Guest Post by David Middleton
During his State of the Union Address, President Obama had a few things to say about energy snd I have a few replies.
Pres. Obama: We buy… less foreign oil than we have in 20 [years].
Wrong!!! We buy more “foreign oil” now than we did 20 years ago.
Pres. Obama: We produce more oil at home than we have in 15 years.
What do you mean by “we”? You don’t produce any oil.
See that decline in Federal Gulf of Mexico production from ~1.7 MMbbl/d to ~1.4 MMbbl/d since early 2010?
You actually did build that.
Pres. Obama: That’s why my administration will keep cutting red tape and speeding up new oil and gas permits.
Drilling permits that once took 30 days to be approved now take more than 180 days. Even relatively simple things like the approval of development plan (DOCD) revisions are sometimes drawn out to nearly 300 days. As of a year ago, the average delays for independent oil companies are currently 1.4 years on the shelf and almost 2 years in deepwater:
Between the “permitorium” and high product prices, many of the best, most capable drilling rigs have been moved overseas. Once we manage to get permits approved, the delays in obtaining a rig can be almost as long as the permit delays were. In this “dynamic regulatory environment,” wells can’t be drilled quickly enough to compensate for decline rates, much less to increase production. This is why the production rate in the Gulf of Mexico is still 300,000 bbl/d lower than it was prior to Macondo. The only red tape you have cut, is red tape that your maladministration created.
Pres. Obama: So tonight, I propose we use some of our oil and gas revenues to fund an Energy Security Trust that will drive new research and technology to shift our cars and trucks off oil for good.
What do you mean by “our oil and gas revenues”? You don’t generate any oil and gas revenue. The Federal gov’t does generate some revenue from the private sector development of Federal mineral leases.
Federal mineral revenues for FY 2012 were HALF of what they were in FY 2008!
The decline in Federal mineral revenues is really ironic considering the fact that the US Navy can’t afford to deploy a second aircraft carrier to the Persian Gulf due to a lack of revenue. The reason for maintaining a strong naval presence in the region is the free flow of oil at market prices (the Carter Doctrine). The Navy only expects to “save several hundred million dollars” by not delaying the deployment of CVN 75 USS Harry S Truman. The royalty payments from the missing 300,000 bbl/d of production could have been as much as $1.8 billion and have more than covered the cost of the deployment.
What’s even more ironic? We’re importing 50% more from the Persian Gulf than just three years ago!
The actions of this administration have both increased our need to maintain freedom of navigation in the Persian Gulf and reduced our means to do so.