July 26, 2010
The Anti-Drilling Commission
By Jeffrey Folks
The commission appointed by President Obama to investigate the Gulf oil spill (the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling) does not include a single member with specialized knowledge of petroleum engineering. This is akin to performing a heart transplant with a surgical team that has never set foot in an operating room.
Of the seven members appointed to the commission, not one is a petroleum engineer, and all have long-standing ties to the environmental movement. This is certainly the case with Frances Beinecke, Donald Boesch, Terry Garcia, and Frances Ulmer, all of whom have close ties to environmentalist research and policy groups. Beinecke, in fact, is president of the Natural Resources Defense Council, while Ulmer is a member of the Union of Concerned Scientists. How's that for an unbiased commission on drilling?
If the president's intention was to prevent future leaks, why would he appoint a commission with no knowledge of drilling? The answer, it would seem, is that this commission was never meant to perform the task it was officially charged with. It was never really intended to be a commission on drilling safety, but rather a group of environmental activists intent on regulating and taxing the oil and gas companies out of business. Its report is unlikely to focus on improved safely measures with the intent of increasing oil and gas exploration and production. It will more likely issue a blueprint on how to restrict drilling while extorting profits from oil companies by way of new fees and regulation.
Even as the commission hears impassioned testimony from Gulf Coast residents about the economic devastation of Obama's ban on deep-water drilling (his second ban, the first having been ruled illegal by a federal court), its members continue to register their opposition to drilling of any sort. Following recent testimony in New Orleans, during which prominent Gulf leaders pleaded for a resumption of offshore drilling, the commission's directors, William Reilly and Bob Graham, offered lip service to the resumption of drilling. But where were Ms. Beinecke and the commission's other environmental activists during these hearings? From all accounts, they have been silent about the economic damage caused by Obama's drilling ban.
There are two crucial lessons to be learned from the Deepwater Horizon accident, but it is doubtful whether the commission will comprehend either of them. The first is that "best practices" exist which, had they been strictly adhered to, may have prevented the Deepwater Horizon accident. It is for the commission to determine whether they were followed in that case, but it is incontrovertible that best practices have prevented significant accidents on all of the other 40,000 wells drilled in the Gulf. These practices, with continual improvement, should prevent spills in the future as well.
The second lesson, and one that no one in government or the mainstream media seems to have considered, is that the Deepwater Horizon, however flawed its management might have been, had the capacity to produce a great deal of oil and gas. Based on the enormous flow of oil from the Deepwater Horizon and others among the 33 deep-water rigs operating in the Gulf, it is clear that vast reserves of oil and gas exist off America's shores. These reserves are enough to make the United States energy-independent. They are enough to revive our flagging economy, enough to produce jobs for hundreds of thousands of workers and to create secondary and tertiary jobs for millions of others.
Estimates of oil flow from the Deepwater Horizon have come in at between 40,000 and 100,000 barrels. Taking a mean estimate of 70,000 barrels, the annual production from the well, not counting natural gas and condensates, would have amounted to 25,555,000 barrels per year. One hundred such deep-water wells in the Gulf, producing equal quantities of oil, would produce over 2.5 billion barrels per year, enough to supply one-third of the petroleum needs of the United States. This new production alone would add over $175 billion to annual GDP, and it would cut America's annual trade deficit by the same amount. Combined with increased onshore drilling, conservation measures, and increased production of natural gas made possible by advances in drilling technology, offshore drilling would render the United States energy-independent for the first time in a half-century.
Moreover, deep-water drilling has the potential to transform America from the slow-growth, high-unemployment welfare state that President Obama envisages into a prosperous, full-employment economy. This new economy would not only be energy independent, but it might well become an exporter of oil and gas -- as it is now an exporter of coal.
Expansion from the current 33 wells to 100 is a realistic goal, since it would not be necessary to drill 100 deep-water wells annually. Oil flow from wells such as the Deepwater Horizon continues for ten to thirty years, or even more (as it has in the North Sea). Ten additional deepwater wells per year, combined with fracking for natural gas on shore, would soon move the country toward energy independence.
For most Americans, new drilling and the energy independence that comes with it seem like a good thing, but that is the very reason why the president has appointed a commission hostile to increased drilling. The success of the free market in the United States depends to a great extent on the availability of cheap energy. By cutting off the supply of oil, natural gas, and coal, Obama ensures a continuation of high unemployment and an extended period of slow growth, and with these, the expansion of the socialist welfare state.
Nothing could be further from the interests of the modern-day Democratic Party than the transformation of the American economy into a flourishing free-market economy powered by cheap and reliable fossil fuels. The fight over drilling, in this sense, is nothing less than a struggle for the future of capitalism in America.
