For House Republicans, the season of oil and gas giveaways has begun

As reported by Politico’s Andrew Restuccia, Tuesday, House Republicans will spend the summer trying to breathe new life into tired ideas filled with industry giveaways. It’s no wonder given these politicians receive huge contributions from the oil and gas industry. Ironically, these “conservatives” want more mandates and quotas for oil companies while also cutting common sense protections for our air and water.

What Congress should focus its energy on – and what people in the West support – is balance between conservation and energy development. Instead of handouts to oil companies, our leaders in Washington should promote a diverse and thriving economy that supports main street businesses, farming and ranching, tourism, and outdoor recreation.

GOP House leadership has already said it will move the same failed giveaways it tried to push through last year, and the year before that. The problem they’re already running into is that they’ve already tried – and failed – to dupe Americans into thinking these handouts are anything else. Even a Republican energy adviser quoted in Restuccia’s story said, “It’s probably going to look a lot like it’s looked in the last four or five years.”

Westerners want more out of their elected officials than repeated political plays and messaging bills for the oil and gas industry. They want a real balance between protecting the public lands that support and attract high-wage businesses and using them to produce American-made energy.

Here’s a quick preview of the rhetoric we can expect to hear from House Republicans this summer, and the facts they will ignore:

The economy

numbers_graphicShot: Failure to open more federal lands to drilling will hurt job creation and economic growth in Western communities.

Chaser: Western states have grown out of the boom and bust cycle that comes with relying solely on energy development. Protecting as much public land as we lease will further build out the outdoor recreation industry, which already accounts for $64 billion in annual spending, 6 million jobs and nearly $80 billion in local, state and federal taxes.

Price at the pump

Shot: These bills are an important step toward bringing down gasoline prices.

Chaser: In 2012, an Associated Press study showed that oil production has no effect on gas prices. Meanwhile, a Goldman Sachs analysis found that Wall Street speculation was adding more than $23 to the price of crude, or as much as $0.56 per gallon at the pump.

Drilling on private lands

Shot: Increased pressure to develop on private lands is just one result of the slowdown of public lands energy development by this administration .

Chaser: The latest oil boom in the lower 48 states is due largely to an unconventional resource known as “shale oil,” (oil trapped within shale rock). The vast majority of both “shale oil” and “shale gas” (natural gas trapped within shale rock) is found under private, not public, lands. The location of these resources – not safeguards to protect air quality and water supplies – explain the shift in drilling from public to private lands.
shale_locationAdam Sieminski, U.S. House, Subcommittee on Energy and Power Committee on Energy and Commerce, 2 August 2012

Permitting delays

Shot: Regulatory hurdles, long delays, and policies that keep federal lands under lock-and-key have become all too common.

Chaser: Industry is responsible for the majority of permitting delays. Last year, BLM announced it is moving to an online permitting system that will hopefully help companies cut down the time it takes them to properly file permit applications.
permit_timingBLM Table of Average Application for Permit to Drill (APD) Approval Timeframes: FY2005 – FY2012


Shot: The Obama administration is playing fast and loose with drilling permit pledges.

Chaser: Industry does not use the drilling permits that have already been issued for oil and gas development. In fact, there are nearly 7,000 unused drilling permits that industry could develop on federal public lands.
unused_permitsBLM Approve Permits – Not Drilled table

Idle lands

Shot: President Obama and his Administration have actively blocked, hindered and delayed American energy production.

Chaser: According to the Department of Interior’s Oil and Gas Lease Utilization, Onshore and Offshore report, issued May 2012, “As of March 31, 2012, approximately 56 percent (20.8 million acres) of total onshore acres under lease on public lands in the Lower 48 States were conducting neither production nor exploration activities.
leased_productionDOI Oil and Gas Lease Utilization Report

The facts are not on House Republicans’ side, and neither is public opinion. A recent poll shows 9 out of 10 Westerners agree that national parks, forests, monuments and wildlife areas are an essential part of the economy. Seventy-four percent believe they help attract high quality employers and good jobs to western states.

It’s time we put conserving our treasured public lands back on equal ground with leasing them for oil and gas drilling. If oil- and gas-funded politicians continue to try and resurrect these industry giveaways, they’re just showing where their priorities lie – with the companies that fund them rather than the people they represent.

Western Energy Alliance wants taxpayers to front $44 billion in handouts to most profitable companies in the U.S. – billion dollar oil and gas industry

The Western Energy Alliance has once again proved that they’ll go to any length to increase the profit margins of the billion-dollar oil & gas industry. Now they’re lobbying for $44 billion dollars in taxpayer-funded handouts over the next 10 years, despite the fact that the oil and gas companies are some of the most profitable in the U.S.

ExxonMobil and Chevron topped the Fortune’s rankings of the world’s most profitable companies in 2012. In fact, four of the top ten companies on the Fortune 500 list were oil and gas companies. And the big five oil companies, BP, Chevron, ConocoPhillips, ExxonMobil and Shell, made a combined profit of $118 billion dollars last year and $137 billion in 2011. 

The oil and gas industry has more than proven that they don’t need these excessive, wasteful subsidies – they’re making billion dollar profits while American taxpayers are paying more at the pump.  

Unfortunately, this is just the latest example of Western Energy Alliance putting profit margins of a billion dollar industry ahead of what’s best for Westerners.

Seven things you need to know about oil production and drilling on your public lands.

With less than three weeks to go before Election Day, the rhetoric around gas prices and drilling is heating up at campaign events around the country. The issue was also front and center in Tuesday night’s presidential debate.

Predictably, data about oil production on federal lands and its effects on gas prices is being spun and twisted to fit a range of agendas. While the data shows that industry interest for drilling permits has moved away from public lands to private lands – there is a simple explanation for the shift that industry lobbyists and PR pros aren’t telling you. Drilling companies go where the most profitable resources are, and today that means shale oil, the vast majority of which is under private lands.

We want to help the public by laying out the hard facts about oil production on federal lands and its impact on the price at the pump (or lack thereof) so that the next time there is a sound bite or lofty rhetoric, the public knows the truth.

Here are seven things to you need to know about oil production and drilling on your public lands.

1. Oil production is at its highest level in eight years.

Despite the conventional wisdom spun by industry and on campaign trails by Big Oil politicians, the U.S. is the world’s third largest oil producer. In fact, domestic oil production is at its highest level in eight years.

Oil Production Graph
Source: “U.S. Field Production of Crude Oil,” Energy Information Administration, accessed 18 October 2012.

2. The vast majority of shale oil and gas resources are found under private and not public lands.

The latest oil boom in the lower 48 states is due largely to an unconventional resource known as “shale oil,” (oil trapped within shale rock). The vast majority of both “shale oil” and “shale gas” (natural gas trapped within shale rock) is found under private and not public lands. The location of these resources, not safeguards for air and water, explain the shift in drilling from public to private lands.

Source: Adam Sieminski, Testimony of the Energy Information Administration, U.S. House, Subcommittee on Energy and Power Committee on Energy and Commerce, 2 August 2012.

3. Natural gas prices have plummeted, while oil prices have rebounded since 2008.

The major factor driving whether a rig drills for oil or natural gas is price. Most of the energy resources under federal public lands are natural gas. As we saw above, most shale oil resources are under private lands. Given that natural gas prices plummeted and oil prices have rebounded since 2008, there is a strong incentive for drill rigs to move from public to private lands.

Source: “Cushing, OK WTI Spot Price FOB,” Energy Information Administration, accessed 18 October 2012.
U.S. Natural Gas Wellhead Price,” Energy Information Administration, accessed 18 October 2012.

4. Despite the fact that most shale oil resources are under private lands, oil production was higher on public lands in 2011 than it was in 2007.

One would of course expect oil production to skyrocket on private lands, but oil production has also increased on public lands by about 19,000 barrels per day.

Source: Marc Humphries, “U.S. Crude Oil Production in Federal and Non-Federal Areas,” Congressional Research Service, 20 March 2012.

5. More oil production from public lands will not affect the price at the pump.

The Associated Press found that “[g]as price spikes have had little to do with the level of oil produced in the United States.” This is because the price of oil is set on a world market, and increasing demand from countries such as China and India is raising the cost of oil. So, drilling companies make more money drilling for oil when prices spike, but it won’t lower the price at the pump.

Click the snapshot below to view the Associated Press’s interactive chart on their website.

6. The U.S. Bureau of Land Management continually approves drilling permits faster than the number of new wells industry develops.

Critics often point to declining permit numbers as proof positive that the federal government is blocking development, but the facts tell a different story. Industry is submitting far fewer permits to drill on public lands because of the shift from public lands natural gas resources to private lands shale oil deposits, and the federal government can’t approve a permit unless industry submits an application for it. More importantly, the federal government consistently approves drilling permits faster than industry can drill new oil and gas wells. The only thing holding back industry is industry.

Source: “Number of Drilling Permits Approved by Fiscal Year on Federal Land,” U.S. Bureau of Land Management, last updated 9 November 2011.
Number of Well Bores Started (Spud) During the Fiscal Year on Federal Lands,” U.S. Bureau of Land Management, last updated 9 November 2011.

7. Industry is sitting on more than 7,000 federal drilling permits with a green light to drill.

Lastly, industry does not use the drilling permits that have already been issued for oil and gas development. In fact, there are more than 7,000 unused drilling permits that industry could develop on federal public lands.

Source: “Approved Applications for Permit to Drill – Not Drilled,” U.S. Bureau of Land Management, 30 September 2011.

Reality check on gas prices, public lands

Rhetoric in the public debate on gas prices is heating up from politicians this week. Unfortunately, oil and gas apologists continue to push misinformation on the American public.

Instead of exporting American resources so that oil companies get richer, let’s use our oil at home to the benefit of all Americans.

There is another simple step we can take to help American families whose pocketbooks are hurting because of high prices at the pump. We should end the billions in special tax breaks to Big Oil and reinvest those funds in transportation solutions, high tech vehicles, and the next generation of renewable fuels.

Here are some facts to consider about gas prices and energy development.

Oil and gas drilling
Oil and gas drilling in America is its highest level since Ronald Reagan was in office. Over the last four years, there appears to be a direct correlation between gas prices and drilling activity. Higher prices means more drilling, but more drilling has failed to lower gas prices.

Domestic oil production
Earlier this year, the Associated Press found that there is no correlation between how much oil is produced and the price of gas. In fact, domestic crude oil production is at its highest level since the late 1990’s.

Over the last four years, oil production has increased right alongside the price of gas. Clearly, we need an all-of-the-above energy policy that goes beyond oil.

Public lands
The Congressional Research Service found that oil production on federal lands is higher in 2011 as compared to 2007.

Oil and gas companies have also failed to develop more than 20 million of acres of public lands that are already leased for oil and natural gas. According to a May 2012 Interior Department report, the oil and gas industry had conducted production or exploration activities on just 56% of public lands leased in the U.S.

New Study: Oil Subsidies Waste Money, Don’t Encourage Production

When you fill up your tank for vacation this summer, keep in mind that the dial at the pump is spinning faster than you think. In addition to what you pay at the pump, your tax dollars are going to waste subsidizing oil companies.

As families pile into the station wagon to hit the road, Republican members of Congress are taking advantage of Americans, and the price at the pump, with their own tour to spin Big Oil talking points. They are avoiding the real conversation we should be having about energy. It’s time to end tax breaks to oil companies and reinvest those funds in American energy solutions such as transportation improvements, high tech vehicles, and the next generation of renewable fuels.

A new study from Headwaters Economics explains why taxpayer money is going to waste when we throw it at oil companies trying to encourage them to drill.

The evidence overwhelmingly suggests there are three things that drive oil production: geology, technology and price.

The study compares two neighboring states, North Dakota and Montana. Since the end of 2009, oil production has more than doubled in North Dakota while Montana’s production, where the tax rate is less than half, has declined by 14 percent.

This difference in production levels can be explained by a few simple factors, the first being that North Dakota has better conditions for drilling than Montana. Resource extraction is a location-dependent industry. ACME Widgets can open a factory just about anywhere and make widgets. ACME Drilling can only drill where there is oil. North Dakota has more oil, so it has more oil drilling.

Drilling isn’t solely limited by geology. Drilling in many locations is or isn’t profitable based on the technology available and the price of oil and natural gas on the market. The report found that a combination of high prices and the use of fracking contributed to a dramatic growth in domestic drilling starting in 2003. By 2008, a national recession and lower oil and gas prices led to a dramatic reduction in drilling.

Additionally, the report finds that production subsidies are late in the business cycle and don’t induce additional production. By the production stage, companies know where the oil is located, have determined if they have the right technology to extract the oil, secured leases and permits, and actually drilled a well.

So, if subsidizing oil doesn’t increase production, it’s not going to create jobs or lower gas prices.

Instead, subsidies are a burden on taxpayers, especially in energy producing states, where the burden falls on communities to address the infrastructure costs associated with development including new roads, police, fire, and schools. The communities also have to address new stressors such as a temporary boom in population, housing shortages, increased need for clean air and water law enforcement, and increased crime.

Headwaters found that Montana taxpayers were getting $800,000 less revenue per wellhead than their neighbors in North Dakota because they had a lower tax rate on production.

The only thing subsidies do is add to the bottom line of oil and gas companies which made a cool $137 billion last year.

So when Republicans come to a town near you on their gas prices tour, ask them why they continue to vote to protect taxpayer handouts to oil companies.

Republicans receive 88 percent of campaign contributions made by the oil and gas industry, and they want to keep their campaign contributors happy by transferring your hard earned dollars to extremely wealthy oil corporations.

It’s summer, time for flip flops

Gas prices have decreased for the past five weeks, in response to the same sort of global economic factors that cause them to increase. But that answer doesn’t work well for oil company politicians and their spokespeople at Fox News.

Media Matters takes a good look at how Fox News is flip flopping and saying that falling gas prices are bad (hear that American families?), and that global factors do affect gas prices.

Note that Fox is now raising how worldwide economic factors are affecting gas prices, after spending weeks blaming Obama for the price increase since the president’s inauguration. Fox won’t explain that the extremely low price in January 2009 was a short-lived drop caused by the massive economic recession. In fact, last week on Fox News, Varney explicitly said with a straight face that the price increase since the bottom of the recession had “everything to do with” Obama, but the recent drop in gas prices “has nothing to do with” him:

Read the story


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