Friday, February 25, 2011

Oil And Politics - A Costly And Toxic Mix

With crude oil prices spiking over the turmoil in the Middle East, Americans are rightly concerned over the rising price of energy. And it's not just Americans. In the UK for instance, gas prices are flirting with the $9 per gallon mark.

There's a provocative new study by the consulting firm Northern Economics and the University of Alaska-Anchorage’s Institute of Social and Economic Research that says drilling on Alaska’s Outer Continental Shelf (OCS) could make Alaska the eighth largest oil resource province in the world ...ahead of Nigeria, Libya, Russia and Norway.

According to the study, developing Alaska’s OCS could produce something like 10 billion barrels of oil, 15 trillion cubic feet of natural gas, create around 55,000 new jobs and produce $145 billion in new,taxable payroll nationally, generating a total of $193 billion in government revenue through the year 2057. And that doesn't account for what we could make selling it to others. Or the money we would save not having to purchase oil and ship it here.

Combining that oil with Gulf oil and the gasification of coal, a proven, clean technology over half a century old could do amazing things for US prosperity. But it isn't going to happen, at least not now.

Unfortunately, you can bet next week's paycheck on the Democrats and Big Government doing everything they can to stop it. Thanks to President Obama's de facto ban on offshore drilling, America can't even take advantage of most of our existing oil and gas resources, let alone develop new ones.

The usual excuse is Gaia, the Holy Environment, and that actually is part of it, in a roundabout way that has nothing to do with pollution per se and everything to do with politics and money.

The Green movement contains a lot of old hippies and communists who are an important constituency of the Left, and some of the more monied ones are heavily invested in alternative energy that benefits from huge Government subsidies...which in turn finds its way back to the Democrat party's campaign war chest.

Sometimes, the financial benefit is more personal, as in case of 'environmentalist' Al Gore who made a huge fortune pushing the global warming scam. Or super-greenie Governor Jerry Brown of California. Brown's father, ex-governor Edmond "Pat" Brown lent the Indonesian junta that overthrew the dictator Sukarno $12 million from a pool of 'investors' and in exchange was rewarded with ownership interest in two brokerages, one in Hong Kong and one in California, who handle the oil-exporting paperwork for every barrel of Indonesian crude that passes through them and are rewarded with a fee for each barrel. This was an extremely lucrative deal for the Brown family because Indonesian crude oil was conveniently given a monopoly on being used to power California's power plants.

When Alaskan oil threatened that monopoly during Jerry Brown's first term as governor, Brown had the California State Air Resources Board that he controlled pass a new air-quality standard specifically designed to eliminate Alaskan oil from use in California's power plants. That kept the Indonesian monopoly as the only oil provider to the California's power industry and the money flowing into the Brown family coffers.

Big Government also loves the high taxes generated by super-sized prices at the pump, which gives them huge sums to spend on pet projects and rewarding loyal constituencies. Those greedy, profiteering oil companies make, on average, about a 9% profit on a gallon of gas in exchange for finding, pumping, shipping, refining and retailing it. In California, the government's cut on a gallon of gasoline simply for being there ranges from around .60 to .74 cents per gallon - or between a 17% 'profit' per gallon in outlying areas to 22% in cities like Los Angeles and San Francisco, depending on sales taxes and the actual retail price involved.

As a certain housewife from Wasilla who knows a little something about these matters has been trying to tell us for some time, Alaska and America's other energy resources could transform our economic doldrums, provide thousands of good paying jobs and rebuild our prosperity in an amazing way.

But it's unlikely to happen. At least not while Barack Obama is president.

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1 comment:

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