William A. Alexander – 7/6/08

This page was last updated on July 7, 2008.

Will drilling solve gasoline problem?; William A. Alexander; Beaver County Times; July 6, 2008.

Mr. Alexander has written at least 30 letters (See the archives for more examples.) since December 2004, and all but three (one fawning over Rep. Jason Altmire [D-PA], one critical of local funding for JROTC, and another upset about the Air Force awarding a contract to Airbus instead of Boeing) bashed Republicans for something. Despite this record, Mr. Alexander is a Democrat/leftist who wants us to believe he’s really a disenchanted Republican. You may recall that in “Can’t wait for Hart to lose,” Mr. Alexander told us he was a “registered Republican.”

Below is a detailed critique of the letter.

“I am weary of people writing in that drilling in Artic [sic] National Wildlife Refuge and our off shore [sic] environmental areas will lower the price of gasoline.”

[RWC] That’s OK; I’m weary of Mr. Alexander.

“[O]ff shore [sic] environmental areas?” Apparently Mr. Alexander wants to confer “environmental area” (whatever that is) status on all offshore waters. You see, the current drilling moratorium covers the vast majority of offshore waters. According to the DOE website, “In June 1990, President George H. W. Bush responded to concerns about preserving the ocean and coastal environment with a directive ordering the Department of Interior not to conduct leasing or preleasing activity in places other than the Texas, Louisiana, Alabama, and limited parts of Alaska offshore until 2000. The moratorium affected virtually all of the coasts of the North Atlantic, California, Washington, Oregon, New England, Mid-Atlantic and the Northern Aleutian Basin. It also included the Eastern Gulf of Mexico off the coast of Southwest Florida, an area extending 700 miles from Baldwin County, Alabama, southward to the Florida Keys.

“Bush’s directive expanded a moratorium Congress imposed in 1982 that removed 736,000 acres off the coast of northern and central California from leasing for oil and gas exploration and production. The concern for possible environmental damage and social disruption caused by both routine activities and accidents, such as oil spills, resulted in local pressure to prevent these possibilities by removing areas from the lease schedule. In 1998, President Clinton extended Bush’s Executive Order until June 2012.”

“The United States uses about 20.6 million barrels of oil a day. The world uses about 86 million barrels a day.

“The expected peak output from ANWR is estimated at 0.8 million barrels a day, or less than 1 percent of the world consumption. This will not affect the price of oil or gasoline on the open market.”

[RWC] Perhaps, then, Mr. Alexander can explain why people on his side of the aisle were pushing Saudi Arabia to increase crude oil production. Here’s what Sen. Charles Schumer (D-NY) said during a Senate floor speech on May 13, 2008. “If Saudi Arabia were to increase its production by 1 million barrels per day that translates to a reduction of 20% to 25% in the world price of crude oil, and crude oil prices could fall by more than $25 dollar per barrel from its current level of $126 per barrel. In turn, that would lower the price of gasoline between 13% and 17%, or by more than 62 cents off the expected summer regular-grade price - offering much needed relief to struggling families.”

I can see how Mr. Alexander is confused, however. On April 28, 2008, just a couple of weeks before making the above statement, Mr. Schumer asserted, “ANWR wouldn’t produce a drop of oil in ten years, and it’s estimated that if they drilled in ANWR, in 20 years, it would reduce the price one penny.”

Hmm, a one penny decrease from ANWR production (about 1 MMBPD) but a $25 cut from 1 MMBPD of Saudi production? Oh what a tangled web we weave …

“The oil companies already have leases they asked for on 68 million acres that they are not working. The estimated peak output for these areas is about 4.8 million barrels a day, or six times that from ANWR. Not to mention that it will be decades before any of these peak outputs will be realized.”

[RWC] What Mr. Alexander and his fellow travelers fail to note is oil and/or natural gas doesn’t exist on all those “68 million acres.” A huge chunk of properties oil companies bid on covers land never seriously explored. Besides, with oil prices what they’ve been for a long time and after spending billions on the leases [which they lose if not producing oil or natural gas within five years (10 years if in a particularly difficult area)], why would anyone sit on reserves they know they would lose? There’s also the issue that when oil or gas exists on a property, it’s not always economically viable to recover. For example, if the cost of production is $200/bbl and the price is $150/bbl, the oil won’t be recovered. Of course, oil that wasn’t economically viable previously may now be.

That people use the “it will be decades before any of these peak outputs will be realized” argument never ceases to amaze me. Using that logic, we should not pursue any alternative energy sources that can’t provide immediate energy price relief. Does Mr. Alexander believe any of his approved energy sources (He doesn’t tell us what they are.) will be economically viable on a mass scale in less than decades?

Remember that ANWR would be producing now if President Clinton hadn’t vetoed a 1995 bill to allow production or if Congress in 2002 had passed a bill proposed by President Bush to allow drilling in ANWR.

“The oil companies’ response to why they aren’t drilling on these 68 million acres of leases was because the drilling rigs are not available. If the rigs are not available, how will they drill in ANWR and off shore if they have the new leases?”

[RWC] As everything else, demand pushes production of drilling rigs. Increase demand and the number of rigs built will increase. For example, The NY Times reports 16 new drilling ships will be delivered this year, more than double the number of the previous six years.

“All deep offshore drilling rigs in the world are committed for the next five years. To build a new one takes three years and today costs $1 billion and they are booked up for a decade. They are built mainly in Asia. Big surprise.”

[RWC] One reason offshore drilling rigs are built in Asia is because the bulk of offshore exploration and new production is/was taking place in the Middle and Far East. And why was that?

“John McCain even said that drilling in these areas would not affect the price of gasoline but would give the United States a psychological boost. What a justification.”

[RWC] Apparently Mr. Alexander doesn’t realize economics is mostly about human behavior. For example, even if there’s currently enough supply of a product, your fears (well founded or not) of a future shortage will drive up the price.

“These are scare tactics and half-truths to get these leases for big oil before Cheney and Shrub leave the building.”

[RWC] Ah, name-calling. A true sign of someone confident of his position – not.

I don’t understand the “to get these leases for big oil before Cheney and Shrub leave the building” comment. Doesn’t opening up areas for exploration and production benefit us all?

“I expect wars will be fought over energy and food in the next 10-20 years.”

[RWC] So Mr. Alexander’s solution is not to open up as much U.S. territory as possible for oil and gas exploration and production? Inconsistency like this is what happens when partisan politics drive your arguments. Regardless of where Mr. Alexander got the talking points he repeated above, you can bet the ultimate source was political.

Why are some folks so hell bent on seeing us tackle our energy needs with one or both arms tied behind our back?