Energy Wars: The Oil Boom


Year 2018 has begun as a promising year for oil production, as seen in headlines posted by Real Clear Energy on 01/02/18.

Oil production in the USA received a long-waited boost on 12/22/17 when President Trump signed into law the Tax Cuts and Jobs Act. Included in that legislation is a provision to open a portion of the Arctic National Wildlife Refuge to oil production.

From Petroleum News: “The Senate legislation requires the secretary of the interior to hold at least two area wide lease sales within the 10-year budget window, with the first sale taking place within four years of the legislation being enacted and the second within seven years. Each lease sale must encompass at least 400,000 acres, including areas with the highest potential for hydrocarbon discoveries.”

Lest anyone claim that 800,000+ acres of the Arctic National Wildlife Refuge will be ruined, this is what the legislation says about the actual acreage to be covered by production facilities:

“The Secretary [of Interior] shall authorize up to 2,000 surface acres of Federal land on the Coastal Plain to be covered by production and support facilities (including airstrips and any area covered by gravel berms or piers for support of pipelines) during the term of the leases under the oil and gas program under this section.”

Paul Driessen writes, “To claim the minimal impact on 2,000 acres of a 19-million acre refuge will despoil the entire refuge is like saying an airport on North Carolina’s northern border would ruin scenery and kill wildlife throughout the state.”

Although the oil boom is good for America’s economy, not everyone is thrilled to see it take place.

In her 12/18/17 column for Axios, Amy Harder writes, “The massive tax bill Congress is set to approve this week does little to simplify complicated tax laws that impact the energy industry, keeping intact most energy subsidies totaling tens of billions of dollars. The prospect of a tax on carbon emissions, which would both raise revenue for the federal government and help level the playing field between polluting and non-polluting energy resources, never had a chance.”

Harder is an advocate for Congress imposing a tax on carbon emissions. In her column, she spells out what a carbon tax is supposed to do.

“Adele Morris, an economist at the Brookings Institution who recently hosted an event about a carbon tax that I spoke at, says a carbon tax achieves two things on top of raising government revenue, that subsidies don’t:

  1. Transition from dirtier energy technologies to cleaner ones.
  2. Energy conservation through higher prices.”

Yes, Harder wants to allegedly “level the playing field between polluting and non-polluting energy resources” by making Americans pay more money at the gas pump.

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  • Brett Buck

    January 8, 2018. David Robertson discovers that leftists use tax law for social engineering, and misses the fact that the solar and electric car industries (and the liberal favorite collectivist transportation system, the passenger rail system including Calfornia’s Supertrain to Nowhere) exist primarily for the purpose of extracting taxpayer money from the Federal coffers.

  • Walter_Cronanty

    But,…but…prices for energy are spiking in NY and New England:
    https://i2.wp.com/www.powerlineblog.com/ed-assets/2018/01/Boston-gas-prices.jpeg

    Why would that happen?

    The Wall Street Journal offered the most comprehensive takedown of this madness in an editorial back in August:

    The U.S. shale boom has lowered energy prices and created hundreds of thousands of jobs across the country. But those living in upstate New York and New England have been left in the cold by New York Gov. Andrew Cuomo, whose shale gas blockade could instigate an energy crisis in the Northeast. . .

    All of this is ominous since the region desperately needs more natural gas to make up for lost power from the impending shutdown of nuclear and coal plants. New England’s Independent System Operator projects that 14% of the region’s electric generation capacity will be retired within three years and says more pipelines are needed for grid stability.

  • Retired military
  • fustian24

    Well, it’s too late for ANWR.

    It’s very expensive to explore there. And if you find oil, it’s very expensive to get it to where it needs to go.

    Contrast that with oil shale. Oil shale is in Texas or along the east coast near all those big cities. The oil produced barely needs refining.

    Oil shale sets a cap for the oil price. This cap used to be around $60 a barrel which is much less than you’d want if you were thinking of investing in a project in ANWR.

    But it’s even worse than that. That cap is dropping. I’m told that oil shale gets economic as low as $40 a barrel these days. And that number is only going to drop further as we get better at it.

    Hell, exploration budgets in the Gulf of Mexico are slashed, much less Alaska.

    Oil shale is changing everything.

    It costs something like $5 a barrel to get oil out of the ground in Saudi.

    But.

    Their government is predicated on $100 a barrel oil. The current oil price is unsustainable for them. This probably has a lot to do with the politics there.

    Another issue is that the US is pretty much oil independent these days. We actually don’t need oil from the Middle East any more. Which also means we don’t actually need to care much about that part of the world.

    The oil price is devastating Russia and Venezuela too.

    • Brett Buck

      Another issue is that the US is pretty much oil independent these days. We actually don’t need oil from the Middle East any more. Which also means we don’t actually need to care much about that part of the world.

      The oil price is devastating Russia and Venezuela too.

      But, I thought Trump was colluding with Putin, and here we are putting Russia out of the oil business?

      As far as I can tell, Democrat talking points aside, we have never been involved in the Middle East to take their oil, or at least not in the last 30-40 years. If we had been we would have occupied the Iraqi oil fields after the first Gulf war – instead of limiting them by sanction. On the other hand I think it is our place and a valid purpose to try to put an end to various barbaric regimes that haven’t advanced since the 7th century if it is within our power and not inordinately costly. It’s certainly within our power, the question is, when is it worth it? We can either do it with the military (like Iraq – later pissed away by Obama), or the way we got rid of the USSR – by out-competing them. Even the Saudis are being more-or-less forced to clean up their act to some degree, due in no small part to our own production driving down the cost of oil to the point that they can no longer afford to indulge their most corrupt elements.

      Back in the 80’s we *crushed* the largest and most credible threat to the existence of liberty and human civilization ever known – by simply being ourselves, unfettered by government interference. Since, we have managed to slide back into the sickening centralized collective control that weakened us since the 30’s, and, not coincidentally, have permitted similar threats to begin developing again like a cancer.

      In fact, we have generations that think being Americans is somehow a sin for which we have to atone. Screw it! We are better than the rest of the world, let us show it, and we will crush this new bunch, too. And the whole world will be dragged along, kicking and screaming, to a better place.

      • fustian24

        Well, the oil flows around the world are complicated and, my understanding was that we didn’t need to take over the middle eastern oil fields, but we did need them to flow and be stable. And for a long time, some Middle Eastern oil did come in tankers to the US.

        But with oil shale, we’re largely isolated from world oil prices. Some are predicting that as the US withdraws from being the world’s policeman (we don’t need to anymore) that history will once again start up and we may see a very different US oil price vs an international oil price.

        Another interesting fact. We don’t really need that Canadian oil either. But we do want it. But probably not for the reason you might think.

        Turns out that oil from frac wells comes out light and sweet. It’s not black in color at all, but looks like you could just about pour it into your gas tank unrefined.

        This is great, but it’s also a problem. To process all of this frac oil, we’re going to need to convert our refineries to accept only this light, sweet oil. It’s a large cost and makes us unable to accept much of the conventional stuff if we decide we need it later.

        So.

        The plan is to pipe that black Canadian oil down to the lower 48, then mix it with light crude from frac wells so that the result looks a lot like the stuff we’ve been refining forever. That way we can keep on keeping on. Leave our refineries more flexible and keep the increased supply the Canadian oil represents to help keep our total oil costs low.