B12 Solipsism

Speculators like Goldman Sachs taking advantage of pliable politicians and regulators to change rules? Amazingly, this is what Matt Taibbi described a few months ago. Perhaps someone in the Obama administration reads Rolling Stone?

[Do Not Oil This Index]

The Commodity Futures Trading Commission plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices — a reversal of an earlier CFTC position that augurs intensifying scrutiny on investors.

In a contentious report last year, the main U.S. futures-market regulator pinned oil-price swings primarily on supply and demand. But that analysis was based on “deeply flawed data,” Bart Chilton, one of four CFTC commissioners, said in an interview Monday.

The CFTC’s new review, due to be released in August, adds fuel to a growing debate over financial investors who bet on the direction of commodities prices by buying contracts tied to indexes. These speculators have invested hundreds of billions of dollars in contracts that were once dominated by producers and consumers who sought to hedge against oil-market volatility.

[Click to continue reading Traders Blamed for Oil Spike - WSJ.com]
[non-WSJ subscribers click this link]

and

The debate over speculators underscores the shifting nature of commodities trading in recent years. Before the mid-1990s, these markets were dominated by entities that had physical dealings with the underlying commodity, and “speculators” who often took the opposite position, providing liquidity to markets.

But a new group of investors has emerged in recent years. Those who want to bet on commodities prices have increasingly put their money in indexes that track the value of futures contracts, in which investors promise to pay a certain amount in the future for oil and other commodities. As of July 2008, financial investors had about $300 billion riding on these indexes, roughly four times the level in January 2006, according to the International Energy Agency, a Paris-based watchdog.

Separately, these investors may buy derivatives, not directly traded on futures exchanges, that let them make contrary bets to offset their risks.

Crude-oil prices surged in July 2008 to a record $145 a barrel, then dropped to about $33 in December. Oil now trades at around $68 a barrel.

Of course, Goldman Sachs is not mentioned by name in this article, why would they be? They are just one the single largest futures speculators

Matt Taibbi’s putdown of Goldman Sachs is finally online if you didn’t get a chance to read it yet. He places Goldman Sachs at the scene of several crime scenes, also known as stock market bubbles. For instance, the summer of 2008’s massive gas price increase. Reserves of crude oil were as high as they had ever been, demand was lower because of a world-wide economic slowdown, why then did gasoline prices exceed $4?

Taibbi explains:

As is so often the case, there had been a Depression-era law in place designed specifically to prevent this sort of thing. The commodities market was designed in large part to help farmers: A grower concerned about future price drops could enter into a contract to sell his corn at a certain price for delivery later on, which made him worry less about building up stores of his crop. When no one was buying corn, the farmer could sell to a middleman known as a “traditional speculator,” who would store the grain and sell it later, when demand returned. That way, someone was always there to buy from the farmer, even when the market temporarily had no need for his crops.

In 1936, however, Congress recognized that there should never be more speculators in the market than real producers and consumers. If that happened, prices would be affected by something other than supply and demand, and price manipulations would ensue. A new law empowered the Commodity Futures Trading Commission — the very same body that would later try and fail to regulate credit swaps — to place limits on speculative trades in commodities. As a result of the CFTC’s oversight, peace and harmony reigned in the commodities markets for more than 50 years.

All that changed in 1991 when, unbeknownst to almost everyone in the world, a Goldmanowned commoditiestrading subsidiary called J. Aron wrote to the CFTC and made an unusual argument. Farmers with big stores of corn, Goldman argued, weren’t the only ones who needed to hedge their risk against future price drops — Wall Street dealers who made big bets on oil prices also needed to hedge their risk, because, well, they stood to lose a lot too.

This was complete and utter crap — the 1936 law, remember, was specifically designed to maintain distinctions between people who were buying and selling real tangible stuff and people who were trading in paper alone. But the CFTC, amazingly, bought Goldman’s argument. It issued the bank a free pass, called the “Bona Fide Hedging” exemption, allowing Goldman’s subsidiary to call itself a physical hedger and escape virtually all limits placed on speculators. In the years that followed, the commission would quietly issue 14 similar exemptions to other companies.

Now Goldman and other banks were free to drive more investors into the commodities markets, enabling speculators to place increasingly big bets. That 1991 letter from Goldman more or less directly led to the oil bubble in 2008, when the number of speculators in the market — driven there by fear of the falling dollar and the housing crash — finally overwhelmed the real physical suppliers and consumers. By 2008, at least three quarters of the activity on the commodity exchanges was speculative, according to a congressional staffer who studied the numbers — and that’s likely a conservative estimate. By the middle of last summer, despite rising supply and a drop in demand, we were paying $4 a gallon every time we pulled up to the pump.

[Click to continue reading about the gasoline bubble: The Great American Bubble Machine : Rolling Stone]

Read the entire article here

Circumstances Beyond Our Control – oil paint, originally uploaded by swanksalot.

Tulip, Lombard.

[view large on black at my photoblog: www.b12partners.net/photoblog/index.php?showimage=209 ]

original photograph:

Speaking of last minute jabs to the eye, Bush has a parting gift to his buddies at Exxon and elsewhere

The Bush administration, in one of its final acts, is proposing to let oil companies drill for oil and natural gas in half a dozen areas of the outer continental shelf that had been previously been off limits to drilling, a move that will reopen the debate over offshore drilling for President-elect Barack Obama.

In an interview with The Wall Street Journal, the director of the federal agency that manages the nation’s offshore oil and gas reserves said his agency would formally open a 60-day public comment period Friday on whether to allow leasing for oil and natural gas in all of some portion of 12 areas of the shelf, including four areas off Alaska, two off the Pacific coast, three areas in the Gulf of Mexico and three more along the Atlantic coast.

Six of the sites — those located off California, in the eastern Gulf of Mexico, and along the Atlantic seaboard — had previously been off limits to development under a quarter-century old federal moratorium that congressional Democrats allowed to expire last fall amid intense voter anger over high gas prices.

While none of the sales would occur before 2011, the proposal puts some pressure on Mr. Obama’s administration to decide what additional areas of the outer continental shelf, if any, should be open to oil and gas production

[From Bush Administration Proposes Letting Oil Companies Drill Offshore - WSJ.com]

There’s not even a joke appropriate for these clowns

“The Omnivore’s Dilemma: A Natural History of Four Meals” (Michael Pollan)

Michael Pollan¹ wrote a fascinating open letter to the upcoming new administration.

After cars, the food system uses more fossil fuel than any other sector of the economy — 19 percent. And while the experts disagree about the exact amount, the way we feed ourselves contributes more greenhouse gases to the atmosphere than anything else we do — as much as 37 percent, according to one study. Whenever farmers clear land for crops and till the soil, large quantities of carbon are released into the air. But the 20th-century industrialization of agriculture has increased the amount of greenhouse gases emitted by the food system by an order of magnitude; chemical fertilizers (made from natural gas), pesticides (made from petroleum), farm machinery, modern food processing and packaging and transportation have together transformed a system that in 1940 produced 2.3 calories of food energy for every calorie of fossil-fuel energy it used into one that now takes 10 calories of fossil-fuel energy to produce a single calorie of modern supermarket food. Put another way, when we eat from the industrial-food system, we are eating oil and spewing greenhouse gases. This state of affairs appears all the more absurd when you recall that every calorie we eat is ultimately the product of photosynthesis — a process based on making food energy from sunshine. There is hope and possibility in that simple fact.

[From The Food Issue - An Open Letter to the Next Farmer in Chief - Michael Pollan - NYTimes.com]

Reading around the blogosphere², there are already calls for Obama to hire Pollan as Secretary of Agriculture, or similar.

oops, never posted this article³, and now Obama claims to have already read the open letter:

was just reading an article in the New York Times by Michael Pollen about food and the fact that our entire agricultural system is built on cheap oil. As a consequence, our agriculture sector actually is contributing more greenhouse gases than our transportation sector. And in the mean time, it’s creating monocultures that are vulnerable to national security threats, are now vulnerable to sky-high food prices or crashes in food prices, huge swings in commodity prices, and are partly responsible for the explosion in our healthcare costs because they’re contributing to type 2 diabetes, stroke and heart disease, obesity, all the things that are driving our huge explosion in healthcare costs. That’s just one sector of the economy. You think about the same thing is true on transportation. The same thing is true on how we construct our buildings. The same is true across the board.

[From Swampland - TIME.com » Blog Archive The Full Obama Interview «]

So there you have it…

Pippen reading Omnivore’s Dilemma

1. who we’ve mentioned a few times before [↩]
2. yes! phrase coined by skippy [↩]
3. probably because it’s pretty half-baked, and never going to be fully baked. Regardless, read the piece [↩]

McCain likes giving his starving oil buddies federal tax dollars: Republican corporate welfare helps keep McCain in office.

Oil and gasoline prices are setting all-time records, helping the five biggest publicly traded oil companies in the world earn a staggering $148 billion in profits over the past year. At the same time, the U.S. government continues to provide massive subsidies to oil companies.

These subsidies for some of the most profitable companies in the world, given directly and through the tax breaks, are a waste of taxpayer dollars and continue tax dollar investments in oil instead of shifting incentives to clean energy alternatives. Subsidies for the oil industry preserve our dependence on oil, which leaves our economy vulnerable to price surges, our security vulnerable to hostile oil-rich nations, and our climate vulnerable to greenhouse gas pollution.

If elected president, Sen. John McCain (R-AZ) would provide $39 billion in federal help for oil and gas companies over the next five years. Some of these subsidies already exist: McCain supports the continuation of many of the current subsidies, which will total $33 billion over the next five years according to a study by Friends of the Earth, “Big Oil, Bigger Giveaways.” While McCain would repeal some of these subsidies, he would also pass a corporate tax cut that would be worth more than $22 billion to America’s five largest oil companies over the next five years.

[From The True Cost of McCain's Oil Industry Subsidies for Every State]

It isn’t as if the federal government needs money, no not at all.

I’m sure the final rule will have a lot less oomph, and plenty of loopholes.

Under pressure from federal lawmakers concerned about high energy prices, the U.S. Federal Trade Commission proposed a rule prohibiting petroleum-market manipulation, giving the agency authority to levy fines of up to $1 million per violation a day.

The proposed rule — which would cover both spot and futures markets — is designed to increase oversight of the crude-oil, natural-gas, gasoline and other product markets as directed by Congress late last year.

As oil prices surged to nearly $150 a barrel in July, many lawmakers increased pressure on the FTC to promulgate the antimanipulation rule, feeling existing oversight was too weak and laxly regulated. Lawmakers are concerned that excessive speculation — and possible manipulation — in the oil markets helped drive prices to record levels, and are seeking ways to enforce tougher market oversight. Congress is considering legislation designed to rein in speculative trading deemed to be distorting the market.

[From FTC Proposes Rule Barring Oil Manipulation - WSJ.com]

Potential fines are discussed:

If the agency enacts the rule as it is currently written, it could subject violators with penalties of up to $1 million per violation per day. The FTC said it aimed to conclude the rule-making process by the end of the year. It drew immediate praise from some lawmakers who have been pushing for more stringent oversight of the markets.

This is some serious cheese for violators. As an example, Exxon Mobil’s profit in 2007¹ was in the vicinity of $4,633,200 per hour, or $111,196,800 per day. A million dollar fine would reduce Exxon Mobil’s daily profit to a paltry $110,196,800 a day! Won’t somebody think of the children! Of course, I’m not sure Exxon Mobil would be covered by these rules anyway, I’m sure nobody at Exxon Mobil is involved in speculation of oil futures, right? but sounds like there will be a lot more discussion before anything gets enacted in any case.

Given that the proposed rule covers the futures market — also the domain of the Commodity Futures Trading Commission — it is likely to upgrade a regulatory turf battle between agencies and spur activity by the CFTC.

Lots of discussion and posturing, and lots of profits to be snatched in the meantime. By the end of the year, Obama will be elected, and the glory years of oil companies might start to sputter.²

1. so far 2008 is much higher, so adjust all these numbers by numbers that your calculator can’t even handle [↩]
2. let us fervently pray so, anyway, though there is no guarantee that Obama will have the intestinal fortitude to tell the oil industry and Wall Street to reign their greed in [↩]

[Never Fear! Fuelman is Here!]

Buried in an article about Obama’s call for releasing oil from the Strategic Oil Reserves is a succinct summary of McCain’s nonsensical energy plan.

Obama emphasized on Monday that using reserves is a temporary fix and that drilling is not “a particularly meaningful short-term or long-term solution.” McCain has said that drilling would have a “psychological” benefit for consumers; his proposal to suspend the 18-cent-a-gallon federal gas tax was ignored by lawmakers on Capitol Hill and criticized by economists, who said it would not lead to a noticeable change in prices.

On the stump, McCain talks frequently about electric power, a subject that energy experts say will do little to affect gas prices. His plan to build 45 nuclear power plants, which he will highlight with a visit to a Michigan plant Tuesday, would take decades.

[From Obama Urges Opening Up Oil Reserves - washingtonpost.com]

Psychological benefit? Really? I’m not sure consumers would worry less about high gasoline prices knowing that oil corporations have the ability to drill for oil sometime in the future. And nuclear plants to be completed long after Senator McCain is deceased will help lower gas prices how exactly? Any specifics about where these plants are going to be located? In a convenient location that nobody would complain about, I’m sure. Show me these 45 new locations on a map, please.

(H/T a letter in Altercation by Ben Miller)

[Gas At Last - Alaskan Service Station]

Yes, a champion of campaign finance reform, indeed.

Alice Rocchio is an office manager at the New York headquarters of the Hess Corp., drives a 1993 Chevy Cavalier and lives in an apartment in Queens, N.Y., with her husband, Pasquale, an Amtrak foreman.

Despite what appears to be a middle-class lifestyle, the couple has written $61,600 in checks to John McCain’s presidential campaign and the Republican National Committee, most of it within days of McCain’s decision to endorse offshore oil drilling.

At a June fundraiser, the Rocchios joined top executives at Hess Corp. — Chairman and Chief Executive Officer John Hess, his wife, Susan, his mother, Norma Hess, and six other officials in giving a total of $313,500 to a joint McCain-RNC fundraising committee, Federal Election Commission records show.

The donations, first traced by Campaign Money Watch last week, were part of $1.2 million in oil industry contributions to McCain’s Victory ‘08 Committee, 73 percent coming after McCain reversed his long-held opposition to offshore oil drilling.

[From McClatchy Washington Bureau | 08/06/2008 | Did New York couple give $61,600 to McCain, GOP?]

Even though this couple just bought (in Feb, 2008) a 1993 Chevy (estimated to be around $3,000, if in good shape), they could afford to donate $61,600 to McCain and the RNC. Hmmmm, smells a little fishy to me.

Of the $57,000 the Rocchios donated in June, $4,600 went to McCain’s general election “compliance committee,” to pay for campaign lawyers and auditors, and $52,400 went to the RNC, which devotes nearly all of its money to supporting McCain’s presidential bid

The Washington Post has more on the same topic:

The bundle of $2,300 and $4,600 checks that poured into Sen. John McCain’s presidential campaign on March 12 came from an unlikely group of California donors: a mechanic from D&D Auto Repair in Whittier, the manager of Rite Aid Pharmacy No. 5727, the 30-something owners of the Twilight Hookah Lounge in Fullerton.

[From Bundler Collects From Unlikely Donors - washingtonpost.com]

The bundler in this territory is Harry Sargeant III, owner of an oil-trading corporation that recently procured a $1,000,000,000 Defense Department contract. Unrelated, I am sure.

Some of the most prolific givers in Sargeant’s network live in modest homes in Southern California’s Inland Empire. Most had never given a political contribution before being contacted by Sargeant or his associates. Most said they have never voiced much interest in politics. And in several instances, they had never registered to vote. And yet, records show, some families have ponied up as much as $18,400 for various candidates between December and March.

Both Sargeant and the donors were vague when asked to explain how Sargeant persuaded them to give away so much money.

“I have a lot of Arab business partners. I do a lot of business in the Middle East. I’ve got a lot of friends,” Sargeant said in a telephone interview yesterday. “I ask my friends to support candidates that I think are worthy of supporting. They usually come through for me.”

Sargeant’s business relationships, and the work they perform together, occur away from the public eye. His firm, International Oil Trading Co. (IOTC), holds several lucrative contracts with the Defense Department to carry fuel to the U.S. military in Iraq.

Not everyone is a fan:

The work has not been without controversy. Last month, Rep. Henry A. Waxman (D-Calif.) initiated a review of IOTC’s contract to determine whether it was overcharging the military for jet fuel, and to learn how the company, which did not submit the lowest bid, landed the contract to supply the fuel. The Pentagon has said that IOTC won the contract because it was the only company with a “letter of authorization” from the Jordanian government to move the fuel across its territory to Iraq.

and the folks who contributed seem a little removed from the political process. For instance:

Ibrahim Marabeh, who is listed in public records as a Rite Aid manager, at first denied that he wrote any political checks. He then said he was asked by “a local person. But I would like not to talk about it anymore.” Neither he nor his wife is registered to vote

or

At the Twilight Hookah Lounge, owned by Nadia and Shawn Abdalla, patrons smoke tobacco flavored with honey and fruit from a menu that includes the strawberry-flavored Sex on the Beach and the strong, orange-flavored Fuzzy Navel.

The Abdallas, who are not registered to vote, said in an interview that they recalled writing a check to an organization in Miami, because a person with that organization was a friend of their mother’s. They said they could not remember his name.

or a Taco Bell supervisor:

Nader, 39, and Sahar Alhawash, 28, of Colton, Calif, who at one point ran the Avon Village Liquor store, donated a total of $18,400 to Giuliani, Clinton and McCain between December and March. About 80 people in the country made such large contributions to all three, and most were wealthy business executives, such as Donald Trump. The Alhawashes declined to comment about the donations. Abdullah Abdullah, a supervisor at several Taco Bell restaurants in the Riverside area, and his wife have donated $9,200 to McCain.

Reached at work, Abdullah said he knows little about the campaign. “I have no idea. I’ll be honest with you,” he said. “I’m involved in the restaurant business. My brother Faisal recommended John McCain. Whenever he makes a recommendation, we do it.”

Faisal Abdullah, 49, said he helped organize all of the contributions from members of his family. When he was asked who solicited the contributions from him, he said: “Why does it matter who? I’m telling you we made the contribution. We funneled it through the channel in Florida because that’s the contact we had. I was responsible for collecting it.”

Right, these people have so much extra cash laying around that they can afford to contribute the maximum amount to political candidates whose name they barely can remember. I’d speculate there is some money laundering going on. How much does the contributor keep? Ten percent? Twenty percent?

McCain and his oil buddy money gushers join the corrupt party

Campaign contributions from oil industry executives to Sen. John McCain rose dramatically in the last half of June, after the senator from Arizona made a high-profile split with environmentalists and reversed his opposition to the federal ban on offshore drilling.

Oil and gas industry executives and employees donated $1.1 million to McCain last month — three-quarters of which came after his June 16 speech calling for an end to the ban — compared with $116,000 in March, $283,000 in April and $208,000 in May.

[From Industry Gushed Money After Reversal on Drilling - washingtonpost.com]

McCain is willing to flip-flop on any position, just sprinkle a little cash money on his campaign…

These bums need to be run out of office sooner than 2009, else our planet will be destroyed. Environmental policy should not be set by oil corporations.

Bush administration officials agreed that greenhouse gases could endanger the public and should be regulated under clean-air laws, but later reversed course amid opposition from Vice President Dick Cheney’s office and the oil industry, a congressional report said.

The report, by the U.S. House Select Committee on Energy Independence and Global Warming, offers a look at the breadth of Bush administration support for regulations before such plans abruptly stopped. The report draws heavily on an interview with a former Environmental Protection Agency official who had told Congress that Mr. Cheney’s office tried to censor federal testimony on the danger of global warming. It is also based on confidential interviews with EPA staff and documents subpoenaed from the EPA.

“This is the dysfunctions and motivations of the Bush administration laid bare,” Chairman Ed Markey (D., Mass.) said in a statement.

[From Cheney's Office Accused Of Thwarting Climate Rules - WSJ.com]

[Non-subscribers use this link to read the entire article]

The White House, on its way out to the dustbin of history,¹ wants to gut the Clean Air Act before the end of the year. Lovely.

WASHINGTON — The White House is trying to prevent the Environmental Protection Agency from publishing a document that could become the legal roadmap for regulating greenhouse-gas emissions in the U.S., said people close to the matter.

The fight over the document is the latest development in a long-running conflict between the EPA and the White House over climate-change policy. It will likely intensify ongoing Congressional investigations into the Bush administration’s involvement in the agency’s policymaking.

The draft document, which has been viewed by The Wall Street Journal, outlines how the government, under the Clean Air Act, could regulate greenhouse-gas emissions from mobile sources such as cars, trucks, trains, planes and boats, and from stationary sources such as power stations, chemical plants and refineries. The document is based on a multimillion-dollar study conducted over two years.

The White House’s Office of Management and Budget has asked the EPA to delete sections of the document that say such emissions endanger public welfare, say how those gases could be regulated, and show an analysis of the cost of regulating greenhouse gases in the U.S. and other countries.

[From White House Blocks EPA Emissions Draft - WSJ.com]

Non WSJ subscribers use this Digg-enabled link to full article which includes some colorful charts.

Cheney wants to ensure his oil buddies won’t have to alter any of their polluting practices until after the Rapture:

“Clearly [White House officials] don’t want to leave behind a blueprint that suggests that the Clean Air Act could offer a potential pathway in a cost-effective way to reduce greenhouse-gas emissions,” said one of the people close to the matter who supports the EPA document’s analysis. “Leaving a blueprint behind could leave the next administration a document they could work from, and that’s not in their interest,” the person said.

If the agency establishes a policy direction in this phase of the rule-making but later changes direction in the proposed rule, it could create opportunities for legal challenges under the Administrative Procedures Act, said Peter Robertson, a former deputy administrator at the EPA and a partner at the Pillsbury law firm specializing in environmental public policy.

“There wouldn’t be a reason for OMB to monkey with this document if it weren’t going to be an important step in the process now and later on,” Mr. Robertson said.

1. and that’s being very kind [↩]

Nice to have the profits to be able to afford teams of highly compensated corporate attorneys to work on the case for almost 20 years (spill occurred in 1989).

The commercial fishermen, Native Alaskans, landowners, businesses and local governments involved in the lawsuit have each received about $15,000 so far ”for having their lives and livelihood destroyed and haven’t received a dime of emotional-distress damages,” their Supreme Court lawyer, Jeffrey Fisher, said when the court heard arguments in February.

First-quarter profits at Exxon Mobil Corp. were $10.9 billion. The company’s 2007 profit was $40.6 billion.

[From Justices Cut Damages Award in Exxon Valdez Spill - NYTimes.com]

The Supreme Court reduced damages from $2,500,000,000 way down to $500,000,000. Exxon Mobil’s legal fees for this matter were probably another $400,000,000 or so, meaning somebody’s having a party tonight with nearly $2 billion dollars. Assholes.

Estimated by Amerian Law Daily as $400,000,000:

Those expenses are nothing when compared to the bills Exxon has been paying during the last two decades to firms like O’Melveny & Myers, its primary outside counsel on the litigation. In 1990 alone, according to a feature story in The American Lawyer following the jury verdict, Exxon reportedly paid $60 million in defense fees. O’Neill estimates that Exxon has likely spent about $400 million defending the case during the last two decades, citing numbers that one of his team’s lawyers saw during litigation that was related to the case. Exxon spokesman Tony Cudmore declined to confirm that figure. “We have not released a figure for legal costs,” he says. “I can tell you they have been significant, but I am not able to provide a number.”

Plaintiffs attorneys are crying tonight, as are all the residents of Alaska.

Continuing on a theme, David Fuller of Peotone, Illinois writes in to Altercation to say:

Turns out that the oil companies currently hold 10,000 drilling permits right now, and have leases to 68 million acres of land that is going undrilled — no need to “open up ANWR or the Gulf Coast right now” as Newt Gingrich would have everyone believe. (Drilling permits are apparently what happens right before the drill bit hits the ground — so oil companies are confident that oil is there.) Check out this June 2008 report [PDF] from the Committee on Natural Resources.

Among the most interesting points:

• Drilling on federal lands has steadily increased since the 1990s
• Drilling permits have gone from 3,802 five years ago to 7,561 in 2007
• Oil and gas companies have shown that they cannot keep pace with the rate of drilling permits (so opening the Gulf and ANWR would help how, exactly?)
• Although permits have gone up, the price of gas has ALSO gone up, refuting the idea that more drilling will automatically reduce prices
• The Bureau of Land Management has issued 28,776 permits to drill on public land; yet, only 18,954 wells were actually drilled (a difference of 9822)
• Of the 47.5 million acres of on-shore federal lands that are currently being leased by oil and gas companies, only about 13 million acres are actually in production
• Offshore, only 10.5 million of the 44 million leased acres are currently producing oil or gas
• According to the Minerals Management Service, of all the oil and gas believed to exist on the Outer Continental Shelf, 82% of the natural gas and 79% of the oil is located in areas that are currently open for leasing
• Nearly 91 million acres are currently open to leasing in the Arctic region of Alaska, including onshore and offshore lands. Oil and gas companies have leased only 11.8 million of the 91 million acres.

• The report goes on to say that just drilling in these 68 million acres (this excludes the Alaska acreage, because much of it is still unleased by the oil companies even though it is available to lease) of untapped areas without drilling anywhere else would likely produce six times the amount of oil in ANWR. Yes, that’s right: SIX TIMES what ANWR is estimated to be able to produce at peak production. And if they’d bother to lease the Alaska areas that are available, that number would undoubtedly go much higher.

  There’s much more in the report, but suffice to say, the next time one of us hears the claim that we need to drill in ANWR or off the coast of Florida to reduce our oil dependence and affect pricing, we should (confidently!) ask why in the world we aren’t making use of the 10,000 permits already issued and the 68 million acres of unused, currently leased land to drill on first, and why the additional drilling we’ve already done since the 90s hasn’t reduced prices at all.

  Shock Doctrine, indeed — don’t fall for it. Educate folks on this, so our politicians can confidently vote “No” to the Gingrich nonsense with the knowledge that the American people have been sufficiently educated about this issue to know better than the lines we’re being fed by the oil companies and those shilling for them.

  [From Media Matters - Slacker Friday]

So why isn’t this sort of analysis being made in the corporate media? I’ve read some stories explaining that if new oil leases are sold, in the Great Lakes, and off the coast of Florida, and of course, in Alaska, the new leases won’t start producing meaningful oil for 20-30 years, but why isn’t that fact contrasted to the existence of 10,000 permits already in place that aren’t producing meaningful oil either? Crazy. He who asks the questions sets the agenda, presumedly, and Bush/McCain/Gingrich were the first out of the gate leveraging complaints re: high consumer gas prices against Big Oil’s future drilling rights. A shame that there isn’t push-back on the topic, except in obscure corners of the web (echoed in even more obscure corners of the web, such as this humble webzine).

[Wrong Bus, Juneau, Alaska.]

Paul Krugman piles on to McCain’s stupid energy policy pronouncements.

In his Monday speech on energy, Mr. McCain tried to touch all the bases. He talked about conservation. He denounced the evils of speculation: “While a few reckless speculators are counting their paper profits, most Americans are coming up on the short end.” A weird aspect of the current energy debate, incidentally, is the fact that many of the same market-worshipping conservatives who first denied that there was a dot-com bubble, then denied that there was a housing bubble, are utterly convinced that nasty speculators are responsible for high oil prices.

The item that made news, however, was Mr. McCain’s call for more offshore drilling. On Tuesday, he made this more explicit, calling for exploration and development of the currently protected outer continental shelf. This was a reversal of his previous position, and it went a long way toward aligning his energy policy with that of the Bush administration.

That’s not a good thing.

As many reports have noted, the McCain/Bush policy on offshore drilling doesn’t make sense as a response to $4-a-gallon gas: the White House’s own Energy Information Administration says that exploiting the outer shelf wouldn’t yield noticeable amounts of oil until the 2020s, and even at peak production its impact on oil prices would be “insignificant.”

But what I haven’t seen emphasized is the broader picture: Mr. McCain has now aligned himself with an administration that, even aside from its blame-the-environmental-movement tendencies, has established an extensive track record as the gang that couldn’t think straight about energy policy.

Remember, they didn’t just insist that the Iraqis would welcome us as liberators; on the eve of the Iraq war, administration officials were also adamant that regime change in Iraq would add millions of barrels a day to the world oil supply, driving oil prices way down. (In fact, Iraq’s oil output took five years just to recover to preinvasion levels.)

[From Paul Krugman - Driller Instinct - Op-Ed - NYTimes.com]

Krugman also points out the energy companies aren’t so keen to drill in the frozen tundra of Alaska in any case.