Big Oil and Big Government are partners in pursuit of new oil; that's the problem

It took the Deepwater Horizon tragedy to bring out the fact that a single federal agency, the Minerals Management Service, is “responsible for both policing the oil industry and acting as its partner in drilling activities,” writes the New York Times. “Decades of law and custom have joined government and the oil industry in the pursuit of petroleum and profit. The Minerals Management Service brings in an average of $13 billion a year. Under federal law, even in the case of a major accident, the company responsible for the oil well acts in concert with government in cleanup activities.”

The coziness between government and the oil industry is also apparent in the cap on liability for damages – a paltry $75 million — from offshore oil spills (not including cleanup costs). The interesting question is whether BP’s dubious conduct would have been different without the cap. Hayward, the Wall Street Journal reports, “admitted the U.K.-based oil giant had not had the technology available to stop the leak, and said in hindsight it was ‘probably true’ that BP should have done more to prepare for an emergency of this kind.” Transocean, owner and operator of the rig, is petitioning to limit its own liability to $26.7 million....

The free market will undoubtedly take the rap — but it’s an unjust rap. According to Reuters, “Like BP, both Transocean … and Halliburton, a contractor, also pumped money into the campaign war chests of senators who sit on the Energy and Natural Resources Committee and the Environment and Public Works Committee.”

Chevron spending $1 million a day drilling one well

ABOARD THE DISCOVERER INSPIRATION — Right now, on the outer edge of the Gulf of Mexico, Chevron Corp. is making a very big bet that, nearly six miles below where it has parked a new high-tech drillship, it will find enough oil to make this $1 million-per-day wager pay off.

Years of research and planning have brought the oil giant to this point, and to this solitary location about 190 miles southeast of Houston, where water depths reach nearly 7,000 feet and a vast, uninterrupted expanse of sea is the only view.

Now, the only thing left to do is wait, as a drill bit far below inches closer to a target that may or may not exist.

“You can do all the planning you want,” said Tom Jones, drilling superintendent of Chevron's Moccasin prospect, aboard the new rig called the Discoverer Inspiration. “But there's only one way to find out, and that's to drill a well.”

The fact that one of the world's biggest oil companies has found itself here underscores how difficult the global hunt for oil has become. It also helps explain why the Gulf of Mexico has recently taken on greater importance in that search.

Radical environmentalism holds sway in White House while Russia drills for oil in Gulf of Mexico

The Obama administration is poised to ban offshore oil drilling on the outer continental shelf until 2012 or beyond. Meanwhile, Russia is making a bold strategic leap to begin drilling for oil in the Gulf of Mexico. While the United States attempts to shift gears to alternative fuels to battle the purported evils of carbon emissions, Russia will erect oil derricks off the Cuban coast.

Offshore oil production makes economic sense. It creates jobs and helps fulfill America's vast energy needs. It contributes to the gross domestic product and does not increase the trade deficit. Higher oil supply helps keep a lid on rising prices, and greater American production gives the United States more influence over the global market.

Drilling is also wildly popular with the public. A Pew Research Center poll from February showed 63 percent support for offshore drilling for oil and natural gas. Americans understand the fundamental points: The oil is there, and we need it. If we don't drill it out, we have to buy it from other countries. Last year, the U.S. government even helped Brazil underwrite offshore drilling in the Tupi oil field near Rio de Janeiro. The current price of oil makes drilling economically feasible, so why not let the private sector go ahead and get our oil?

The Obama administration, however, views energy policy through green eyeshades. Every aspect of its approach to energy is subordinated to radical environmental concerns. This unprecedented lack of balance is placing offshore oil resources off-limits. The O Force would prefer the country shift its energy production to alternative sources, such as nuclear, solar and wind power. In theory, there's nothing wrong with that, in the long run, assuming technology can catch up to demand. But we have not yet reached the green utopia, we won't get there anytime soon, and America needs more oil now.

World is running out of oil - again

"The chief economist of the International Energy Agency says the world is running out of oil. We've been told that for the last 150 years. The only thing we're running out of is the will to drill.

Ever since the first oil well was drilled in Titusville, Pa., in 1859, experts have been predicting we would soon run out of oil. The latest is Dr. Fatih Birol, chief economist for the International Energy Agency in Paris, whose job it is to assess future energy supplies by OECD countries."

(snip)

"But what we have is not peak oil, but peak government. Ronald Bailey has pointed out at ReasonOnline that "77% of the world's known oil reserves are in the hands of state-owned oil companies" that "do not respond to market signals and so are underinvesting in new production technologies and even in the production facilities they currently have."

There are friendlier places to find more oil, places such as Alaska, our Outer Continental Shelf and the Rocky Mountain West, if we had the political will. Our future should not be dependent on thugs like Hugo Chavez and Mahmoud Ahmadinejad in places like Venezuela and Iran, or on the political whims of OPEC.

Science magazine reports that the U.S. Geological Survey says the Chukchi Sea off Alaska holds more than anyone thought — 1.6 trillion cubic feet of undiscovered gas, or 30% of the world's supply, and 83 billion barrels of undiscovered oil, 4% of the global conventional resources.

The Green River Formation, an oil-rich region in Colorado, Utah and Wyoming, has been called the "Persia of the West." This formation has the largest known oil shale deposits in the world, holding from 1.5 trillion to 1.8 trillion barrels of crude.

Then there are the riches beneath ANWR and the Outer Continental Shelf. Let us seek, and we shall find. We always have."