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June 12, 2008
How to get America drilling for our own oil (updated)
AT contributors have some further thoughts on how America can re-start aggressive development of our own opil resources, instead of relying on OPEC.
Jerome Scmitt writes:
Patrick J. Casey AT essay today “Countering Democrats on Drilling” observes that there is a “Battle of the Narratives”. He is correct and we cannot give up the fight, however it is worth noting again that the media-producing might of Hollywood and the TV “News” Networks is arrayed against the truth in alliance with the Greens.
Today for example, ABC’s GOOD MORNING AMERICA in a segment entitled “Scientists From Around the Globe Join ABC News in a Forum on Surviving the Century” announced an upcoming program to be broadcast called “Earth 2100.” It goes overt the top in predicting dire environmental “doomsday” consequences by 2015! ABC Producers invite input from “viewers”; selected input will then be made into stories complete with apocalyptic computer-generated images. Somehow I doubt positive scenarios from viewers will make it into the narrative of this program.
To counter this sort of doomsday alarmism, we could use CGI images showing, for example, how environmentally benign and un-intrusive modern oil-drilling in ANWAR would be, so the public would actually be educated about something of substance.
Bruce Walker writes:
Patrick Casey had an excellent article today. In essence, he argues for a few clear, brief arguments in favor of drilling now which put Democrats on the defensive. I agree, of course. The position of the Left, from any perspective, is morally and intellectually untenable. I hope and wish that what Patrick proposes is adopted and works. But I am not confident, today, that common sense will persuade voters or that sound business principles will influence Democrats.
All sensible people understand the solution to our energy crisis: Drill for oil everywhere within the territory of the United States – in Alaska, off the Gulf coast and California coast, in national parks and wherever else we may hope to find oil. Finding more oil will help American consumers, help global economy (which would dramatically the standard of living of hundreds of millions of our planets poorest people), end our dependence upon oil from bad nations (which would improve our national security without any firing a shot), and it would allow the use of petrochemicals for uses other than energy (which could reduce the costs of health care supplies.)
Leftists have three major arguments against such drilling: (1) Such drilling might enrich the evil oil companies who exploit us by providing cheap, abundant fuel at a profit; (2) Such drilling might harm the environment in mystical ways immune to scientific inquiry; (3) Actually finding oil might stop the artificially induced conservation efforts of Leftists by allowing middle class Americans to drive as if they were limousine liberals.
What can be done to effectively counter these pseudo-arguments? We must play their game. We must use rhetorical judo on the Leftist Democrats. Assume the nonsensical blathering of the Left is sober and sound. Keep our eye on the ball, which is not to win political arguments as much as it is to get policies changed and petroleum pumped from American territory. If that is our goal, what should we do?
Efficiency and profitability are prima facie proof of rapacious profit-taking to Leftists, so allowing oil companies to make a profit drilling for oil in the religious sites of pagan Leftism, like in Anwar, will be anathema. Normal minds might think that Leftists who opposed a state church would oppose a state church of paganism, but that is not true: Only the Judeo-Christian religious tradition offends the Leftists’ First Amendment. Enshrining some pantheistic cult into national land use planning is fine – more than fine – to Leftists.
Science cannot expiate profit-makers from the sin of pristine effectiveness and market driven plenty, but the Leftists who complain about drilling by profit-sinners are largely indifferent to the sloppy, slovenly, wasteful and dirty deeds of the sacred state, the holy government, the divine collective. Leftists, like all Fascists, hiss at freethinking bees who keep the honey they produce, but these Leftists worship the common work of the hive – for they are the drones who feast upon its surplus.
Likewise soft murmurings of love for the middle class are not intended to actually help these social threats to Leftist fascism. Reducing the consumption of the middle class, like reducing the food rations in Orwell’s 1984, is not the result of economic necessity but rather the deliberate policy of those who seek to govern our lives through the lash of privation.
How, then, to defang the serpent of Leftism which threatens to sacrifice our energy and our future for the sake of its lust for power? We need a counter-proposal which is bulletproof. That does not mean we need a counter-proposal which pleases the fascists of Leftism, but rather a counter-proposal which the Left cannot defeat in the slanted arena of public debate.
Why not this? Provide that drilling for oil can be done anywhere now prohibited, but that it must be done only by either the Environmental Protection Agency or the Department of the Interior. The sale of any oil discovered and extracted from these public lands would have to be at the lowest existing market price, and the production of oil from these sites would increase supply and drive down the market price. The actual process of drilling would have to be done in a way calculated to preserve the environmental condition of the site to an extent equal to environmental protections accorded by the ten largest oil producing nations in the world. Profits from the sale of oil so produced would be placed in a trust fund and could be used only: (1) To improve the quality of air and water in America; (2) To research and develop alternative energy sources and low mileage cars; (3) To provide assistance to low income families who have trouble paying energy costs.
What would the Mussolinis of the Left say to this? Government, not business, would gain all monetary advantage from this exploration and production. Oil companies, in fact, would be hurt by government competitors who did not pay taxes. A national oil company – which is what this would be – work, not well, but they work. Increasing oil production in America is the goal, and this would accomplish that goal.
What if the federal bureaucrats assigned to this task proved incompetent in drilling oil? Create a system in which the bureaucracy itself is largely funded by oil sales and include a sunset provision which mandates that if the bureaucracy is not self-supporting in ten years, it will end. With that institutional incentive, oil will be found, extracted and sold.
Requiring that the environmental standards of drilling in these areas of America be equal oil producing nations in the world would make it better for the environment to drill for oil in America than anywhere. If Russia, Venezuela and Iran ignore the environment in drilling for oil, then shifting production to a federal agency that protects the environment helps protect the global environment: We cannot control what other nations do, and they will pump oil whenever it brings them loot, but we can control domestic production by federal agencies.
Creating a trust fund to work on renewable energy, low mileage cars, and so forth is exactly what Leftists beg for all the time. The more oil sold from Anwar and other places, the more electric cars, wind power and so forth that could be developed by the government for private use.
Except for a few private oil companies, governments run the production of oil around the world anyway. Why not open those now closed areas of America for production of oil by government? Is it better to pay for oil produced by an American government agency or an Iranian or Mexican government agency? Yes – of course! – It is better to have the streamlined and sophisticated private oil companies of the world drilling in Anwar and elsewhere, but the politics of this option have been impossible for more than a decade. We are in a global war for our survival now. Oil is one of the keys to winning that war. It is time for us to win however we can.
Jerome Schmitt responds:
Bruce Walker proposes a Public Oil company to drill in public lands and seabed now off-limits to private companies. In some ways, this proposal echoes the experience of the railroad industry under CONRAIL: The federal government abandoned unworkable "liberal" policies once it actually owned the assets of the railroads these same policies bankrupted.
The private Northeastern railroads were made to be uncompetitive via a welter of archaic and unnecessary Federal Regulations concerning labor relations and price-setting. For example, the National Railroad Administration continued to require private railroads to employ totally redundant steam-engine firemen on diesel locomotives well into the 1970s. This limited their ability to compete with the trucking industry, which had expanded vastly with the interstate highway system. Similarly, we find the competitiveness of our own domestic oil and gas industry hamstrung today by a welter of environmental regulations preventing them from competing.
What happened when the federal government nationalized the bankrupt northeastern railroads to form Conrail? Faced with the responsibility of actually administering the railroads and subsidizing the continuing losses due primarily to labor featherbedding, the government administrators finally realized the stupidity of their earlier policies they had enforced which had bankrupted private owners. See, for example, "Railroad Management, Organized Labor, and Federal Intervention: A Case Study" by K.L. Bryant ) which concludes as follows:
In other words, while the private sector -- and consumers -- were footing-the-bill and being bankrupted by labors' excesses, labor was supported and empowered by the Federal Government, but later when the Federal Government was forced to take responsibility after literally bankrupting the private sector owners, organized labors' excesses didn't seem so acceptable after all. Reform and deregulation were to follow as discussed further below. We only need to substitute "environmentalists" for "labor" in the previous sentence and we have today's energy industry crises.
With this history as background, let's anticipate what will happen today in the prospectively "socialized" oil and gas company. Private energy industry executive operate within a vast number of, at times conflicting, constraints - primarily environmental -- imposed by federal and state governments. These constraints vastly limit their ability to compete globally and improve the "productivity" of their industry domestically as means to lower costs and prices. Suppose the Federal Government were to "nationalize" the oil industry? Faced with the direct responsibility of increasing domestic energy supplies in the face of consumer and voter complaints, federal bureaucrats will find themselves on both sides of the negotiating table concerning permits and lawsuits governing oil-drilling on lands and waters where it is now restricted. How long will it take for politicians to ‘discover' the benefits of allowing "US Public Oil Inc." to drill on "US Public" lands? My prediction: Not long.
In the case of the Railroads, the Federal Government eventually realized its own ineptitude in managing a private industry (think AMTRAK today and the Senate Dining Hall). Why liberals can't remember these lessons is beyond me but nonetheless, the deregulated US freight railways today are thriving, make a profit and are very efficient, so much so that other countries with nationalize rail systems are studying our experiences: See for example, Clifford Wilson's AMERICAN ENTERPRISE INSTITUTE essay on railroad deregulation since 1980 available here: CONRAIL itself actually began to thrive in the deregulated environment and was sold to two private sector railroads in 1999
In my view, with this history as background, it would be better to skip the nationalization / privatization steps and let the oil companies compete, HOWEVER, Bruce Walker has a good point that the liberals need to be persuaded since they always forget history and so a "Trojan Horse" public oil company may be the undesirable (and, we hope temporary) means to this desirable ends of drilling for oil in America.