Friday, July 18, 2008

Misleading headline of the day

The award goes to Reuters for "White House threatens to veto oil drilling bill".

One would imagine that the bill in question somehow fundamentally alters the amount of domestic oil drilling, with a strong implication that the bill would increase said drilling. That would be wrong.

The White House on Thursday threatened to veto legislation being considered by the U.S. House of Representatives that would force oil companies to give up undrilled federal leases and ban the export of crude drilled in Alaska.

Ok, they're already called "leases" because they expire. If they didn't expire, they would be called "purchases".

The bill, which the House was to vote on later on Thursday, has a "use it or lose it" provision that requires oil companies to diligently develop their existing federal leases or turn them back to the government before they could obtain new acres to drill.

It's hard to see how this increases domestic production... if ABC Oil Company doesn't drill on a leased area that they've already paid for it's hard to see why XYZ Oil Company would be in a hurry to scoop up that property. And again, they're leased properties. They expire anyway. But the Democrats will say anything to change the subject from offshore drilling.

Back that whole Alaska thing for a moment. I've heard rumblings about Alaskan oil being exported, and I just don't care. Even Reuters says "virtually none of the state's crude has been shipped to other countries in the past eight years". But it doesn't matter if all of the Alaskan oil was being exported. It's easier to move money than crude oil, and if it's more economical to ship every drop of Alaskan oil to Japan and China, take the money and buy more of the same thing from Canada, Mexico, etc, then it would be idiotic not to do so.

Thankfully somebody at the White House was on top of that one:
"Such a ban would make virtually no additional oil available to U.S. consumers, and would not lower oil prices that are set in a world market," the White House said. "At the same time, such export restrictions are detrimental to the efficient operation of global energy markets and would send the wrong signal to our trading partners who may face pressure to impose similar trade restrictions."

What part of "world market" do you not understand, Democrats? I'm going to go with the "market" part, but you can make a case for the whole shebang.


Anonymous said...

Query - what's the average duration of these leases? If it's 5 years or thereabouts, then having an early termination clause doesn't make much sense. However, if we're talking 50 or 100 year leases, then you could at least argue that this kind of expiration trigger might be worthwhile.


Exporting oil from Alaska and importing from Canada/Mexico = dumb. And no transitive property applied here from Spaceballs turning my words around to importing = good, thankyouverymuch.

Sockless Joe said...

Good question on the leases. I'll have to check in to that.

I'm confused by your (apparent?) disagreement over the Alaska business. If it makes economic sense, do it. If not (which seems to be the case) then it just won't be done, no help from Washington necessary.

Anonymous said...

Right. That's what I was trying to say, that it looked like it made no economic sense to export from Alaska. That it was, in fact, dumb. But I'm no expert.

Speaking of Star Wars parodies and politics - Robot Chicken Wars is on the way to my home in glorious DVD. (despite the fact that I could easily watch it online).


Sockless Joe said...

Which brings me back to the pointlessness of the bill in question. It is likely (and at best) a completely unnecessary regulation w.r.t. Alaskan oil. They're either grandstanding or ignorant.

(I think a plausible but unlikely scenario based on transportation costs can be constructed where it would make perfect sense to export Alaskan oil, and in this hypothetical scenario a bill such as this would actually raise the price of oil.)

But there's this meme floating out there about the usual greedy oil barons who sell Alaskan oil abroad when they "should" be selling it here. But that's not even happening. Sadly, crap like this has legs.

Sockless Joe said...

Back to the lease duration, my layperson's casual reading of the regulations indicates that the lease is 5 years minimum with the potential for up to a 10 year lease at the discretion of the Secretary of the Interior(*).

The Secretary also has the discretion to ask at any time for a good-faith plan for development, and an unsatisfactory plan can lead to lease cancellation.

(*)-I think it's the Sec. of the Interior. The legislation refers to the "Secretary" and the definition was basically Interior though most of it unless, well, it isn't, such as Energy. I didn't care enough to figure it out on a provision by provision basis.