point in their lives. Forcing them is the only way to get them covered, but it's not clear where the constitutional authority to do that comes from.
The Constitution specifically enumerates the powers given to each branch of government and says that any powers not mentioned revert to the states and to the people. Nowhere does it say that the feds can compel you to buy health insurance. But then, this is the administration that claims the right to a de facto nationalization of the banking system and auto industry, to set executive compensation and to fire corporate officers.
With regard to health care reform, the administration seems to be operating under a distorted version of the Commerce Clause that has been grossly misinterpreted over the years as allowing the feds to regulate and control just about everything. Because the sum total of millions of individual health decisions has a collective economic impact, the reasoning goes, government has the authority, even the duty, to regulate those decisions. It does not.
Former New Jersey Superior Court Judge Andrew Napolitano, a constitutional scholar now a Fox News analyst, says the power to "regulate" interstate commerce is just that and only that. He says that when James Madison used the word "regulate," he meant "to keep regular." Madison intended the government to function like a modern-day referee in football — to throw a flag once in a while and moderate disputes, but not call the plays.
The irony here, says Napolitano, is that at the same time the government wants to force people to buy insurance, it forbids them from doing so across state lines. In other words, he says, "Congress refuses to keep commerce regular when the commercial activity is the sale of insurance, but claims it can regulate the removal of a person's appendix because that constitutes interstate commerce."
Sweet And Sour
Source: http://www.investors.com/NewsAndAnalysis/Article.aspx?id=506596
Taxes: With the federal government claiming the right to buy, manage or regulate virtually everything in the private sector, it's refreshing (excuse the pun) to see Coca-Cola's CEO fight back.
Muhtar Kent knows a thing or two about guts. His father was a Turkish diplomat who in 1943 risked his life physically intervening to save 80 Turkish Jews, as cattle cars railroaded them from Marseille to a Nazi concentration camp.
So when your father has defied the Gestapo, maybe standing up to Uncle Sam is a piece of cake. With the president considering a tax on sodas and other non-diet soft drinks to fund Congress' designs on the health care system, and to try to reduce obesity, the Coke chairman refused to go flat.
Speaking to the Rotary Club of Atlanta last week, Kent called such a tax "outrageous," according to Bloomberg News. "I have never seen it work where a government tells people what to eat and what to drink," he said. Kent, whose rise through the ranks at Coca-Cola Co. began 30 years ago, also quipped that "if it worked, the Soviet Union would still be around."
Perhaps Washington has become so enamored of the idea that capitalism is under siege that it takes someone with multicultural, internationalist credentials to provide a jolt of realism.
Born of a Muslim family in New York City and educated in Turkey and Britain, Kent headed Coke's East Central Europe Division when Eastern Bloc nations were liberated from the yoke of communism. So when he makes the Russian analogy about the state dictating what the people can eat and drink, he knows what he's talking about.
Government can't be allowed to use its taxation powers for an illegitimate purpose like directing the behavior of the populace. As Mark Levin states in his million-selling book "Liberty and Tyranny," they must be exercised "only to fund those activities that the Constitution authorizes and no others." To let Washington go further is to risk eventual statist servitude, Levin warns.
A penny-per-ounce soft drink tax could make a two-liter bottle of soda or iced tea cost 50% more. So the food and beverage industry is on the offensive, forming the Americans Against Food Taxes group this year and running high-profile ads on cable networks and in major newspapers.
But this is no special-interest issue. We've already let the government criminalize tobacco, fossil fuels and trans fat. Will we now let Washington add sugar to its index of forbidden substances?
Health Reform Is Just Subterfuge; Dream Is Democratic Dictatorship
Source: http://www.investors.com/NewsAndAnalysis/Article.aspx?id=506789
By now the realization should be taking hold that the Democrats' health care plan has been exposed as a hoax. And it was the Democrats themselves who discredited and exposed it, but in a very ironic way. Of course, you won't hear this bombshell news reported by Democrat partisans Katie Couric, Charles Gibson and Brian Williams.
As for the substance, remember the Democrats' original rationale for their national health care takeover scheme? They wanted all uninsured Americans to be covered, right? Remember?
But now they concede that their mega-upheaval of a plan would still leave about 15 million without medical insurance. Yet they still advocate the plan! Why?
First, a digression: Don't believe that "47 million uninsured" number. That canard is beyond a hoax. It is a fraud and a lie.
For example, it includes at least 10 million illegal aliens (yes, that is the right term for those who enter our country by violating American law) and an additional five million or so legal foreign residents. Those categories are not "uninsured Americans" because they are not Americans.
The notorious 47 million also includes millions of wealthy people who do not purchase medical insurance — rendering themselves self-insured, not uninsured.
The biggest deceptions of all may be counting a large cohort of the young and vigorous who make the rational cost/benefit decision not to buy medical insurance yet, and several million others who qualify for free insurance and just don't bother to sign up!
Bottom line, subtract out the un-uninsured and other inapplicable categories and the true number of Americans without health insurance is somewhere around 7 million, maybe 10 million conservatively (compared with 15 million after Democrat "reform"?). Google the issue for about 10 minutes to verify.
Another way the Democrats inadvertently reveal their own national health insurance dishonesty is through infidelity to a second objective — cost control.
Remember that one? They are hoping you don't, especially since the Congressional Budget Office has reported that the Obama-Democrat scheme would add $1 trillion to the national health tab over the next decade. Yet the Dems still want their plan. Why?
Why, indeed? It must be something else, therefore. If their own action undermines their stated aims, and still they desperately favor the action, then the Democrats' real purpose must be something different, something they will not reveal. But what? Simple:
Have you noticed how the Washington Democrats like to take control of things, particularly big things in the economy such as the major banks and the auto industry, as well as health care?
Saturday, September 12, 2009
Forget 'Peak Oil' — Drill, BP, Drill
Source: http://www.ibdeditorials.com/IBDArticles.aspx?id=336869598898259
By INVESTOR'S BUSINESS DAILY | Posted Thursday, September 03, 2009 4:30 PM PT
Energy Policy: Ignoring peak-oil Cassandras, BP has made another giant oil find in the Gulf of Mexico. We're not running out of oil. Our government just doesn't want us to look for it.
Read More: Energy
The world is running out of oil and good riddance. That's the environmentalists' mantra. But since the first well was drilled near Titusville, Pa., 150 years ago, the prophecy has gone unfulfilled. Trouble is, those darn greedy oil companies keep finding the stuff.
Oil has been produced in the Gulf of Mexico since the first well was drilled by Kerr-McGee Corp. in 1947. Some of the wells are pretty well played out by now, except that over the past two decades or so, oil explorers began to notice a curious thing. Shallower wells that were thought to be exhausted seemed to be filling up again.
This, and the discovery of vast natural-gas deposits at depths greater than 10,000 feet, mean that either (1) we haven't been drilling deep enough or (2) oil and gas are not finite resources deposited long ago, but rather the result of still-functioning processes deep within the earth. Either way, there's much more to be had.
So British Petroleum went looking for it at depths that had never been plumbed. The spot where it hit black gold is in a place called the Tiber Prospect about 250 miles southeast of Houston. The Tiber well was drilled to a depth of 35,055 feet, which is greater than the height of Mount Everest.
BP, whose partners include Conoco Phillips and the Brazilian company Petroleo Brasilero SA, says the discovery may hold as much as 3 billion barrels of oil. That equates to about a year's worth of output from OPEC giant Saudi Arabia.
As Bloomberg notes, Tiber is BP's second discovery in three years in a geological formation in the Gulf known as the lower Tertiary that consists of a layer of rocks created 24 million to 65 million years ago.
Geologists and engineers didn't know if oil could be recovered at such depths until Chevron drilled a well into its Jack Prospect in 2006. Chevron drilled in 7,000 feet of water and more than 20,000 feet under the sea floor.
Its Jack No. 2 well, in deep water 270 miles southwest of New Orleans, tapped a field with perhaps 15 billion barrels of oil.
The U.S. Minerals Management Service says that, all told, offshore areas off-limits to U.S. drilling contain upward of 86 billion barrels of oil and 420 trillion cubic feet of natural gas.
The oil is there and oil companies are willing to go after it if we let them. Think of it: American oil creating American jobs while lowering gas prices. Congress, however, continues to place most of the Outer Continental Shelf, the Arctic riches of the Chukchi Sea and ANWR, and the shale-rich Rocky Mountain West off-limits. In other words, it doesn't know Jack.
If Brazil had copied America's current energy policy, it wouldn't have discovered in December 2007 the Tupi field, estimated to contain 5 billion to 8 billon barrels of crude, or its Carioca offshore oil field that may hold up to 33 billion barrels.
Much was made of the U.S. Export-Import Bank sponsoring a $10 billion loan to Brazil's Petrobras to develop its offshore fields. That will help increase the world's oil supply and further disprove the peak oil nonsense.
But we need to be doing more in our waters and on our land.
The BP project shows that our resources may be limited only by technology and will. It shows the kind of expensive technology required and what oil companies do with their profits — look for more oil. Drilling seven miles into the seabed is not what you do when, as the anti-oil crowd often charges, you are hoarding supplies to drive up prices.
