Former Democratic Senator Bob Graham of Florida is co-chair of the President’s Oil Spill Commission. The Commission, stacked with environmentalists and Harvard lawyers and notably absent any working industry expertise, delivered its report to the President earlier this month. Its contents were predictable, calling for more regulation and more government.

Here’s what Sen. Graham had to say this week:

This is a wakeup call to the American people. Why are we drilling in deeper and inherently more risky offshore locations? The United States is consuming about 22 percent of the world’s daily extraction of petroleum while it sits on top of less than 1.5 percent of the world’s proved reserves. If we “drill baby drill” in an attempt to go totally independent, and if our thirst for petroleum continues at its current level, the United States will drain its remaining proven domestic oil reserves by 2031.

If we stay at our current 48 percent domestic and 52 percent imported oil, that date will only be extended to 2068. Unless we develop and sustain a national energy policy which will fundamentally change our petroleum addiction, the only choice our generation will have is whether to leave to our children or to our grandchildren an America totally dependent on foreign oil producers for its national security, economy and way of life.

[Source. Formatting in original.]

Uh, I have a few problems with this.

1. First off, his numbers are wrong. In round numbers, worldwide production is about 85 million barrels a day. Domestic production is about 5 million barrels a day of crude plus a couple of million barrels of natural gas condensate and liquids. Domestic production is about 30-35% of consumption, not 48% as Graham asserts.
2. Oil companies don’t just drill for oil. Probably 80% of the drilling on the shallow-water “Shelf” in the Gulf of Mexico is for natural gas. It’s much less risky than deepwater oil, but it has been shut down, too. When you consider that we have 100 years of domestic resources (mostly as yet undiscovered), and that gas is environmentally superior to coal and oil, then Sen. Graham should do everything in his power to get behind gas exploration.
3. Even more troubling is that Graham has bought into the Leftist lie, “The U.S. has only 1.5% of the world’s reserves but consumes 22% of its oil.”

As I’ve pointed out previously in these pages, there’s a lot of confusion between oil reserves and oil resources.

As practiced in the U.S., “proved reserves” are a conservative, audited estimate of production that will be produced mostly by existing wells.  The SEC requires that American companies report reserves to their shareholders. “Resources” is the term applied to the quantities that are expected to be found by future drilling. Resources are converted to reserves by drilling (unless politicians, greens and NIMBYs prevent development of resources, which is the subject of another diary…)

Not only that, but most of the reserves in the world are owned by National Oil Companies in Saudi Arabia, Russia, Angola, Nigeria, etc. Their reserves are whatever they say they are, because they are not subject to the SEC rules. And usually they guess high. As a result, the U.S. proportion of the world total deceptively low.

Our policy makers don’t seem to understand that the U.S. is resource-rich, but reserves-poor. That is a result of policy, not a fact of life.

Imagine a situation where I had $500,000 in savings and home equity, plus $10,000 in my checking account. My living expenses are $2,000 per month.

If I told you I would be broke in 5 months, you’d say I was an idiot. And you would be right.

“Only choice?” Hardly. Sen. Graham’s case against oil is specious at best and at worst an outright lie.

I don’t understand why such important policy has been turned over to neophytes and Leftist ideologues, but that seems to be the pattern under Obama.

Cross-posted at RedState.com.

#NewOlbermannJobs: Quality Control Officer, Lipton Co., Teabag Division

Link: EPA official bolts after WV coal mine permit cancellation. #rsrh

Link: EPA MIA in Austin Hearing. Round up the usual suspects. #rsrh

Regardless of having not a shred of scientific evidence to bolster its case, EPA continues to fine Range Resources $16,500 per day, then arrogantly “no-shows’ Railroad Commission hearing.

Link: Climate Change in Int’l Falls, MN: -44F = -42C #rsrh | But it’s a *dry* cold.

Link: What causes gasoline prices to rise? #rsrh #tcot

Link: Wal-Mart to mkt healthful foods under ‘FLOTUS’ brand. Entrepreneurial opp’ty for Mom’n’Pop. #rsrh

New choices: Sugar-free pork rinds, Fat-free Crisco, Mrs. Entenmann’s Fiber Bars

This press release is the biggest load of hooey I’ve seen for a while. The Department of the Interior wants to create two new agencies to remedy what they term “conflicting missions” within a single agency. Hooey.

WASHINGTON, D.C. – Secretary of the Interior Ken Salazar and Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) Director Michael R. Bromwich today announced the structures and responsibilities of two new, independent agencies that will carry out the offshore energy management and enforcement functions once assigned to the former Minerals Management Service (MMS). …

“The former MMS was saddled with the conflicting missions of promoting resource development, enforcing safety regulations, and maximizing revenues from offshore operations,” said Director Bromwich. “Those conflicts, combined with a chronic lack of resources, prevented the agency from fully meeting the challenges of overseeing industry operating in U.S. waters. The reorganization is designed to remove those conflicts by clarifying and separating missions across the three agencies and providing each of the new agencies with clear missions and new resources necessary to fulfill those missions.” [emphasis added]

Two new bureaucracies, eh? This plan is a prescription for disaster for the Gulf of Mexico. It should serve as a wake-up call for any thinking person who thinks America’s energy security is an important issue. Or, for that matter, for anyone who doesn’t relish the thought of $8.00/gallon gasoline.

“Conflicting missions?” Baloney. Like “walking” and “chewing gum” at the same time are conflicting missions.

Please indulge an allegory.

Outside the dusty Oklahoma town of West Pigknuckle there are two farmers: we’ll call them Farmer Salazar and Farmer Maley. Neither is independently wealthy, but over the years each has managed to accumulate 3 sections of prime, rolling ranchland.

Three hundred million years ago, geologic good fortune visited the Greater West Pigknuckle Metroplex, which now sits square in the middle of the oil- and gas-rich Anadarko Basin.

Having been approached by oil and gas leasing agents, the doctors each decide to lease their land. Oil companies will have the right to drill, subject to lease stipulations. In return for granting a lease, each farmer will receive 20% of the oil and gas sales, with no further investment.

The farmers assess their priorities:

1. Preserve the value of the land for their children and for their posterity.
2. Maximize mineral income.

Farmer Maley contemplates his options and decides to hire a manager to help him lease to an oil company that is going to help him reach his goals: drill safely, only in approved areas, with respect for the environment. When and if the company makes a well(s), the manager will verify that the royalty payments are proper and timely.

Seeing this, Farmer Salazar says “You’re a silly, silly man, Maley. You’ve given your manager conflicting missions, because in his zeal to maximize royalty income, he won’t care whether the oil company is responsible!”

So Salazar hires two managers. To the first he says: “Your only responsibility is ensuring that my land stays pristine. If they spill any oil or cause any damage, then it’s off with your head!” To the second: “If those oil companies cheat me, then it’s off with your head!”

Fast forward five years.

Maley has 10 wells on his property, and two rigs are busy drilling new wells. As a result of the mineral income, the manager has been able to hire an accountant to help him with the books, freeing the manager to focus on operations. It hasn’t always been easy; the oil company made a mess of their first location, but when Maley’s manager made it clear that the cost of failure was cancellation of their lease, the oil company quickly got their act together.

Salazar has yet to get his first well drilled. The environmental manager he hired was no dummy; he was smart enough to figure out that there’s only one way give the environment 100% protection, and that’s to do nothing at all. In a way, the accounting manager has done his job, too, since with zero income, Mr. Salazar can’t say he’s been “cheated”.

As I hope I’ve illustrated, these “conflicting missions” are a complete red herring. As a landowner of huge dimensions, the Feds have the power to dictate the terms of development. By setting up an independent agency with responsibility only for environmental issues, Interior is virtually guaranteeing that the permitting process will become slowed to a glacial pace, if there is any movement at all.

I can only conclude that that’s exactly what Mr. Obama and Mr. Salazar want.

Cross-posted at RedState.com.

Link: Conflicts of interest?! More bureaucracy makes the situation worse, not better. #rsrh

They’re setting up a separate organization that is charged “only and only” with enforcing environmental and safety concerns.

That agency can be 100% effective at its job by discouraging all future activity. And I predict that’s exactly what they’ll do.

Anyone can be misinformed, or suffer a mental lapse resulting in an incorrect statement. Any of us might be stricken with poor judgment, and take a questionable position on an important matter of state from time to time.

But occasionally prejudice, bad judgment and contorted logic become woven together into a tapestry of wrong-headed thinking. And sometimes the people who issue these statements hold responsible government jobs. Scary.

As an example, here is the entire text of a polymorphously boneheaded statement from Rep. Ed Markey (D-MA), with analysis below the fold:

WASHINGTON (January 14, 2011) – Reacting to reports of a major share-swap between BP and the Russian state-owned oil company Rosneft, Rep. Edward J. Markey (D-Mass.) issued the following statement. Rep. Markey, who is the top Democrat on the House Natural Resources Committee, called for a thorough analysis of the agreement. If the deal is found to affect the operations of BP America, Rep. Markey says the Committee on Foreign Investment in the United States, a Treasury Department entity tasked with reviewing and acting upon the national security implications of foreign investments, should analyze the deal. In 2009, BP was the top petroleum supplier to the United States military.

“Even following the largest oil spill in U.S. history, and potentially billions of dollars in fines still outstanding, the Russian Bear is apparently bullish about BP. This acquisition will almost certainly complicate the politics of levying and collecting damages from BP following their Gulf of Mexico oil spill.

“BP once stood for British Petroleum. With this deal, it now stands for Bolshoi Petroleum.

“The details of this deal and its impacts on the operations of BP America need to be thoroughly examined. If this agreement affects the national and economic security of the United States then it should be immediately reviewed by the Committee on Foreign Investment in the United States. Additionally, the U.S. State Department should closely monitor this transaction.”

[Bolding in original. Italics mine.]

Where to begin?

• “In 2009, BP was the top petroleum supplier to the United States military.” My preference would be for the U.S., not just the military,to be less dependent on foreign sources.  Russia’s involvement concerns me, too, but oil is a world-wide commodity, and Russia is the world’s #1 producer of oil. The U.S. imports some 70% of its oil needs, and the imports have to come from somewhere.
• “…[The] Russian Bear is apparently bullish about BP. … BP once stood for British Petroleum. With this deal, it now stands for Bolshoi Petroleum.” Not hardly. BP owns more of Rosneft than vice versa. And Rosneft was “bullish about BP” because BP’s shares were savaged in the stock market. Caveat emptor. From a WSJ Article (link may require subscription):  

The deal makes Rosneft the single largest BP shareholder. … Rosneft will be issued new BP shares equivalent to a 5% stake, valued at $7.8 billion, while BP will receive a 9.5% stake in Rosneft, in addition to the 1.3% it already holds. 

• “This acquisition will almost certainly complicate the politics of levying and collecting damages from BP following their Gulf of Mexico oil spill.” So your primary interest in the financial health of BP is their ability to pay the as-yet-unspecified fines that you plan to levy against them? How about keeping them healthy to pay American taxes, supply America’s oil and provide good-paying jobs? Plus, why will collecting fines be more difficult?
• BP must also be concerned about its future. Resource companies must replace production or die. As the American environmental, regulatory and legal climate have made the U.S. a hostile operating arena for all operators, and BP in particular, they are bound to look elsewhere.

[WSJ]: The deal entrenches BP’s position in Russia, at a time when the Gulf spill has raised doubts about the company’s ability to grow in the U.S. … The deal gives BP access to an area long seen as the final frontier for energy exploration. A 2008 report by the U.S. Geological Survey found that the area north of the Arctic Circle contains just over a fifth of the world’s undiscovered, recoverable oil and gas resources. It said the Arctic has an estimated 1,670 trillion cubic feet of gas—nearly two-thirds the proved gas reserves of the entire Middle East—and 90 billion barrels of oil.

• BP is the biggest operator in the U.S. sector of the North Slope of Alaska and a leading operator in the Deepwater Gulf of Mexico. Virtually every other domestic basin with the world-class exploration potential that companies like BP need to sustain themselves is off limits.

[WSJ]: Under the tie-up, BP and Rosneft will jointly explore three license blocks owned by Rosneft in the South Kara Sea, an area covering 125,000 square kilometers. BP said the license area was comparable to the U.K. North Sea —which contains some 60 billion barrels of oil and gas—in terms of its size and potential.

Rep. Markey and his Democratic colleagues have always been deeply distrustful of the American oil and gas industry. They have done nothing to help build energy security for our nation, and have permanently put our own resources off-limits, while putting us at the mercy of hostile regimes. If they were truly interested in “the national and economic security of the United States”, they would bypass another round of pointless committee hearings, and get on with the real business of opening access to American resources for American firms.

Cross-posted at RedState.com.

H/T Yunks.