Wednesday, July 23, 2008
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MythBusters
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Posted by:
Michele Bachmann at
2:56 PM
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Energy has clearly been the focus of this blog for the past several weeks, and with gas prices where they are, for good reason. People want to know what America has for energy resources and how we can access them to lower the cost of gas.
Recently, I did my best to debunk the sham "Use it or Lose it" legislation that failed in Congress with a bi-partisan majority.
I'd like to once again set the record straight about some claims that have been cited in a few recent newspaper articles. More specifically, claims made by Philip Budzik of the Energy Information Administration (EIA) that can mislead many readers against the benefits of drilling in ANWR and the Outer Continental Shelf (OCS), and of accessing our enormous oil shale supplies to help lower the cost of gas.
For instance, here's an exert from Sunday's Star Tribune:
"Bachmann was expected to visit ANWR today to underscore her desire to drill there. But opening the refuge to drilling 'is not projected to have a large impact on world oil prices' or the price of gasoline, said [Philip] Budzik of the Energy Information Administration (EIA). Tapping the refuge could cut the cost of a barrel of oil by perhaps 2 percent and shave 1 cent to 3 cents off the pump price of a gallon of gas, he said. As for the Outer Continental Shelf, the EIA said it 'would not have a significant impact" on oil prices before 2030.'
Here's what false assumptions Budzik makes in order to justify saying this:
Assumption #1: Current bans that have prevented American consumers from accessing American energy will remain in place until at least 2012 (exactly what Republicans are working to reverse – right now, not 4 years from now): “Leasing would begin no sooner than 2012, and production would not be expected to start before 2017.”
Assumption #2: Once we finally get to the OCS, we’ll only be able to find a fraction of the oil and gas that the Minerals Management Service (MMS) – like EIA, also an agency of the Dept. of Energy – believes is out there.
- What Budzik says: “With these assumptions, technically recoverable undiscovered resources in the lower 48 OCS increase to 59 billion barrels of oil and 288 trillion cubic feet of natural gas."
- What MMS says: “The mean estimate for undiscovered technically recoverable resources (along our nation’s Outer Continental Shelf) totals 85.9 billion barrels of oil and 419.9 trillion cubic feet of natural gas.” (http://www.mms.gov/PDFs/2005EPAct/InventoryRTC.pdf)
Budzik should be distributing accurate energy information, not just using whatever numbers he feels.
Here's what actual economists have to say about the positive impact an increase in energy supplies will have on the cost of gasoline. This is from last week’s Financial Services Committee hearing:
Rep. Brad Sherman (D-CA): Is there any way to give a numerical answer? Would half a million barrels [of oil] a day affect the price, a quarter million?
Fed. Reserve Chairman Ben Bernanke: The short-term elasticity is … that a 1 percent increase in supply could lower prices by 10 percent.
Here are the facts:
We have the resources to bring down the cost of gasoline. Those are the facts.
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Michele is right that removing the blockade to more drilling will drastically impact gas prices.
Kimberly illustrates the kind of narrow minded backward thinking that has gotten us into the mess our economy is currently in. The fundamentals of economics, as presented in even the most basic macroeconomics class, include the principle of inelastic demand (which is typical of energy related commodities). A product that can double in price with only minimal impact on consumption is highly inelastic. In those conditions, relatively modest changes in supply can greatly impact cost. I would recommend to Kimberly that she get a little education before she dismisses practical solutions based on a misdirected environmental dogma. |
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Oil cos. have spent billions of dollars for those leases. Drilling increased by more than 66% since 2000. Parts of the 68 million acres will have oil, some won't. Oil companies have plenty incentive to find oil at current prices.
68 million acres is a small amount. 94% of federal lands — 658 million acres — remains off-limits to exploration. Another 97%, or 1.7 billion acres, of federal offshore properties remains off-limits.
It's the height of arrogance for Congress to leave these lands off the table. It ensures we remain vulnerable to pariah petrostates like Venezuela, Saudi Arabia, Libya, Iran, and et. al., who wish us ill.
It's true that oil co. profits have never been higher. Oil cos. profits are high because price is high. As a share of revenue, profits aren't so high.
The average profit, is around 8 to 9 cents to the $. That compares with about 7 cents to the $ for manufacturers and >15 cents to the $ for computer makers.
In short, oil profits aren't out of whack with the rest of industry.
While oil companies have profit margins of ~8%, ~12% of the price of a gallon of gas goes to the government in the form of taxes. When indirect taxes are incl., the share is even higher.
So who are the real price-gougers?
From 1981 to 2006, the oil industry made $867 bill. in profits. Yes, that's a lot. Over that same time, they paid total taxes of $1.2 trill., Energy Department data show. That doesn't include taxes of $519 bill. paid to foreign countries.
Remember that the next time a politician vows to hit "Big Oil" with a windfall profits tax. The tax won't be paid by the oil company; it will be paid by YOU, the consumer.
Have a good day, Kimberly.
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Better find a new job Kimberly, DNC is going to get crushed over this issue in the November election for their smoke screening and arrogance. We aren't buying the DNC myths.
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Drill for Oil but against energy saving light bulbs
It is Rep Bachmann's way or the highway |
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Philip] Budzik of the Energy Information Administration (EIA)--is *lying* to everyone! (According to Rep. Michele Bachmann, who's been caught lying on camera.)
What do think Budzik's motive is, Rep. Bachmann? Why is trying to deliberately deceive the American people in a time of energy crisis? I can't figure out what his motive could be, to distort the facts the way you say he's distorting them.
I mean, I can always figure out *your* motive for distorting the fact (cheap demagoguing to advance your political career), but I can't for the life of me figure out why Budzik's Energy Information Administration (EIA) would deliberately lie about the effect of drilling on gas prices. It's a real chin-stroker, a puzzler, because the EIA ("an independent statistical agency within Bush's Department of Energy, whose mission is to provide policy-independent data on energy to the government and public") would seem to have NO motive to deceive the public--
--while you (up for re-election and spotting a panic about gas prices) and the voter-challenged GOP would have EVERY suspect reason to deceive the public on this issue, in an election year when your careers are on the line!
Who to believe, who to believe. Bachmann, a GOP conservative with NO background in energy issues, a politician who's been caught lying about national security, about why she went into politics, about her two-way conversations with Jesus Christ--or a non-partisan expert entity charged with monitoring and evaluating America's energy supply.
I guess, in the final analysis, who you decide to believe--is going to depend on the shape of your head. So good luck, conservatives, if you believe (as Michele promises) that more drilling will bring gas prices back to $2 a gallon.
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It's not about who you want to believe, it's about the facts and common sense.
The audacity of the left! Only stupid people or people on the take believe the DNC dribble about oil drilling not having an effect.
Vote the DNC No Drill Scoundrels out, we have had enough of their arrogance! |
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While I don't actually have too much objection to offshore drilling or drilling in AWNAR, I do have an objection to Bachmann's claim that doing so will reduce the price of gas from its current level. That is a claim that is simply a lie, because there is absolutely no way of knowing that. It may prolong oil reserves, but the cost of those reserves is impossible to calculate.
Let's assume that Exxon wins the right to drill in ANWAR. Will Exxon then be forced to sell the resulting gas to the American market at sub-2008 prices? Even if, by then, gas is ten bucks a gallon? And isn't forcing a company to trade only on pre-determined conditions, well, kinda socialist? Who picks up the tab if oil is trading at $300 a barrel by the time ANWAR starts producing? These companies have to make a profit, right? How do they make a profit if gas prices are ten bucks a gallon in the open market but they have to sell to the US market at 2008 prices? And those issues are just the tip of the iceberg...
Bachmann is just making it up for the sake of persuading ignorant voters to tick the box marked "Republican". And you'll fall for it hook, line and sinker without giving what she is saying a moment's thought.
This is a debate worth having, but not when one side pretends (and believes) it has a crystal ball. |
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Bernanke - "The short-term elasticity is ... that a 1% increase in supply could lower prices by 10%."
I agree that, if tomorrow, the Feds opened up ANWR for oil drilling the price of oil would certainly drop the next day. But that's just speculators acting on information. When the oil actually starts coming out of the ground and into refineries ... that's when you will see the long-term effect of ANWR oil. ANWR oil will be x% of world production and ought to lower our oil prices by x%. It makes no sense that it would (long-term) lower prices by 10x% |
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I see, so you think that you are Nostradamus? And any expectation or prediction that the economic principle of supply and demand will work is a lie? I think that it is a common sense approach and your smoke screen makes no sense.
The voters have had it with the Democratic Congress' oil embargo.
The DNC had better lead, follow or get out of the way.
If people vote Republican, it will be because the DNC no longer represents them. The voters understand the issue quite well. unfortunately for the DNC they are playing a losing hand and the longer they stall, the worse will be their defeat in November.
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If you want some insight into this complicated issue, Bernanke is not a good source. He is just giving us his opinion as a banking regulator, not as a market expert. |
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If you are so agaist the big evil oil companies Kim, then stop using oil. You would not last 2 days by the way.
Libs like you never think anything out, you just react to a feeling you are feeling. This is why the left are like children who need to stick to running bead shops and espresso stands. |
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Just for fun...
How about the Feds announce that "everywhere" in the country is now open for oil drilling. I wonder how far the price of oil would plummet?
No need to actually pass legistlation. Just make an announcement and our gas prices fall like a rock! |
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Should not use gas for ANYTHING. They should cook with wind power and walk to work. They shouldn't be allowed to use their jets, fueled by gas subsidized by taxpayers.
PERIOD.
They vote against it because they are not personally affected by it.
Besides, if facts were botox, Pelosi would look human. She has no need for facts.
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I watched Representative Bachmann yesterday on CSpan and was very impressed actually. I listened carefully and thought she made good points. I liked her a lot. I wish I could ask her why someone so intelligent and talented would associate with someone like Pat Robertson though. I really am dumbfounded and am not being disrespectful.
I had a negative image of her because of her association with Pat Robertson who has done such harm to Christianity with his scandalmongering and hatemongering and ridiculous ramblings and embarrassing prophesies and gross self-aggrandizing. He helped his son Gordon cheat on his wife and keep the affair hidden and those two continued their on-air healings and words of knowledge throughout the affair and telling others to confess their sins and repent. I wish I could ask Michelle Bachman why she does not use her position to help expose frauds and protect faithfuls who believe the counterfeits to be real. |
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If the author wants to be believed, she needs to use figures and facts that are believable.
Ben Bernacke saying that the price of gasoline is going to come down $0.10/gallon. Huh?
The Bush administration's Department of Energy report, that the author is quite familiar with, stated that ANWR would reduce the price of a barrel of oil $0.75 or a couple of cents per gallon. That's IF OPEC doesn't compensate for the increased production from the US. Not exactly something you want to bet the farm on.
Oil shale. I'm sixty years old. I've heard about oil shale for many, many years. The issue has never been about if it's there, or if we should go after it. The issue has ALWAYS been the technical feasibility of getting it out of the ground.
If someone came up with a method of getting that oil tomorrow, it would be the quickest solution. Everything is in place. NO ONE is holding that up. They just can't get to it. |
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was going to happen anywhere and everywhere would reduce the price of oil almost immediately. Have you not heard about the "evil" speculators and their driving the price of oil up because they're buying oil based on their speculation of the price in 5 years. They would stop buying post-haste and the price would plummet. It's simple economics but I guess that escapes some people (Kimberly). |
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I went to pay my taxes and get gas today so I wrote this little song.
I owe in the morning.
I owe in the evening.
I owe at supper time.
And if I owe you money, It's going to be a long long time.
Put your arms around me.
Hold me all so tight.
Because if I owe you money, it's going to be one hell of a fight.
Poor John
Best Wishes Thanks |
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Oil shale is being extracted now. The value of the oil now compensates for the extra expense of processing the stuff.
The thing is extraction is happening in Canada. How do I know? Actually saw the story on CNN, though their slant was the environmental impact of all the dust.
Yes there is a lot of dust. There are also retired people like my parents who are seeing their savings disappear in their gas tank. |
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We are at the mercy of the world market because that is where we buy 70% of our oil If we seek independance, we can sell gas for whatever price we choose, like other countries do. It's 15 cants a gal in Iraq and Venezuela. There the government subsidizes it instead of jacking the price up with taxes.
The first post tried to pull heart strings for retired parents. This retired parent only drives about 3,000 miles a year and could care less what gas costs. Try sympathy for truckers, instead. |
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lewes says "I wish I could ask Michelle Bachman why she does not use her position to help expose frauds and protect faithfuls who believe the counterfeits to be real."
The answer is simple, lewes. It's because Michele Bachmann is a fraud and a counterfeit herself. She couldn't possibly do anything to expose herself. She is exactly the charlatan that you believe Pat Robertson to be. |
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You need to take Economy 101. Iraq and Venezuela are poor and failing countries. They make very poor economic models for a great successful and successful country to emulate. |
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Everyone on here is wrong because we all know that LIBS know this is about POLITICS as usual,
they sure jumped when over 70% of the people raised hell about the ILLEGAL IMMIGRATION(ILLEGAL AMNESTY BILL) but they could care less when over 70% of WE THE PEOPLE say they need to drill. Now you tell me were Im wrong and I will go away. This is a case of let the Country go to the SH!TTER before the elections so they(LIBS) can try and us it as a POLITICAL WEAPON. only problem is that the country is now getting to see that this DO NOTHING DEM LED CONGRESS could care less what they took and oath to do. REPRESENT WE THE PEOPLE, I was on here and daily heard LIBS quote about we the people want out of IRAQ and they,LIBS threw it in our faces daily what say you LIBS, the country says DRILL NOW and you say TOUGH SH!T. REALLY SHOWS YOUR liberal mentality DOESNT IT.
It wont matter for we will all be converting to MUSLIMS soon when we become a SOCIALIST/MARXIST/ISLAMIC COUNTRY
ALAH AKBAR MY SOON TO BE CONVERTED MUSLIM AMIGOS |
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To those out there that are consumed with fear and anxiety over the gas crisis, don't panic! If you want to resolve the oil supply issue, vote for GOP candidates in November.
We, the voters, have options and should not be afraid to boot out the congressional DNC incumbents that seek their own self interests over our interests.
Both parties play politics, thankfully we can still use one to club the other when they misbehave. Its time to club the congressional dems, hard.
A scared politician is an attentive politician....
I think that the DNC will stall the voting to drill until after November and hope for the best.
Because of this arrogant behavior, the DNC will be taught a lesson for messing with the voters pocketbook.
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I'd like to address Rep. Bachmann's comment about "Current bans that have prevented American consumers from accessing American energy".
I don't understand what "American Oil" has to do with oil prices. Do we pull up to a gas station and have a choice between the "Regular Unleaded Foreign" pump and the "Regular Unleaded Domestic" pump? No. It's all one pump.
There aren't any "American Gasoline" stations selling American gas at a lower price than imported gas. If such stations existed then every other station would go out of business.
So, can someone please tell me how Americans can access "American gasoline". The only way I can see it happening is if the US Government gets into the actually business of drilling and refining and selling oil products; ie, nationalization.
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As you correctly point out there currently is only a global supply and market for oil. The US imports a good percentage of it's oil. So any increase in US domestic oil production increases the global supply to balance with demand.
I don't believe Rep, Bachmann is stating anything different under normal circumstances.
In the event of a hostile government using oil as a weapon against the US, the US options change if the US has the capacity to drive oil prices down.
As long as we are close to the oil supply=demand point, any burp (or an anticipation of a burp) in the world situation immediately influences prices upward.
When the global oil supply is ample, as when the US Congress removes the ban from increased domestic oil drilling, the hostile governments do not have the leverage (or the cash) to start trouble.
Make no mistake, OPEC has bought a good portion of the DNC Congressmen and for that reason they must go in November along with the camels that they rode in on.
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