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Thursday, June 03, 2010

Cheney's Chernobyl

Let's be clear here, drilling five miles beneath the ocean surface is a desperate move. It's the sort of thing you'd do if you couldn't find oil any place else. Despite what Republicans like Sarah Palin have been saying, environmentalists didn't force drilling offshore by opposing drilling on land in places like the Alaska National Wildlife Refuge. Like deepwater drilling, drilling in ANWR would be a desperation move. Of the leases of federal land that oil companies hold, 68 million acres are unused. ANWR isn't the only place left. And the final nail in the coffin of "we have to do deepwater drilling" is oil price. If we were really so desperate for oil that we absolutely had to drill deep in the ocean, supply and demand would dictate that oil prices would be through the roof in historical terms. Nearly the exact opposite is true:

Chart showing oil at a low during a five year period

There is no logical reason to be drilling this deep. We don't need oil that badly.

As we see the environment in the Gulf Coast slowly poisoned, a common refrain is that this is our fault. It's our unending thirst for oil that forces us to do this -- I've walked down that road myself. But, again, the historical facts and further thought cast doubt this. If demand had forced this to happen, oil prices would reflect that. And, of course, with barrel after barrel after barrel spilling out into the Gulf by the minute, that waste isn't jacking up the price either. Turns out we can pour all that "necessary" oil down a drain and not have it make a dent. Sure, Americans burn oil as if it were our religion and that's a major problem, but to say that our demand has forced this upon ourselves isn't entirely accurate.

The fact of the matter is that the big black cloud of oil darkening the Gulf of Mexico exists for no good reason. A nearly unimaginable fortune of oil is lost and the only impacts are in public health and environment. No gas lines exist, no price spike is breaking us, no engine goes thirsty. Gusher aside, we now see what the world would be like if there were no Deepwater Horizon and we find it changed not at all. Throw in the gusher and we find it would've been a better world without it. I think we can stop talking about the "necessity" of offshore drilling now.

So why do we do this? Because it's expensive. And if something's expensive, then there's a lot of money to be made. You just need to figure out how to pass on that expense, so construction companies like Halliburton can cash in. So you get an army of lobbyists and have government create incentives for oil exploration. Suddenly, a big waste of time and money isn't so personally expensive anymore. It helps to have a corrupt corporate stooge like Dick Cheney to help you out. He actually let lobbyists write energy policy, which turned out to be awesome for the "drilling where we don't need to" industry.

CNN, July 2005:

As the energy bill moves closer to becoming law, debate is still raging over the first overhaul of national energy policy in a decade.

Supporters say the $14.5 billion bill will pave the way for more exploration and ultimately less reliance on foreign oil. Critics say it will enrich the already wealthy oil industry without addressing the need for relief from record oil and gasoline prices.

But if there's one thing that both parties can agree on, it's that the oil industry as a whole stands to benefit from its passage -- which could be an attractive point for investors looking to share the wealth.

"The bill will provide an elimination of royalties that oil and gas companies pay the government for drilling in the deep water in the Gulf of Mexico," CNN reported. "While details still need to be finalized, those companies that drill deeper will receive more relief, said KeyBanc vice president Kim Pacanovsky." The American Petroleum Institute estimated ending royalties amounted to a $5 billion giveaway to oil companies. And the only way oil companies could get that money was to drill where they had no business drilling.

The media has started calling Deepwater Horizon "Obama's Katrina." This is inaccurate.

It's Cheney's Chernobyl.


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