What Obama Could Say in His Speech That Would Really Turn The Economy Around
The
Outpost
Recent polling indicates that seventy-six percent (76%) of voters say the country is heading down the wrong track. Clearly, something needs to be done to turn the train around and head in a different direction.
By Marita Noon
First we need to know where we’ve been headed and then make a conscious decision to do a 180. Three recent news stories—all under-reported—offer a snapshot of the wrong direction.
THE JULIA FIELD
Exxon is in a legal battle with the US government. The company has a new oil discovery in the Gulf of Mexico in what is called the Julia Field. Exxon reports an estimated one billion barrels of recoverable oil—worth potential royalties to the government of $10.95 billion. The discovery is believed to be the largest in the Gulf of Mexico. (Note: we are not out of oil; we keep finding more.)
In its exploration, Exxon is known for moving slowly and studying all the options before committing billions of dollars—using the best technology and science to utilize the shareholders’ risk capital. This is good. Deep-water exploration is difficult and complex. It needs to be done right.
However, apparently, the process was so lengthy, it butted up against the end of the lease period. Exxon applied for a routine extension. It was denied. A series of appeals have taken place. Finally, the Interior Department’s Office of Hearings and Appeals ruled against Exxon. Now, potential jobs and monies paid to the federal coffers are delayed.
The Julia Field debacle is reminiscent of a decision earlier this year that forced Shell to shelve Artic drilling plans after they spent nearly $4 billion in preparation to conduct exploratory drilling in Arctic waters. In dispute is what amounts to a clerical error that requires Shell to start over and puts off the creation of new jobs and revenue another year.
BLACK ARCTIC GOLD
It has just been announced that Exxon Mobil Corp. has entered into a deal with Russia to develop Arctic oil resources. The company has agreed to invest $2.2 billion to explore a potential oil field in the Kara Sea and to spend $1 billion in exploration in the Black Sea. The ventures are politically risky, and there is no certainty that oil will be found. The deal includes Russia’s state-controlled oil company, Rosneft, acquiring stakes in Exxon’s US projects.
Exxon expects to spend tens of billions of dollars just to start producing, with a potential direct investment of $500 billion in Russian waters. With an estimated 90 billion barrels of recoverable oil in the Arctic, someone is going to go after it. Unfortunately, the revenues are going to Russia, not the US.
BAKKEN FIELD
North Dakota is home to a series of newer US oil discoveries—known as the Bakkan Field. As a result, North Dakota enjoys the lowest unemployment rate in the country—3.3%. It is widely known that the energy industry creates jobs, and not just minimum wage jobs. A report released this week shows that the industry is ready to create 1 million jobs over the next seven years and a recent study by PricewaterhouseCoopers estimated that each direct job in the U.S. oil and gas industry supports more than three jobs elsewhere in the economy.
With the obvious economic success story of the Bakkan field, you’d think that President Obama and his advisors would be looking to what is working and trying to replicate that nationwide.
Instead, development is being thwarted, hassled, and punished.
In the case of the Julia Field, the Interior Department could work with Exxon, perhaps charge a fee to expedite a permit. Instead, Exxon has to file a lawsuit to receive the deserved return on its investment. What company would want to invest billions and then have to fight the government for the payback?
In the Arctic, companies want to explore, expand, and extract the resource. But, as Shell experienced, the agencies are looking for reasons to reject or revoke permits rather than working with companies. No wonder Exxon has chosen to do business with a risky Russia—at least they can do business.
In North Dakota, seven oil companies were recently charged with killing migratory birds. These are not endangered species—these birds can be hunted and killed. But if they die because they—of their own free will—landed in an oil waste pit, operators face a penalty of six months in prison and a $15,000 fine.
Currently there is no proof that the companies did anything wrong, but 28 birds died at a few of the 6000 well sites—as a result, companies have been charged in federal court with killing birds—when a fine and a slap on the hand would probably be sufficient. (This, in contrast to the nearly half a million birds killed a year by administration-touted wind turbines—not to mention the deaths of thousands of agriculturally important bats.)
And the President wonders why companies are sitting on their money. A payroll tax holiday won’t do it. Infrastructure spending is not a solution. Reversing one onerous, cost-increasing regulation will not turn the economy around.
These three little stories—all within the past few weeks, represent the overall attitude of this administration toward businesses that create jobs and revenue. Until the administration decides to work with, and not against, the job creators in the economy, growth will remain flat—or worse.
Tonight before the joint session of Congress, President Obama could say, “I have heard you, loud and clear. My decision last week to dial back the EPA was just the first step. I have seen that agencies, bureaucrats who are under my control, have been overzealous. Tonight, I am here to announce a new attitude. As of this moment, I have instructed all departments to stop any action that has the potential to slow the economy and work with business, not against…”
Oh wait! I am dreaming. He’ll never say that. But he did back off that one regulation. Surely that was not his idea. He did it because of public pressure, Yes, if re-elected, he’ll probably tighten the regulatory screws. But we, the people, can continue to pour on the pressure—we can help steer the train back to the right direction. One thing politicians understand is re-election. Therein lies the power of the people.
Marita Noon is the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE).
Filed Under: ARCHIVES • Editor Outpost
Tags: Bakken Field • Obama Administration • oil and gas regulations
Clean Energy Collective is now based in Boulder Colorado. 
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https://www.lpea.coop/pdf/board_meeting/resolutions/2012/201213_tristate_policy_117.pdf 
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Comment by fred kirsch on 8 September 2011:
Couldn’t disagree with ya more.
But just to give you a chance:
Why was the Julia “routine extension” denied? The Interior has increased permitting more in the past year than since 2002 I believe. Is there more to the story than you are reporting?
Black Arctic Gold: Are you suggesting that Obama should stop Exxon from dealing with the Russians?
How much of that estimated 90 billion is in U.S. territory?
Bakken: Not surprising that North DAkota has low unemployment, they have been losing population for years. The only reason to go there is for a job.
The “energy industry” is going to create 1 million jobs in 7 yrs. Is that solar, wind, bio, oil, gas, etc?
Does the 3:1 job ration include health care jobs taking care of all the people that oil, gas, coal make sick. If not, you should add that to boost your #s.
How many jobs could be created if the fossil subsides went instead to energy efficiency and renewables development? I’m sure I could find a stat out there, but I want to hear it from “Citizen’s Alliance for RESPONSIBLE Energy”.
I think I agree with you about the birds, but have you ever had asthma? Smog is a different story.
CARE indeed – $$$
Comment by Mike Foster on 12 September 2011:
Fred,
1) You are confusing well permitting with a lease extension. Additionally well permitting is still way down due to the massive backlog created by the moratorium. The BOEM dosn’t have the resources necessary to process the backlog, and LA economy is suffering. Kind of ironic for the current administration to kick LA while it’s down after all that that state has been through. Don’t you agree?
2) I don’t think that anyone has a problem with Exxon working with the Russians. The point is that the conducting offshore energy investment in the U.S. is as dangerous as investing in Russia. Doesn’t it scare you that the U.S. energy investment climate is as risky as investing in Russia?
3) Are you insinuating that the materials comprising our renewable energy infrastructure are organic and non-toxic? Off course they aren’t as they contain petroleum based plastics, rare earth elements and rare metals that are toxic to mine, and they have to be backed up by natural gas powered turbines due to their intermittent nature.
4) What subsidy are you referring to? The last I checked the oil and gas industry was a major source of tax revenue for Colorado counties and the state itself. Are you proposing that we do away with natural gas industry in the state in the middle of of the worst recession in 70 years?
Comment by fred kirsch on 21 September 2011:
1) I wasn’t referring to LA permitting in particular. I read that permitting in the US was highest since 2002. Is that accurate? What are the economic numbers of fisheries/tourism impacts vs oil impacts of BP disaster?
2) No it doesn’t. Russia is a guns blazing wild west show. We should (all) be more cautious.
3) Of course I’m not insinuating that we can be totally fossil free right now. Are you going to address the real questions I brought up? Your dodgeyness is suspicious.
4) Are you kidding? Google it and stop wasting my time. Actually you don’t have to Google it. Just answer this: Did we invade Iraq because of their awesome solar resources? No, wait, it was to spread democracy right?
Here’s a question for your vague statement: How much revenue does the oil/gas industry bring to the state and counties versus how much money it costs due to health and property property devaluation? Here’s another question: What does the balance look like if we shift those subsidies to clean energy development.
BTW: It is a logical fallacy to insinuate that subsidies don’t exist and then credit them for revenue.
Here’s another one: Did the rising price of fuel affect our economic condition?
Come with better than that Mike.
Comment by mike foster on 21 September 2011:
4) a) No Fred I am not kidding. You need to be more specific about the “subsidies” to which you are referring. Name one.
b) In regards to Irag and property devalution – How does solar and wind electricity direclty replace gasoline powered cars? Are you suggesting cars that run directly on wind and solar power? Of course you could convert vehicles to electric and boost our reliance on coal. Or perhaps you are arguing for a yet higher renewable electric power standard combined with a mandate for electric vehicles. Ever thought about how many square miles of land that your renewable standard will encumber when it is coupled with electric vehicles? Try thousands of square miles. The reasonable solution to Irag is powering cars and semis with domestically produced natural gas.
Comment by admin on 21 September 2011:
Domestic natural gas is a big part of the equation, for sure, Mike. It’s getting the CNG tanks down to a reasonable size for passenger cars that is a major issue.
Comment by fred kirsch on 6 October 2011:
4)a). The war in Iraq, exemption from the safe drinking water act, exclusive bidding rights, “According to the most recent study by the Congressional Budget Office, released in 2005, capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry.”
b). Cars are going electric and becoming more efficient as are buildings. It is not unrealistic to say that our buildings’ energy use could be cut in half by 2021. It is also not unrealistic to say that solar power will be cheaper than coal by 2021 and every south facing roof or viable surface will have (or soon have) solar panels built on.
We don’t have to mandate anything. In fact, I’m in favor of removing all mandates and assistance. Put oil, gas, solar, wind, coal, on an equal playing field with total cost accounting and no externalization of expenses and see what is best.
Any source for your “thousands of square miles” estimate, and is that in addition to the thousands that are roofs and parking lots and other spaces that can serve a dual purpose with solar?
Gonna answer any other questions or giving up on that?
Comment by Mike Foster on 11 October 2011:
Fred
4a) 1) The key words are capital and investment. You are comparing taxes on business capital investment to taxes on business income but that comparison has nothing to do with any speciifc subsidy for oil and gas. Given that every business in America is allowed to depreciate capital investments there doesn’t appear to be any specific relationship between taxes on capital investment and any specific subsidy for oil and gas development. Nice try though.
2) Also while there appear to be Iraqi oil contracts for CONOC (China), Rosneft (Russia) and Total (France) I don’t see any U.S. oil companies in the top five recipients of Irag oil development contracts do you?
3) Colorado has 13K MW of generating capacity. Wind power requires 2 square miles of land for every MW of capacity. Thus to just replace 20% of Colorado’s generating capacity with wind requires 2,600 square miles of land area.
4) Cars are going electric. But how does a move to 100% electric vehicle fllet place less burden on the einvironment than a natural gas or gasoline powered vehicle fleet? We will have to generate huge amounts of electricity to power those electric cars while at the same time disincentivising fossil fuels and nuclear as a base or backup power source. How does that not lead to the loss of a massive amount of land area to solar farms and wind farms?
5) The article was referring to permitting in the GOM. So your comment that the combined onshore and offshore rig count was higher than 2002 doesn’t seem relevant to the original article that you attacked.
6) Your comment about the fishing and tourism follows Salazar’s logic. Wow LA’s fishing and tourism industry is in shambles why don’t we help them by destroying their drilling industry too!!