Ignorance and BIG OIL

I'm very weary of the ignorance of the American public in general and our politicians in particular concerning the proverbial BIG OIL situation in this country. If you are not up to reading some contrasting views on this topic and believe that BIG OIL is a monster hell bent on destruction of our society, then you should probably leave this blog now. If you are still here, I congratulate you on your willingness to remain at least partially open minded. Please read on....

First my credentials. I don't claim to be any kind of expert on energy of any kind. I spent some time in the 1970s working for a company that had most of the major oil companies or drilling companies as clients. During this time I was friendly with a lot of people involved in the oil industry and gained an understanding of how it used to work. I say "used to" because things have improved a lot since those days. I also read a lot on energy because it interests me.

I see 4 major myths being perpetuated today by politicians, the media, and a lot of citizens for action groups who haven't the least idea what they are talking about. Here they are along with my rebuttal.

1. The oil companies are greedy. To keep their record profits going they lobby lawmakers to prevent development of alternative energy sources.

2. Wind, solar, biofuels, hydrogen, and compressed natural gas energy is cheap, easy and readily available

3. Oil drilling pollutes and would ruin many natural areas.

4. Oil leases currently owned by the oil companies would provide plenty of oil so no new drilling is necessary.

I'll address these one item at a time.

Myth #1 Perhaps oil companies are greedy. Like any business or industry they are in operation to make money and to try to increase their profits for their share holders. If that is your measure of greed, then you'd be more comfortable in a communist or socialist society where nobody has a opportunity to make any more money than anyone else. Go to Russia or China and see how you like this model. Now lets look at the accusation that they are trying to prevent development of alternative energy forms.

This is incredibly silly. Oil companies aren't stupid. You don't get that rich by being stupid. They know that supplies of natural gas and oil are limited. Most oil companies have long been investing money into research and development of every kind of possible new energy source available. It is part of the greed thing. Think about it. Instead of wanting to stifle development of these energy forms it is far more financially astute of them to grow and OWN these new energy sources when the legacy of natural gas and oil is gone!! Even back in the 70s, many oil industries were deeply immersed in developing these energy forms. They have put many billions of dollars into research to that end and continue to do so. If it were easy to develop these sources and bring them on line to sell to you at a profit, don't you think it would have happened long ago? That brings us to the next myth.

Myth #2 Wind, solar, nuclear, biofuel, hydrogen, and CNG.... As mentioned above, none of these are as easy and cheap to develop, store, distribute and maintain as are fossil fuels with the possible exception of nuclear generated electricity.

Wind turbines and solar cells generate electricity from a "free" source, yes. However, the wind doesn't always blow and the sun doesn't always shine and the turbines and solar cells aren't cheap and have to be constantly maintained. Electric storage must accompany these two technologies to furnish power when the turbines and solar cells aren't. When you add up the price of all of this, your kilowatt hour of wind or solar generated energy becomes more expensive than the coal, oil or gas fired generating plants we currently use. I will agree that these two technologies look very promising for the future as we learn new ways to deal with the storage and transmission problems involved but they are not yet ready to, or cheap enough to replace our present methods of electricity generation. Nuclear electricity generation is cheap and ready to go now.....but.....

Nuclear power is scary. Remember Three Mile Island? Remember Chernobyl? What about radioactive waste from the reactors? Bunk. France, whom we love to dump on for everything, has mastered all of these problems easily and now generates more than 80% of their electric power from nuclear power plants. OUR problem is that we've cow-towed to tree-huggers, the scientifically illiterate, and the "nanny state" radicals to the point where government regulations intended to "save us" from that "scary" nuclear stuff make it too expensive to develop. We desperately need to trash those regulations so that building nuclear power plants becomes economically viable to the large energy corporations who can afford to do it! Of course we need to regulate the nuclear power industry. What we DON'T need to do is to strangle it with over regulation as we have done over the past 40 years!

The madcap rush to develop ethanol and bio diesel in this country is a looming disaster. The world doesn't currently grow enough food to feed its population - a population that is growing geometrically while farm land stays the same - and biofuel nuts want to take a lot of the food we do have and make fuel out of it? It is just unbelievably stupid. Yes we can get ethanol from some plants which aren't food, (look at Brazil, but be sure to count the number of cars per capita and the cost of gasoline in that country!) but the process turns out to cost a lot more than current energy sources including oil!

Hydrogen and Compressed Natural Gas look promising. For Hydrogen we have to figure out how to produce it cheaply. We already have lots of natural gas but - guess what - to supply all we'd need to replace gasoline, we'd have to - you guessed it - do a lot more drilling! When we solve those two problems then all we have to do is figure out how to store these two fuels safely (They are highly explosive, you know! Much more so than gasoline!) and then convert cars to carry and burn them. Those conversions are pretty much available for fleet vehicles already but try pricing a conversion for your family grocery hauler! I looked. The numbers are still burned into my retina!! Anyway, lots of advocates of alternative fuels are trying hard to convince you that somehow these are simple problems that can be easily solved in a year or two. Sure. You bet.

Myth #3 The idea that you can't have clean drilling sites off shore and in the Arctic Natural Wildlife Refuge simply shows a complete lack of understanding of how drilling is done today. I would agree with this idea IF we were still using the drilling methods we used up through the 1960s. Wells from those days are the ones that have had problems. There have been virtually NO pollution issues associated with drilling since the 1970s when oil companies discovered ways to clean up their act and their image. Anyone who buys this myth knows nothing about modern oil extraction methods and is operating at a purely emotional and totally uninformed level. Are these the people you want controlling our energy policies?

Those who don't want off-shore drilling rigs to spoil their view need to be beamed up because they are definitely space cadets. In the 1970s people along the gulf coast had a bumper sticker that described their view of coastal states that proscribed off shore rigs. It proclaimed, "Let The Bastards Freeze In The Dark!". Amen.

Myth #4 That brings us to the topic of oil leases. What do you know about them? Where do they come from? What are they for? Huh? Got any answers? Yet you are willing to believe in the idea that the oil companies hold millions of these leases that we should force them to use or loose, aren't you? Okay - here's the scoop.

There is a virtual cottage industry built around buying and selling oil leases. Across the plains region of the country (and possibly elsewhere) many farmers seek to sell oil leases for their land to get a little extra money. In many cases no exploration has been done at all but they are always worth a few bucks an acre to speculators who might later resell them to someone else. Also, there is always the chance that an oil company will come along and spend the money on exploration, find some leases where the probability of oil is relatively higher, and buy the leases up from the speculator. Once they have done that they are limited by an old and existing law (No, we don't need another one of these!) to either develop the lease (drill) or turn it back after a given and relatively short amount of time.

The point is that holding an oil lease on a given piece of real estate doesn't mean that there is any oil there! You buy up oil leases as a hedge - a gamble - that there "might" be oil there. Consequently the oil companies buy up many oil leases and end up finding oil on, and developing only a hand full of them. So the story you are hearing from our congress that we should force the oil companies to use the leases they already have before allowing any additional drilling is pure stupidity. I wish I knew the percentage of oil leases that actually, eventually produce oil. I'm pretty sure it is a tiny number.

Now, let me say that I am a firm believer that we must make huge changes and make them damned soon, too! As I write this we are looking at a trillion dollar infusion from the government to save our economy. That's a lot of money! But remember that by the end of the year we will have sent 700 Billion of our dollars out of the country to the people we buy our oil from because our elected congressmen and senators have been too ignorant, lazy, and partisan to address this problem. 700 Billion and a few well chosen regulatory changes would have just about fixed the problem. Moreover, next year's 740 Billion projection added in would have solved the credit crisis completely and left us with some money in the bank.

I agree that we have to fix our oil dependency immediately, but let's not be stupid about it as a citizen. Let's read and learn what really *will* work before we go wandering off down the garden path into oblivion pinning our hopes on a fleeting wisp of ignorance. Congress will only do what we *make * them do, so let's not make them do the wrong things due to our own stupidity.