Oil Wars

alaska-oil-drilling.jpgThe Hill reports that, rather than forcing John McCain and a lot of endangered Republican incumbents to vote againt children’s healthcare again, Democrats in Congress are going to work on an energy bill that will include some allowance for drilling.

House Democrats are ready to propose an expansion of offshore drilling as part of a broader energy bill  they plan to introduce this month, according to a top Democrat.

Democratic Caucus Vice Chairman John Larson (Conn.) said the majority is prepared to back “responsible” offshore drilling through a bill that could be brought to the floor as early as next week.


“We will consider responsibly opening portions of the Outer Continental Shelf for drilling while demanding that Big Oil companies use the leases they have already been issued or return them to the public,” Larson said Saturday in the Democratic response to the President’s radio address.

Larson said the legislation will also seek to curb excessive oil market speculation and call for a reinvestment of government royalties into alternative energy technology.

This is not actually news. When Obama said he would reluctantly accept more drilling as part of a package that included a lot of other, smarter energy policies, it became clear the party would follow his lead.

And, if it is done well, it might actually be brilliant jujitsu. If the bill were to define "responsible" by requiring that states agree to the drilling and by demanding that the drilling actually look like it would do some good, it would result in very little new drilling at all–because drilling is, from a policy standpoint, not "responsible." And a package could take the Republicans’ most successful (arguably, their only) policy recommendation, drilling, off the table for the election.

Of course, that all assumes this would be done well…

Meanwhile, in Alaska, the Caribou Barbie is trying to pull of her own energy jujitsu, though it’s not yet clear what that jujitsu might entail. Andrew Halcro reports that Governor Palin is trying to get the oil companies onto a conference call this week, but it’s not yet clear why she wants to talk. 

Governor Sarah Palin has requested a conference call this week with the CEO’s of the major oil companies playing a role in the potential development of Alaska’s natural gas pipeline.

The requested participants include Tony Hayward from BP, James Mulva from ConocoPhillips, Rex Tillerson from Exxon along with others. According to my source, no one knows exactly what the purpose of the call is, but some have never the less speculated.

Last week in her address to the nation, Palin stepped far over the line of truthiness (thanks Steven Colbert) when she told the country, "I fought to bring about the largest private-sector infrastructure project in North American history. And when that deal was struck, we began a nearly forty billion dollar natural gas pipeline to help lead America to energy independence."

Halcro lists the following possible reasons she’s requesting the call:

  • She has realized she actually has to deliver on the promise she made in her acceptance speech–so she has finally decided to make nice with the oil companies and start negotiating terms for the natural gas project that will be economically viable for the oil companies.
  • She wants to persuade the oil companies to stop referring to the massive new taxes she levied against them as a "windfall profits tax" (which of course Democrats support but McCain and the Republicans oppose strongly).
  • She has realized she has to at least be speaking to oil company executives if she wants to claim to be an energy expert–so she has decided to play nice to achieve, at least, some dialogue.
  • She wants to publicly browbeat the oil companies again, to bolster the McCain campaign’s claim to being assholes mavericks.

Mind you, that is all speculation from Halcro, not verified facts.

Now, Sarah Palin may be utterly inexperienced in most things that pertain to being a Vice President; she may be a more interesting subject for stories about her false maverickyness, her love of pork, and her lying. But she is definitely in a position to offer Republicans a story to tell about energy plans. We would do well to consider both these developments–Congress’ negotiation of an energy package and Palin’s attempts to do who knows what with the oil companies in AK–as two skirmishes in the battle over who gets to claim their party has a real plan to solve the current energy pinch. 

This may be one of the policy issues that could decide this election–whether one or both of these sides successfully pulls of their jujitsu. I say "may," because who knows whether it will remain the one policy issue on which Republicans outpoll Democrats, what with the price of a barrel of oil down to $107 but with OPEC threatening to cut production. But both sides are treating it as the one policy issue that one or another side might be able to show real progress on between now and the election.

Photo by kristen.

  1. scribe says:

    Regular was $3.249 at my local off-brand place this morning, down from about $3.999 a month ago.

    75 cents in a month – you think Palin wants the current price manipulations (just like the ones that dropped gas below $2 in late October ‘06) to continue, in exchange for a little consideration after the election?

  2. emptywheel says:

    I encourage you to read the whole Halcro post–it’s quite detailed. It sounds like Palin would have to offer a whole lot–and eat a lot of crow–to get the oil companies on her side.

  3. wavpeac says:

    Caribou Barbie….I think I had one of those.

    I am going to hold out for the jujitsu angle and hope the dems know what they are doing.

    So this forces her to “bring it” and allows us to “see the result”.

    Then we will have to wait and see…

  4. kraftysue says:

    My suggestion is to have the Democrats demand that if the Republicans insist on allowing drilling anywhere in US controlled territory, then the oil companies must ONLY sell the oil to America. We own the land after all. The oil companies sell more than 70% of its oil to foreign countries. I would guess that would stop all this “drill, baby, drill” nonsense.

  5. bmaz says:

    Drill baby drill. Why do I think the Democrats are the ones getting drilled here, and that they are about to be screwed? Could it be that they are not capable of playing this in a manner that doesn’t give up a lot and get nothing usable in return?

  6. dosido says:

    Hello Shell Oil? BP? everyone?

    I’m going to be telling the American people that I oppose the raping and pillaging of Big Oil, but I just want to you know that I’m only going to say that until November. We’ll talk more after that. And you can go to SP for VP dot com and don’t forget to hit the PayPal button. Thanks. I know I would not be here without your support.

  7. Arbusto says:

    When it comes to issue management, DINO’s are minnows compared to GOP baracuda. Give anything to the GOP and they reframe and reframe until the DINO’s look like putz’s in a cluster fuck. It’s been like this for 12 years and the DINO’s and Obama just don’t get it.

  8. whitewidow says:

    BP sponsored Caribou Barbie’s inauguration.

    In case anyone hasn’t seen dengre’s piece (you probably have, because it’s been on the rec list over at the Orange Satan for a full day) it’s well worth the read.

    The more I know, the more I am convinced that it is very, very crucial that Palin is never near the levers of power.

  9. whitewidow says:

    I’ve been meaning to ask for awhile, why do I have so much trouble getting my linkies to show up?

    What am I doing wrong?

    • dosido says:

      Hi WW. first you highlight the word you want the link to appear in. Click the link button and insert the url and click OK. hope that helps.

  10. dosido says:

    Interesting: this article from the Seattle Times indicates that Obama is for windfall taxes on oil companies, something that McCain opposes and Palin implemented in Alaska. What do you all make of it?

    Keep in mind that Palin can sharply change direction at any given moment.

  11. WilliamOckham says:

    It’ll be interesting to see how Palin plays this one. I understand the appeal of keeping the energy issue in the spotlight, but the Republicans will once again have to depend on an ignorant and compliant press to finesse this one. Palin’s interest as Gov. of Alaska is directly contradictory to VP Palin’s interest.

    Alaska needs to extort as much money as possible from the oil giants now, while energy prices are high. Palin’s been doing that as Gov. and it’s messed up the the negotiations for the natural gas pipeline. McCain/Palin, on the other hand, need to pretend to have solutions to the current crisis while assuring Big Oil that they will continue to get the protections they are accustomed to.

    Palin’s real bind is that she campaigned on a ‘get tough with the oil companies’ platform as an expediency and her popularity in Alaska is due in large part to her ability to bring home the bacon in the form of big royalty checks. If she abandons that as part of the VP campaign and loses, she will have ended her political career.

    • KenMuldrew says:

      Alaska needs to extort as much money as possible from the oil giants now, while energy prices are high. Palin’s been doing that as Gov. and it’s messed up the the negotiations for the natural gas pipeline.

      This has also created problems for discovery and development of conventional oil and gas deposits. As the prices of oil and gas increase, drilling leases are subletted to smaller companies. If the price goes up again before any activity begins, then the leaseholder can make more by subletting to some other company. Probably all the available leases in Alaska are 4 or 5 levels down from the original leaseholder. This all happens faster than any government can raise royalties in response to price increases. So when the windfall royalties are finally implemented, they gather money from currently producing wells but they stop exploration dead (since all the extra value added through price increases has already been swallowed up by successive sublets from oil company to oil company).

      Big oil has Palin over a barrel, so to speak. They will demand (and get, I suppose) some mighty big quids for their quo. There is no way that big oil can return their undeveloped leases to the public without compensating the numerous small oil companies who are subletting from them. So either the royalties go back to a level commensurate with, say, $50/bbl oil, or some new exploration encouragement funds appear, or something else; so long as big oil wins.

    • WilliamOckham says:

      Oh my. How stupid are the people at the WaPo?

      The oil companies still control the gas. So, if TransCanada actually gets all the necessary permits, assembles financing and builds the pipeline, the Big Three will have to be persuaded, years from now, to ship their gas through it on reasonable terms.

      Let me explain this in terms that even Beltway insiders can understand:

      Pipeline – expensive, all up front cost
      Revenue – comes from gas being shipped on pipeline
      No prior commitment on gas supply, no pipeline

      No pipeline will be built unless Big Oil believes they will make a profit in the long run. Palin hasn’t made the pipeline more likely. She’s made it less likely. TransCanada got their $500 million up front. They’re happy, but there’s no pipeline until BP, ConocoPhillips, and ExxonMobil are happy.

      • annaneu says:

        No pipeline will be built unless Big Oil believes they will make a profit in the long run. Palin hasn’t made the pipeline more likely. She’s made it less likely. TransCanada got their $500 million up front. They’re happy, but there’s no pipeline until BP, ConocoPhillips, and ExxonMobil are happy.

        Palin’s pipeline goes to the Alberta tar fields and ends there. Extracting oil from the tar requires large amounts of natural gas. There’s bound to be profit in selling gas for oil extraction, considering that Alberta’s oil fields are the only chance the US has of becoming independent of Middle East oil. Sources on this and a map of Palin’s proposed pipeline are at dailykos.com/story/2008/9/8/12517/55971/297/589573. (Sorry, can’t get links to work.)

        If the Lower 48 want some of that gas for home heating, they’ll have to build their own pipeline from Alberta. That’s not yet part of Palin’s “US energy independence” plan for which $18 bill of US government funds are already appropriated.

  12. ScrewBush says:

    I had a feeling that by November I’d be making a choice for the slightly lesser of two evils. For some reason ($$$) Democrats just want to stay one degree left of Republicans. Regardless of who we vote for, America is going to be taking a trip into the great toilet bowl of history, enjoy the party.

    • nomolos says:

      If obama had not abandoned his base and gone to the DLC center he would be a damn sight better off than he is right now in the polls. McSame went right to the heart of his base in choosing sexy sarah despite no vetting and the fact that she is a doofus but she has energized his campaign. can you imagine how well obama would be doing if he had not eschewed his progressive supporters. I, for one, have given up on both the “major” candidates as it is just changing CEOs of corporate america. Go back your base you twit obama and you too might get some more support. Oh and FU obama and you damned drilling and your lousy “health care” and your vote on FISA and your support of gun ownership and your belief that mentally challenged women should not be able to get an abortion and your sipport of state sponsored murder….. keeryst the man is a fucking gooper!

  13. WilliamOckham says:

    I should add that the Canadian government and the aboriginal peoples will also have to be happy. They prefer the route planned by Denali group (BP and ConocoPhillips) to the one planned by TransCanada and Palin.

  14. Mary says:

    Here’s what no one other than Schweitzer seems to be saying –

    1. This country controls less than 3% of the world’s oil reserves. If you bump as hard as you can for opening up offshore and Anwar drilling, you won’t get much past 4%. So if you “drill baby drill” just what can you anticipate generating to offset the fact that we use WAY WAY WAY in excess of 4% of produced oil. You can statistically NEVER “drill your way out” of the situation we have in this country.

    2. Offshore and Alaskan reserves drilling are —- EXPENSIVE AND RISKY. The only way they “pay” is if oil prices are and remain very high. If prices drop to a more normative $50/barrel or so, big oil can’t really generate the necessary $$ to make these plays pay.

    3. As nasty as it has been to deal with in the past, what this country does have in abundance is coal, and if all the time and $$ going into offshore went into cleaner coal and sequestration tech, like the FutureGen project Bush tried to shut down, not only do you benefit this country on an energy front (go look at how many US powerplants are coal powered) but you also TREMENDOUSLY help the situation in growing economies like China which are going to also be using loads of coal, and using it in an environmentally suicidal way absent better tech applications and breakthroughs.

  15. earlofhuntingdon says:

    What is it about Rahm Emanuel and his “leadership” decision to let the GOP off the hook, to give them another mulligan on voting against medical care for kids, to give Bush another free lunch by not making him issue an unpopular veto. Pretty sure things. Yet he takes on a maybe, hoping to hoist the Goopers on their own oil derricks by passing drilling legislation that contains unpopular qualifiers such that Goopers will have to oppose it.

    A qualified emotional winner on necessary legislation? Nah. A maybe on a rational policy that won’t excite anyone at the gas pump unless it’s explained to them, like reading the tax notices from the county treasurer on the pump. Yea. Gotta have that one, momma.

    What’s wrong with this man? A lot more than a little competition for his seat on the public payroll would cure. Rahm: the defects of Democrats in a nutshell; makes Al Gore of Decision 2000 look like a fire eater.

  16. alank says:

    $3.55 in the eastern panhandle of WV.

    People are still buying and driving big ass SUVs and trucks with six wheels in the DC metro area, as far as I can tell.

    Russia is negotiating to build a pipeline to the lower 48.

  17. dosido says:

    My low information “gut” call is that I do not want another executive from a Big Oil state running our country.