First, a history lesson. Back in 1979, there was a nuclear incident, a near-meltdown, at Three Mile Island. The Chernobyl explosion a few years later gave the anti-nuclear crusaders even more ammunition to wage their fear-based campaign. Long story short, because of TMI, Chernobyl, and NIMBY (Not In My Back Yard), there was so much fear and hatred of nuclear power that we haven’t really built many new nuclear plants in several decades, which is a really big problem. But, here’s the thing. The nuclear power industry historically has a very strong safety record, and decades of advances in technology and the state of the art since TMI have only improved an already solid record.
What’s that got to do with the offshore drilling moratorium? Simply put, my fears that the BP incident would become offshore drilling’s TMI are playing out. The parallels are eerie. Sure, I’ll readily agree the oil industry screwed up big time here and caused a spectacular ecological and economic disaster. I’m not downplaying that, but we have to learn from history and Obama hasn’t.
We see from the nuclear power example that industry adapts. It learns from its mistakes and takes corrective action to ensure history doesn’t repeat itself. Like nuclear power, the offshore industry had a pretty solid safety record coming into the catastrophe. All the drillers saw what happened, and they’ve already taken internal corrective action to ensure it doesn’t happen on one of their rigs. I could rattle off countless examples of industry adapting, but nuclear and TMI were the most pertinent.
Sure, the government needs time to review its regulations and such, but such a moratorium is overkill and it’s going to have some very negative consequences. Figure 1 shows our domestic and imported oil for the past 30 or so years along with our consumption per the EIA. You see a steady rise in imports and overall consumption and a steady decline in domestic production. But we’re seeing some changes.
For example, did you know that domestic oil production increased in 2009 for the first time since Papa Bush’s presidency? It’s true according to the EIA, and it’s a little-known fact Obama and his detractors would both like to keep under wraps (it makes Obama look bad to his environmentalist supporters and his detractors want to paint him as an enemy of business). Also, according to the EIA, 2010 is on pace to have higher domestic production than 2009, giving us the first consecutive YOY increases in domestic oil production since the Reagan days. Two years don’t make a trend, but increased domestic oil production is promising.
Now, look at imports. They peaked in 2005 and have dropped sharply since, mostly in 2008-09 and likely due to the economic collapse. Canada is our chief source by far, followed by Mexico. After those come our ‘friends’ in Venezuela and Saudi Arabia, who, between them, sold us ~750M barrels in 2009 (over 10% of our annual consumption). At our current level of ~$90/barrel, that’s ~$70B going to two countries that don’t like us very much.
I don’t know about you, but I’d like to stop importing oil from countries that don’t like us. The moratorium will make this very difficult because it will probably reverse the two positive trends, namely the increased production and decreased imports. Instead, we could reduce or even eliminate imports from Venezuela and Saudi Arabia (or other countries we’re not on the best of terms with) if we engaged in a concerted effort to increase domestic production, decrease consumption, and import more from friendly countries (to reward them for getting along with us).
Also, note that increasing domestic production and decreasing consumption are both direct stimulus to our economy. Drilling here creates jobs here. Also, companies and people using less oil means we have more money left over for other, more useful stuff/activities. Increased domestic production should appeal to the right wing. Reduced consumption also leads to reduced greenhouse gases, which should appeal to the left wing.
My idea sounds like a win for everybody. Obama’s idea…not so much.
Now, look at imports. They peaked in 2005 and have dropped sharply since, mostly in 2008-09 and likely due to the economic collapse. Canada is our chief source by far, followed by Mexico. After those come our ‘friends’ in Venezuela and Saudi Arabia, who, between them, sold us ~750M barrels in 2009 (over 10% of our annual consumption). At our current level of ~$90/barrel, that’s ~$70B going to two countries that don’t like us very much.
I don’t know about you, but I’d like to stop importing oil from countries that don’t like us. The moratorium will make this very difficult because it will probably reverse the two positive trends, namely the increased production and decreased imports. Instead, we could reduce or even eliminate imports from Venezuela and Saudi Arabia (or other countries we’re not on the best of terms with) if we engaged in a concerted effort to increase domestic production, decrease consumption, and import more from friendly countries (to reward them for getting along with us).
Also, note that increasing domestic production and decreasing consumption are both direct stimulus to our economy. Drilling here creates jobs here. Also, companies and people using less oil means we have more money left over for other, more useful stuff/activities. Increased domestic production should appeal to the right wing. Reduced consumption also leads to reduced greenhouse gases, which should appeal to the left wing.
My idea sounds like a win for everybody. Obama’s idea…not so much.
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