Friday, April 23, 2010

Obama's Offshore Drilling Gamble

One has to wonder what President Obama thought he was gaining with his announcement about offshore drilling. It was gamble that can't pay off. Team Gore immediately sent out a notice that started with these words:

"President Obama disappointed millions of Americans by announcing his plan to open vast coastal areas to offshore oil drilling. At a time when we need clean energy and climate solutions, this plan is a giant step backward--allowing oil companies to reap billions, while feeding America's addiction to dirty fossil fuels."

At CARE, we sent out our own announcement that was published in newspapers throughout the country. With a tongue-in-cheek tone, we pointed out that Obama's confidence in Alternatives must be fading.

Regular contributor to the CARE Blog, Michael Econmides, Editor-in-Cheif of the Energy Tribune, sent us this fact-filled commentary that predicts that by the magic date of 2050, fossil fuels will still provide are 85 percent of the US energy mix--no matter what US political rhetoric may ascribe on alternative energy sources. Who wins with the offshore announcement? Or, is it just off-base?

Drilling Down in Obama’s Oil Play

Barack Obama – a president as hostage to liberal rhetoric as one could ever envision, and who ran a presidential campaign on the most virulent of anti-oil, pro renewables tickets – has unexpectedly reversed the long-standing US ban on offshore oil drilling.

Speaking in Maryland on Wednesday, the president announced he was giving the go ahead to allow oil and gas exploration and, presumably, drilling along the Atlantic coastline, the eastern Gulf of Mexico, the north coast of Alaska, Alaska’s Cook Inlet and other sites. Pending applications to drill will remain in place and the ongoing ban on offshore drilling on the West Coast will continue.

While green and conservation groups are aghast at their Green-caped Super-Hero, and villainous Big Bad Oil may be rubbing its hands in glee, the rest of us might take time out to ask: What is really going on here? Why now, just when Interior Secretary Ken Salazar had been set to drop a G (Green) bomb on oil leases elsewhere?

Well in the wake of the Democrat’s recent victory on healthcare and the Obama’s falling approval rating in the polls, someone appears to have come up with a play designed to cause confusion. But by tossing a bone on domestic drilling to the Republicans, Obama’s team may believe it can buy him some Republican (and dissident Democrat) votes – along with some credibility on bipartisanship – before his upcoming next big move: the push for cap and trade.

At the very least, the partial lifting of the offshore drilling ban is a move designed to cause confusion, including, no doubt, among Obama’s supporters – a calculated gamble he believes he can pull off -- while stealing some populist Republican thunder. And who can deny that offshore drilling licences will create real jobs; not the pale green, transitory stimulus variety? It may even give him a bump in the approval polls.

But we could spend all day surmising as to the Obama administrations oil play. Could we not just accept it at face value? There is always a potential quid pro quo on offer somewhere – especially from a guy bent on instigating national cold turkey in pursuit of weaning America off what George Dubya termed its “addiction” to oil. While the polls might buy it, it’s doubtful that Republicans will.

But we needn’t worry about delving too deep beneath the surface of the drilling decision. A simple look at the math tells us all we need to know. That is, that the decision is a disingenuous one. It must be, given the government’s twin-track policies on energy and climate.

First: the energy facts. Currently, 85 percent of the US energy mix is provided by oil, gas and coal. And the US is using around 100 quads (quadrillion Btu) of energy, and so these numbers reflect both percent and actual energy use. If we take the Energy Information Administration’s figures of 0.5% increase per year and extrapolate total energy use to 2050, this would translate to about 125 quads. (Incidentally this is a surprisingly small figure considering the recent past, which was as high as 2% annual increase and China’s forecast of over 3.2% annual growth. Is the EIA trying to please the Obama White House?)

Second: the Obama administration has made several statements regarding its intent to cut CO2 emissions by 83% of the 2005 figures by 2050. This would mean that the current 85 quads that come from fossil fuels must be reduced to less than 14.5 quads, which would imply that, by 2050, the contribution from fossil fuels to the US energy mix should be reduced to about 11.5% (some even mentioned less than 10 percent) of total energy consumption. But that in turn would mean that wind and solar, the darlings of this administration would provide essentially all the rest – a patent impossibility.

More drilling for more oil just exacerbates Obama’s insoluble conundrum.

The announcement is designed to hoodwink would-be opponents, and there are many, of cap-and-trade or a carbon tax. If Obama was sincere about energy and energy “independence” he would immediately rescind the EPA’s finding of CO2 as a pollutant, which by coincidence came into force on April Fool’s Day. Further, it would actively encourage drilling rather than starting environmental studies that would drag on for years with excruciating permits, followed by certain environmentalist challenges that would just about take this offshore oil non-production to 2050.

The interesting thing is that almost every key energy assessment from knowledgeable energy insiders, including the DOE’s own EIA, suggest that by 2050, fossil fuels will still provide around 85 percent of the US energy mix, no matter what US political rhetoric may ascribe on alternative energy sources.

The fact is the Obama Administration already has an impossible circle to square on its current energy pronouncements. Whatever political calculations may be in play, the President’s offshore oil card play may trump his carbon-reducing climate play – but it makes “nonsense on stilts” in harmonizing both.

Michael J. Economides and Peter Glover are authors of “Energy and Climate Wars: How naive politicians, green ideologues and media elites are undermining the truth about energy and climate” to be published by Continuum, in September.

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