President Obama and Rep. Stupak proclaim “There will be peace in our time!”
by Richard R. Loomis, Contributor, World Energy Source. June 17, 2010
Listening to the hearings today regarding the Gulf spill, I heard Rep Stupak asking the leaders of the largest oil companies in the United States if they could handle a spill the size of the “worst case scenarios” in their disaster plans. I think Rex Tillerson of ExxonMobil said it best, “We need to prevent these spills at the well head”. Stupak continued, “No, what if you have a spill that is 4 times as large as this one? Can you handle it?” The obvious implication, you cannot handle it so why are you drilling? At what price can we have “peace in our time”.
Meanwhile, our President is comparing this spill to the 9/11 disaster and promising to bring all of our assets to combat this siege. So are we really at war with this spill or with the companies? If so whose side are we on? The Oval Office speech certainly had the air of crisis and conflict with military metaphors spread throughout the speech. Even going so far as to dictate that BP will “voluntarily” put aside $20 billion to handle “legitimate” claims that the Whitehouse feels should be paid.
But where are the lines being drawn. If we are at war with the spill and our generals are Lamar McKay, Rex Tillerson, Jim Mulva, and the head of Shell are we sending the right message. One congressman even called for Lamar to commit hari- kari. Others asked the CEOs what they would do with the equipment if they are not allowed to drill. The response was obvious, move to where drilling is allowed. Still another pointed out that while 40 pages of Exxon’s spill plan were dedicated to the media response only 9 pages were dedicated to the actual clean up.
The President made it very clear that he is “not going to let a crisis go to waste” and is going to push for an energy policy that ends our reliance on oil, creating energy independence. Are we really after energy independence, an end to our reliance on oil or will this lead us to a ruined economy? If we are fighting for our independence that is different than ending our reliance on oil, and we need to be in the deepwater. Yet according to Representative Stupak and others to achieve “peace in our time” we need to be retreating from this line.
If I understood Stupak correctly, he was saying in effect, “today we had too many Japanese airplanes hitting our shores in Hawaii. We got our butt kicked. Generals, in your best defense scenario if we were hit by two or three times as many could you have handled it. If your answer is no, then we cannot rebuild our navy, we need to surrender now and retreat back to the continental US.”
I have also seen this disaster compared to the explosion of the space shuttle. Apparently our resonse to that disaster should have been, “When the shuttle blew up it had wings, so we need to ground everything with wings until we figure out what went wrong. If of course we find out that the shuttle blew up because of an accident, everything needs to stay grounded.” Obviously if that was how we handled emergencies like Pearl Harbor and the Challenger explosion, we would have lost the war and never been in space at all.
Each day that the spill continues in the Gulf of Mexico we are seeing an environmental disaster happening right before our eyes. The fishing and tourism industries are being affected along the Gulf coast and our Federal government, our president is insisting that BP pay for it all. At the same time the President himself has attacked the economy of the region by placing a moratorium on deepwater drilling. This means that the oil and gas industry gets to share the fate of the fishing and tourism industries in these states. I guess that is spreading the misery but for the State of Louisiana that is hitting them when they are down. The economic impact of the stoppage is just beginning to be felt, the layoffs, the movement of the equipment, the decline in production are all going to make the situation worse.
Today, we use 18-19 million barrels of oil every day in the United States. 2/3rds of that oil goes to transportation and 1/3 goes to hydrocarbon based products. If we have declared war on the hydrocarbon industry, we will need to formulate a plan to replace that source of energy with something else that can move a car. Today, let us be clear, there is nothing else in the world of energy as efficient or inexpensive as oil. Anything else we use will cost more and transport less.
If we are declaring war on the spill, then this government has as much to answer for as BP. Why has the best of technology not been applied to this spill? Why are the skimmers offered by the Dutch still standing idle? Why are the warehouses of booms still full? Why do we ignore the Governor of Louisiana when he requests permission to guard his coast line? Why do scientists with unique solutions get ignored when Kevin Costner get’s an audience and an order for his gear? Since when has the Jones Act been an excuse for inaction? Why does a President get to look for “whose butt to kick” instead of any and all solutions to the problem? If we are at war with this spill, we need to get busy and stop trying to play the blame game.
Perhaps we are not at war with the hydrocarbon and at first we did not really imagine that the spill would get this bad. Perhaps we are more in love with a different agenda than at war with anyone or anything. When the President of the United States decides that we are going to move from the hydrocarbon into a “clean energy future” he just needs the perfect catalyst. Here we have one of the biggest environmental tragedies in the history of the United States and the President picks this time to speak on conservation. This seems a very odd response given the magnitude of the issue in front of us today. The President’s solution is to demand that BP clean this mess up. Secretary Salazar has suggested that he will keep his “boot on the neck” of BP. The President and the Legislature are calling on BP not to pay dividends to share holders, further weakening the company. In the meantime the price of oil is going up.
When asked, the senior executives of the oil industry suggest that they will move on to other projects around the world if they cannot drill in the United States. This explains why they did not seem particularly upset or concerned by the comments being made at the hearing. Each of the executives did their best to answer questions and offer opinions, but other than a simple head shaking or rolling of eyes they gave no real objection to the conclusions of the politicians. Other oil companies that principally work in the Gulf of Mexico would no doubt be a little more vocal in their opposition to this clearly destructive path.
Moving down this chosen path, we will see the call for regulations begin with the deepwater and move toward the coast. The first legislative actions will be primarily targeted toward the drilling process, until it is pointed out that the drilling activities were completed. We will then see a series of suggestions that will make operating a deepwater rig difficult in the Gulf of Mexico. As the regulations move down the value chain we will see that conservation is added to the mix. We will see that the ever looming carbon discussion is going to be added and implemented to reduce our use of fuel. The taxes we pay on every barrel produced will go up, causing the products made from the commodity to rise. In essence the cost of “Peace in our time” will come as a huge economic burden on the citizens of the United States.
Where are the people on this? Are we going to sit idle and let this happen as another sector of our economy comes under government control? It seems that the President’s speech did have the desired effect. Most of the polls tracking response show that the American people are not buying what he is selling. It is clear that everyone wants the spill to end, but 57% in the CNN poll still favor offshore drilling. It is certain that the people of the Gulf Coast that make their livelihood from the offshore industry want to continue working there.
Of course all of us want to drive our cars, use plastic, have rubber for shoes and continue with the lifestyle we have become accustomed to. The option of “Peace in our time” is about as unreachable as it was in the 1940s when Chamberlin proposed it as a solution to the Nazis, and if we buy that rhetoric the results may be just as devastating.
© 2010 Richard Loomis
Richard Loomis | President & CEO, World Energy
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