Number of drilling rigs in U.S. oil fields has QUADRUPLED under Obama and domestic oil production hit an 8-year HIGH in 2011

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Thom said this morning that Obama has tripled the # of leases so I thought this top story from Thinkprogress yesterday should be seen and spread by all.

Blame Oil Speculators, Not Obama, For Rising Oil Prices

As the improving economy has robbed conservatives of their chief talking point against President Obama, they’ve turned to rising gas prices as the next problem to pin on the president.

Speaker John Boehner (R-OH) “instructed fellow Republicans to embrace the gas-pump anger,” while Rick Santorum conspiratorially claimed Obama is intentionally pushing up prices to cut carbon emissions. Not to be outdone, Newt Gingrich released a 30-minute video today about how “the Obama administration is so anti‑oil” that they’ve forced the price of gas to go up.

But there’s little truth to claims that Obama has curbed U.S. oil production and driven up gas prices in the process. As NPR noted this morning, the number of drilling rigs in U.S. oil fields has quadrupled under Obama and domestic oil production hit an 8-year high in 2011. For the first time in 60 years, the U.S. is now a net fuel exporter.

Oil demand was actually down 4.6 percent last week over last year, while the supply of gasoline has actually increased slightly since a year ago. So why are gas prices so high? As McClatchy’s Kevin Hall explains today, there is a systemic problem: speculation.

Energy futures markets serve a legitimate role in helping producers (like oil companies) and big end users (like airlines) hedge against price volatility, but lately, they’ve been taken over by Wall Street speculators who never intend to actually use the fuel they’re betting on. As Hallreports:

Historically, financial speculators accounted for about 30 percent of oil trading in commodity markets, while producers and end users made up about 70 percent. Today it’s almost the reverse.

A McClatchy review of the latest Commitment of Traders report from the Commodity Futures Trading Commission, which regulates oil trading, shows that producers and merchants made up just 36 percent of all contracts traded in the week ending Feb. 14 while speculators who will never take delivery of the oil made up 64 percent.

Many experts, lawmakers (Democratic and Republican), and government regulators have expressed similar warnings.

Finally, after many delays, the government board responsible for regulating commodity futures markets finalized a rule in October to limit speculation, a power it was given by the Dodd-Frank Wall street reform law. However, the rule won’t go into effect until next October, as the Commodity Futures Trading Commission (CFTC) needs to collect “one year of interest data” first. The financial industry is fighting the new rule, but just today, the CFTC took action against a company in different market, providing an example of how the energy regulation can effectively work.

Erik300's picture
Erik300
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Comments

In political chess, countering the 'drill baby drill' mantra and chant with doing more is probably better than giving the Grinchcrap any shred of truth. Will it stop the liars? Of course not. Will it stop the media bs? Not likely. But imagine what it would be like were he actually cutting back!

DRC's picture
DRC
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Jul. 31, 2007 3:01 pm

Erik, don't confuse the issue with facts and figures. We need to drill for baby seals.

Phaedrus76's picture
Phaedrus76
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Sep. 14, 2010 7:21 pm

Great post Erik.............This will come in handy at several other places I visit on the web.

Thanks

Sprinklerfitter's picture
Sprinklerfitter
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Sep. 1, 2011 5:49 am

The number of wells by it self means little. Some old wells produce so little they are often taken off line if the price of oil is too low. One off-shore well can produce more oil than hundreds of these old wells.

As for speculation, this is a classic case of capitalism canablizing itself. Such runaway speculation in an economically vital market like oil can bring down the economy. Obama is a fool not to have clamped down on such speculation... unless this is some backdoor way of rebuilding the banks without government money. That and the refusal to put any of the Wall St perps in jail and we SHOULD be asking what are Obama's priorities here?

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Pierpont
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Feb. 29, 2012 1:19 pm

under the obama administration new permits have plummeted to 20 year lows and revenues from royalties have gone from 1 billion to 300 million. This administration has nothing to do with this boom it is the private sector on private land.

CollegeConservative's picture
CollegeConservative
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May. 4, 2012 1:22 pm

Quote CollegeConservative:

under the obama administration new permits have plummeted to 20 year lows and revenues from royalties have gone from 1 billion to 300 million. This administration has nothing to do with this boom it is the private sector on private land.

Really? Just 1 billion?
As a "college student" you have heard of posting credible sources so others can evaluate your claims, right?

For example, your alleged royalty number... what's your starting point? Are royalties connected to the market price of oil? Did the Bush Recession reduce domestic production? Are there collection problems at the BLM.

As for the latter, yes there are. From the GAO

http://www.gao.gov/highrisk/risks/efficiency-effectiveness/management_federal_oil_gas.php

Revenue collection. Our past work has shown that Interior does not have reasonable assurance that it is collecting the public’s fair share of revenue from oil and gas produced on federal lands. Specifically:

  • In 2010, we reported that Interior had not consistently met its statutory or agency goals for verifying that oil and gas producers accurately report the volumes of oil and gas produced from federal leases, either onshore or offshore.
  • In 2009, we reported that Interior lacked consistent and reliable data on the production and sale of oil and gas from federal lands and therefore cannot provide reasonable assurance that it was appropriately assessing and collecting royalties.
  • In 2008, we reported that Interior collected lower levels of revenues for oil and gas production than all but 11 of 104 oil and gas resource owners––countries and some states––whose revenue collection systems were evaluated in a comprehensive industry study.

Is the government now giving away some of its royalties to states? As of 2006, yes http://www.sourcewatch.org/index.php?title=U.S._federal_oil_and_gas_royalties

Gulf of Mexico Energy Security Act of 2006 (S. 3711/H.R.0 6111)
In 2006, Congress passed and the President signed the Gulf of Mexico Energy Security Act. Sen. Mary Landrieu (D-La.) and Senate Energy Committee Chairman Pete Domenici (R-N.M.), coauthored the plan to open 8.3 million acres in the Gulf of Mexico and share 37.5 percent of the new royalty revenues, dedicated to coastal protection, with Louisiana, Texas, Mississippi and Alabama. An additional 12.5 percent will be dedicated to the state side of the Land and Conservation Fund, which funds the acquisition of parks and green spaces across the country.
What about the Cash In Kind policy where the government took a cut of production instead of actual royalties? Source: http://www.sourcewatch.org/index.php?title=U.S._federal_oil_and_gas_royalties Has the government begun a "royality relief" program that has cut into revenues?http://www.netl.doe.gov/technologies/oil-gas/publications/AP/NETL_BLM_final.pdf
If this plan went through http://www.nytimes.com/2006/02/14/business/14oil.html?_r=1&pagewanted=all royalties lost would be about 13 BILLION by 2011.

Enquiring minds want to know even if you don't.

Pierpont's picture
Pierpont
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Feb. 29, 2012 1:19 pm

Doesnt change the fact that large swaths of the country have been ruled off limits

CollegeConservative's picture
CollegeConservative
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May. 4, 2012 1:22 pm
Quote CollegeConservative:

under the obama administration new permits have plummeted to 20 year lows

This was my question upon reading the OP - is all this activity that is credited to Obama actually the result of permits and leases entered into by the Bush administration?

I don't understand why any progressives would be cheering the exhausting of our finite domestic oil reserves.

We need to raise excise taxes on gasoline to the point where the price we pay for a gallon of gas captures all the costs of bringing that product to the pump and all the costs that result from burning it. Plus extra to reduce our consumption so we can make alternatives competitive price-wise.

chilidog
Joined:
Jul. 31, 2007 3:01 pm

From above:

"I don't understand why any progressives would be cheering the exhausting of our finite domestic oil reserves."

poly replies: Conservatives tend to cheer that sort of thing the loudest.

isn't it sort of like being on a life-boat, running out of food, and making the decision to eat it faster?

On another note: Concentrations of wealth are so high, that most commodity prices can be manipulated through futures contracts...from oil and wood to beef and wheat, etc.. Refiners and lumber mills, meat packing plants and millers either pay the price on the inflated delivery contract bid up by finance or produce nothing.

Touting "Manipulated Markets" as "Free Markets" is an amazing feat of propaganda, isn't it?

Retired Monk - "Ideology is a disease"

polycarp2
Joined:
Jul. 31, 2007 3:01 pm
Quote CollegeConservative:

Doesnt change the fact that large swaths of the country have been ruled off limits

Often this is done at the request of states. Jeb Bush didn't want offshore drilling off the Florida coast.

http://www.thedailybeast.com/newsweek/2005/10/09/oil-offshore-drilling-debate.html

And I don't see much of a point of trying to piss away what oil we have only to be in a worst position needing exports in 15-30 years. Any oil policy has to include plans to transition away from it.

Pierpont's picture
Pierpont
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Feb. 29, 2012 1:19 pm
Quote CollegeConservative:

Doesnt change the fact that large swaths of the country have been ruled off limits

Who the hell are you even responding to? You claimed any increased oil production in the US was entirely on private land and claimed that if oil royalties on public land were down... of course you didn't even prove that, that this somehow "proved" oil production on public lands must be down.

I won't hold my breath waiting for you to ever write an intelligent post.

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Pierpont
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Feb. 29, 2012 1:19 pm

Currently Chatting

The other way we're subsidizing Walmart...

Most of us know how taxpayers subsidize Walmart's low wages with billions of dollars in Medicaid, food stamps, and other financial assistance for workers. But, did you know that we're also subsidizing the retail giant by paying the cost of their environmental destruction.

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