Who Is Coastal Drilling Really For? Follow The Money.

Bill Scher

Who is really going to benefit from opening up our coastal shores to oil drilling? You, or Big Oil?

Follow the money and get your answer.

Last month, Sen. John McCain changed his position on coastal oil drilling. And all of a sudden, the fossil fuel crowd took a big liking to his campaign. The Washington Post reports that even though “oil and gas executives have not traditionally been a major source of campaign money for McCain,” in June McCain took $1.1 million from oil and gas corporate executives — five times more than in the previous month.

(Check out Huffington Post’s David Donnelly for more.)

Why? Because while coastal drilling amounts to nothing in regards to lower energy costs for you and me, it does amount to a fat giveaway to Big Oil.

You may say, so what? Who cares if oil companies do well, so long as they increase the supply of oil and lower prices for me.

Except that there’s not nearly enough oil off our shores to lower the price of oil (both the White House and McCain concede, when pressed, that opening up the coasts for drilling won’t lower prices.)

And there’s no reason to expect that oil and gas companies would be in any rush to use the leases and actually drill.

Remember, with supply of oil as it is, and the price of oil as it is, oil companies are doing quite well thank you very much. ExxonMobil recorded the highest annual profit of any company in the history of companies last year, $40 billion.

Tight supply + high gas prices = good times for Big Oil.

Same reason why oil companies don’t invest in more refineries.

Not because of environmental standards, as they typically complain about. But because they’re not interested in increasing supply, driving prices down and reducing their profits. The National Resources Defense Council explains: “…refiners reap higher profits when capacity is tight, so they actually have a disincentive to significantly expand production. In fact, oil executives have stated that the reason they did not expand refining capacity in the 1990s is that the low profitability of the business did not justify the investment.”

Same reason why oil companies aren’t drilling in all of the 68 million acres of federal space for which they already have leases. As Sen. Joe Biden recently noted in a Wilmington News Journal op-ed:

First, the oil companies in this country now hold 7,000 leases to drill offshore, yet only 20 percent of those leases are producing oil. That is 68 million acres for which they already have the rights to drill. Nearly 80 percent of our offshore oil is already available for leasing — approximately 54 billion barrels total. They could be drilling in these areas, but they are not.

Here in Delaware, we are paying $10 more a day for gas — around $3,600 a year — than we were seven years ago. That is a bite out of a family’s budget.

During the same period, permits for new oil drilling leases increased by 361 percent. Put simply, allowing more drilling does not equal cheaper gas.

Sure, it’s not fair to expect drilling in every inch of that 68 million acres, because oil wouldn’t be found in every inch. But even a defense of oil companies from the Houston Chronicle acknowledges that there is available crude that Big Oil chooses not to pursue because “it still is not cost-effective to drill for oil in some places” and “some oil companies hold onto leases to prevent competitors from drilling on them.”

What’s “cost-effective” for Big Oil isn’t the same as what’s cost-effective for you.

What’s cost-effective for Big Oil, in the era of dwindling oil supplies and rising gas prices, is to string out what oil is left for as long as possible, and slowly prepare for an inevitable transition to alternative energy sources (What oil company TV ad doesn’t try to assure you, “We’re investing in clean energy, really! Nothing to worry about! Go buy oil.”)

While fighting off a rapid transition to clean energy which would mean actual competition and consumer choices (Eek! Capitalism!) from upstart alternative energy companies.

That means a painfully slow transition to alternative energy, with you still having no choice but to buy increasingly expensive oil for decades, as Big OIl, propped up by conservative government policies, keeps making a mint.

It does not mean Big OIl would be in any rush to exploit what little oil is there off our shores. They want leases wherever they can get them, but just so they can string out oil supplies for as long as possible, not to provide any relief to you. If they did, they’d be working their current leases harder.

Big Oil is making money now. And if you’re them, it ain’t broke, so don’t fix it. No need to rush and extract all the oil we have.

But for us energy consumers, our energy policy is beyond broke.

As Al Gore sharply put it last week:

It is only a truly dysfunctional system that would buy into the perverse logic that the short-term answer to high gasoline prices is drilling for more oil ten years from now.

Am I the only one who finds it strange that our government so often adopts a so-called solution that has absolutely nothing to do with the problem it is supposed to address? When people rightly complain about higher gasoline prices, we propose to give more money to the oil companies and pretend that they’re going to bring gasoline prices down. It will do nothing of the sort, and everyone knows it.

If we keep going back to the same policies that have never ever worked in the past and have served only to produce the highest gasoline prices in history alongside the greatest oil company profits in history, nobody should be surprised if we get the same result over and over again.

But it’s not just Al Gore warning that there’s not enough oil to lower prices. Oilman T. Boone Pickens, trying to get ahead of the curve on wind power, lays it out:

Can’t we just produce more oil?

World oil production peaked in 2005. Despite growing demand and an unprecedented increase in prices, oil production has fallen over the last three years. Oil is getting more expensive to produce, harder to find and there just isn’t enough of it to keep up with demand.

The simple truth is that cheap and easy oil is gone.

We can recognize that fact, and develop policies that make sense for us energy consumers. Or we can keep propping up Big Oil and let them suck our pocketbooks and our planet dry.

Oil companies keep shoveling in campaign cash to conservative politicians in hopes of keeping our government, our tax dollars and our resources in their service, with no benefit to you.

But we can choose to change our energy policy to serve us, not oil company CEOs. We can invest in clean energy and energy-efficiency instead of allowing yet another boondoggle for Big Oil. We can give ourselves the ability to power our lives without dependence on expensive oil.

We are under no obligation to remain subservient.

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