Category Archives: oil

>The End Of The Oil Age

>

Author and senior-fellow-in-residence at the Post Carbon Institute Richard Heinberg says what I’ve been saying for years:

But the following should be an even clearer conclusion from all that has happened, and that is still unfolding: This is what the end of the oil age looks like. The cheap, easy petroleum is gone; from now on, we will pay steadily more and more for what we put in our gas tanks—more not just in dollars, but in lives and health, in a failed foreign policy that spawns foreign wars and military occupations, and in the lost integrity of the biological systems that sustain life on this planet.

The only solution is to do proactively, and sooner, what we will end up doing anyway as a result of resource depletion and economic, environmental, and military ruin: end our dependence on the stuff. Everybody knows we must do this. Even a recent American president (an oil man, it should be noted) admitted, “America is addicted to oil.” Will we let this addiction destroy us, or will we overcome it? Good intentions are not enough. Now is the moment for the President, other elected officials at all levels of government, and ordinary citizens to make this our central priority as a nation. We have hard choices to make, and an enormous amount of work to do.

Call your Congress Critter.

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Filed under energy future, oil

>Failure To Anticipate

>Damn, I’m so sick of this shit:

BP suggested in a 2009 exploration plan and environmental impact analysis for the well that an accident leading to a giant crude oil spill — and serious damage to beaches, fish and mammals — was unlikely, or virtually impossible.

Where have we heard this before?

How about the failure to anticipate 9/11. The failure to anticipate post-war problems in Iraq. The failure to anticipate the Space Shuttle Columbia disaster.

Nobody anticipated the failure of the northeast electric grid in August 2003. Nobody anticipated that deregulating the energy market in California would make consumers vulnerable to greedy Enron energy traders manipulating the energy supply for fun and profit.

Nobody could have anticipated the breach of levees protecting New Orleans. Or the collapse of a major interstate bridge in Minneapolis. Certainly nobody anticipated big shitpile blowing up in everyone’s faces.

Locally, TVA failed to anticipate the breach of a leaky coal ash pond, spilling 1 billion gallons of toxic sludge onto East Tennessee.

And on … and on …

Once upon a time we were able to anticipate things. We were able to set up systems that prepared for the worst, and mostly things ran pretty well. Now we stand slack-jawed in amazement as one major fail after another rains down all around us.

What the hell is going on?

I think it’s two-fold. I think part of it is that we’ve been blessed over the past 50 years to live in a country where we did worry about infrastructure and regulatory measures. Things worked pretty smoothly, for the most part. Sure there have been problems, but mostly they were few and far between so we become comfortable–maybe even complacent. We started unraveling the oversight which had shielded us from the worst disasters, and we stopped paying attention to infrastructure. Predictably, things have started falling apart.

But there’s a larger issue at play. We live in a far more complex world than ever before. And with greater technological complexity comes a need to change how we calculate risk, how we “anticipate.”

Grist’s Peter Meyer touched on this after the Kingston Coal Ash disaster and that post is worth revisiting here. It’s an excellent post which doesn’t lend itself to pulling out easy excerpts. So I urge everyone to read it.

In a nutshell, Meyer explains that things like Environmental Impact Statements are too often wrong because they

are still based on what economists call “expected utility theory” (EUT). Based on past experience and recorded data, we project the probability of different events and use those odds in combination with the “utility” or value associated with each alternative event to arrive at an expected value for a course of action.

But in the case of the Kingston coal ash disaster,

The expected value calculation appears to have assigned a zero probability to a spill as massive as the one that occurred. That’s as if you carried an umbrella in the rain even though you might melt if you got wet, and assigned a zero probability to the possibility of high winds or hail. That’s not rational.

Assigning that zero likelihood also meant that there was no serious effort to calculate the cost of such a massive failure.

What this helps to see is that the expected value calculation—and all our NEPA-mandated Environmental Impact Statements for federal projects —depend on key assumptions that are unlikely to be true even if we make conscious allowance for normal accidents we tend to ignore.

Getting back to the B.P. oil spill, it seems we have the exact same scenario:

The plan for the Deepwater Horizon well, filed with the federal Minerals Management Service, said repeatedly that it was “unlikely that an accidental surface or subsurface oil spill would occur from the proposed activities.”

The company conceded a spill would impact beaches, wildlife refuges and wilderness areas, but argued that “due to the distance to shore (48 miles) and the response capabilities that would be implemented, no significant adverse impacts are expected.”

Robert Wiygul, an Ocean Springs, Mississippi-based environmental lawyer and board member for the Gulf Restoration Network, said he doesn’t see anything in the document suggesting BP addressed the kind of technology needed to control a spill at that depth of water.

Just like with the TVA coal ash spill, it seems the BP plan assigned a zero probability to a spill, meaning that there was no serious effort to calculate the cost of a massive failure.

In other words: a failure to anticipate. Going into this project planners already determined that there would be no well failure, because no wells had ever failed at that depth. That’s not just unrational, it’s not factual: just as with the TVA coal ash pond, which had been leaking for years before finally bursting, this Deepwater Horizon rig had a nine-year history of spills and accidents. Still, it appears a plan for drilling the world’s deepest offshore oil well was written–and approved–with the assumption there would be no spill.

And I daresay every Environmental Impact Assessment for an offshore oil plan has that same flaw.

Planners, regulators and policy analysts need to take a look at this. There is a deep flaw in how we calculate risk. Our world is riskier but we seem to be living in a happy ignorance. Relax, don’t worry, nothing could ever go wrong!

This is a dangerous attitude. We cannot afford to live in happy ignorance any longer. The old adage “anything that can go wrong, will go wrong,” should be the rule when calculating environmental risks in sensitive areas.

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Filed under BP, environment, oil

>No Free Ride On The Karmic Carousel

>[UPDATE] 4:

Those regulatory whatchamacallits sure do come in handy:

Nevertheless, regulators in two major oil-producing countries, Norway and Brazil, in effect require them. Norway has had acoustic triggers on almost every offshore rig since 1993.

The U.S. considered requiring a remote-controlled shut-off mechanism several years ago, but drilling companies questioned its cost and effectiveness, according to the agency overseeing offshore drilling. The agency, the Interior Department’s Minerals Management Service, says it decided the remote device wasn’t needed because rigs had other back-up plans to cut off a well.

The post goes on to point out that “an acoustic trigger costs about $500,000.”

Of course, as previously mentioned, BP is spending $6 million a day on this spill … so far. And from the memory hole, it seems the Interior Department’s Minerals Management Division had a few other things on its mind besides saftey.

[UPDATE] 3:

Fingers are pointing at Halliburton:

An oil-drilling procedure called cementing is coming under scrutiny as a possible cause of the explosion on the Deepwater Horizon rig in the Gulf of Mexico that has led to one of the biggest oil spills in U.S. history, drilling experts said Thursday.

[…]

The scrutiny on cementing will focus attention on Halliburton Co., the oilfield-services firm that was handling the cementing process on the rig, which burned and sank last week. The disaster, which killed 11, has left a gusher of oil streaming into the Gulf from a mile under the surface.

Which gets us back to where I started with this post.

[UPDATE] 2:

Free hand of the market FAIL:

The Wall Street Journal reported Thursday that the doomed rig lacked a remote-control shutoff device commonly used in other major offshore oil-producing nations.

Would be nice if we had some sort of protective whatchamacallit, some kind of thingie mandating oil companies drilling in public waters take every available precaution to protect the environment so multi-billion-dollar fishing and tourism industries aren’t destroyed.

Another “flaw.” Imagine that.

[UPDATE]:

A temporary halt to new drilling has been instituted:

In a ‘GMA’ exclusive this morning White House Senior Advisor David Axelrod told me that in the wake of the disastrous oil spill in the Gulf of Mexico, no expansion of off-shore oil drilling will take place until any investigation into how this spill occurred is complete.

Wonder how long that will last?

———————————

There’s always a Halliburton connection, isn’t there? A lawsuit filed by shrimpers names the company:

It also names Halliburton Energy Services and Cameron International Corp., which manufactured the blowout preventer that failed to cap the spill.

Thank you very fucking much. God I love the karma of this: Halliburton rakes in billions in Iraq War profiteering and now has to spend some of that fixing the mess it made in the Gulf of Mexico.

No one gets a free ride on the Karmic Carousel, people. This was absolutely, 100% predictable.

And I love how whenever a private company suffers a disaster we all pay to fix the mess.

Send in the U.S. Coast Guard! Send in the U.S. Navy! The EPA! Homeland Security! (Actually, it turns out there are 16 federal agencies involved in the effort.) Turns out Gov. Bobby Jindal “pleaded for federal help”; I wonder if he regrets scoffing at federal spending a few years back, or how he bragged about cutting Louisiana’s taxes six times–”including the largest income tax cut in the history of our state”?

Maybe he shouldn’t have ridiculed $8 billion for light rail projects around the nation, since such projects lessen our dependence on the very oil now washing up on his shoreline.

Yes, BP is spending $6 million a day on this disaster. Yes, President Obama says BP is responsible for the cleanup costs.

But I’m sorry, we’re all going to pay for this. We just are.

It goes well beyond the costs of the federal response. It’s bigger than the loss of wildlife. It’s the loss of an entire industry:

Louisiana has a $3 billion fishing industry—the source of a third of the seafood consumed in the U.S., according to the Louisiana Seafood Marketing and Promotion Board, a state-run agency. Seafood caught here also helps underpin the economy of nearby states that process it, such as Alabama and Mississippi. The impact could be long-lasting and could be made worse by the fact that it’s spawning season for some fish and migration time for the young of some species of shrimp.

Hey guess what, solar power spilled all over my roof this afternoon and I didn’t need to call the fucking U.S. Coast Guard to help me clean it up. No local industries were harmed, either. What do you think of that?

Look, I’m tired of hearing people say solar and wind power aren’t developed enough to meet our energy needs. That’s bullshit. Seventy years ago this nation entered World War II and transitioned our economy to a war footing in a matter of months. Factories that once made consumer goods were suddenly making bombs and airplanes and materials for war, virtually over night. People rationed sugar and gasoline and turned their lights out at night. It was a massive national effort and it brought the entire country together in a display of patriotism wingnuts can only dream about today.

We can do this if we want to. Problem is, there’s no want-to. There’s too much money at stake. Too much greed. Too many Halliburtons profiting off of taxpayer-funded wars in the Middle East. Oil and coal get all sorts of federal concessions while solar and wind development get peanuts, so “free market” conservatives can then claim that alternative energy isn’t developed enough to stand on its own. Yeah, well that’s how it looks when you stack the deck and rig the books, isn’t it?

The dirty little secret is that this country has been in an energy crisis for 50 years now. No one talks about it, but it’s still there. We’ve had little shocks here and there, but we’ve always shaken them off. That was stupid, and short-sighted. It’s not foreign oil we need to wean ourselves from — most of that comes from Canada, anyway. We need to get off the oil tit in general. God isn’t making any more dinosaurs, the oil that’s left in the ground is more difficult and more expensive to access.

If we’d learned the lessons of the very first Arab oil embargo we wouldn’t be in Iraq today, and we wouldn’t be worrying about Gulf Coast fisheries being wiped out for the next few years. If, after 9/11, George Bush had told us to get off the oil tit instead of telling us to go shopping, we’d be well ahead of the game.

Stupid Americans, we never learn, do we? It feels so much better to tell ourselves we can “drill here, drill now, pay less.” When the truth is, oil refineries are cutting production or shutting down completely to keep prices high. It’s the end of the oil road, a dying industry’s last gasp.

Yes, our economy is dependent on oil, but it doesn’t have to be. Indeed, it won’t be for much longer. There’s no reason in the world why every rooftop doesn’t have a solar panel, and why electric cars powered at solar charging stations aren’t widely available by now. If we could transition the country’s economy for war in a matter of weeks, then we can transition away from oil, too.

If we see this for the crisis it is, of course.

If we learn the lesson from this latest emergency, so close on the heels of the West Virginia coal mine disaster, itself right on the heels of Tennessee’s coal sludge disaster.

Is anybody listening?

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Filed under energy conservation, energy future, oil, solar energy

>Goodbye White Sand Beaches

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Nice tourism economy you have there, Gulf Coast. Be a shame if anything happened to it:

NEW ORLEANS — Oil leaking from a sunken drilling rig in the Gulf of Mexico oozed slowly toward the coast Monday, endangering hundreds of miles of marshes, barrier islands and white sand beaches in four states from Louisiana to Florida.

The areas, home to dolphins, sea birds, prime fishing grounds and tourist playlands, could be fouled later this week if crews can’t cut off an estimated 42,000 gallons a day escaping two leaks in a drilling pipe about 5,000 feet below the surface.

[…]

The spill, moving slowly north and spreading east and west, was about 30 miles from the Chandeleur Islands off the Louisiana coast Tuesday. The National Oceanographic and Atmospheric Administration said it would likely be several days before any oil reaches the coast.

George Crozier, oceanographer and executive director at the Dauphin Island Sea Lab in Alabama, said he was studying wind and ocean currents driving the oil. He said Pensacola, Fla., is likely the edge of the threatened area.

Meanwhile, at least Gov. Jindal has seen fit to order the Coast Guard to protect the Pass A Loutre wildlife refuge. Haley Barbour of Mississippi is predictably dithering.

If you grew up in California then the 1969 Santa Barbara oil spill has been seared into your consciousness. For those who don’t remember, a Union Oil platform exploded off the coast of Santa Barbara in January 1969, sending 200,000 gallons of crude into the Pacific over 11 days. It was a major environmental disaster by anyone’s estimation, tens of thousands of birds were killed, and oil washed up on the beaches literally for years afterward (trust me, I remember “beach tar.”) Many credit it with raising the nation’s environmental awareness and giving birth to the environmental movement.

Of course our memories are short, and “drill here, drill now” has become the new rallying cry of an energy-hungry nation.

Wonder what the shrimpers, oystermen and tourist businesses think about this?

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Filed under energy production, oil

>Dinosaurs 4 Oil

>Well this was an interesting press release:

As Governor, I would call upon Mayor Bill Haslam, CEO of the nation’s largest, diesel fuel retailer, to lead the way in assisting our state in financing and building the world’s largest, fossil fuel refinery on the Haywood megasite. The need for refineries is undeniable, and ultra-liberals have used them as a wedge issue with the intent of destroying private, capital markets.

You hear that, West Tennessee? GOP Gubernatorial Candidate Joe Kirkpatrick wants to put the world’s largest oil refinery in your backyard!

Everybody panic!

The Haywood Megasite is near the Hatchie Wildlife Refuge. The best neighbor for a wildlife refuge has definitely got to be an oil refinery. Not just any refinery, of course, but the world’s largest oil refinery.

I love how right-wing Republicans think!

Here’s a little piece of information for Joe Kirkpatrick: no one wants to build more oil refineries, least of all the oil companies. Back in February I linked to a story explaining that oil refineries are only operating at 80% capacity to increase their profits. It’s why gasoline prices are still high, even though demand has dropped.

Fast forward eight months, and we find refiners are actually shutting down U.S. plants:

HOUSTON — Excess capacity, weak demand for fuels and rising product inventories continue to squeeze margins for U.S. oil refiners.

Sunoco ( SUN – news – people ), the second-largest refiner in the country that doesn’t produce its own oil, said late Tuesday that it will soon shutter its Eagle Point refinery in Westville, N.J., which has a capacity to handle 145,000 barrels of oil per day. During the second quarter, Philadelphia-based Sunoco lost $77 million in its refining business and told analysts Tuesday that the third quarter could be worse.

[…]

Industry observers believe the Sunoco shut-in is a sign of what’s to come. In September, Valero ( VLO – news – people ), the largest of the independent refiners, extended the shutdown of a refinery in Aruba and cut back capacity to process heavy oil at a subsidiary in Delaware City, Del.

Among the majors that produce and refine oil, ExxonMobil ( XOM – news – people ), which operates the largest refinery in the U.S. in Baytown, Texas, (572,500 barrels per day), reported a $15 million loss in the second quarter in the so-called downstream sector of its U.S. business. ConocoPhillips ( COP – news – people ), the fifth-largest refiner in the world, reported a second-quarter loss of $52 million in its refining and marketing business due to lower refining margins and volumes. On Wednesday, ConocoPhillips said it would sell $10 billion in assets over the next two years from its exploration and production and refining and marketing segments in order to reduce debt. (See “ConocoPhillips On The Block?”)

Kirkpatrick wants to build the world’s largest oil refinery at a time when those already in operation are being shuttered for lack of buisness. Brilliant!

No wonder Republicans keep destroying our economy. Their policies are purely ideological, based on partisan talking points blaming “ultra-liberals” for everything. Let’s put a grown-up in charge of Tennessee’s government, shall we?

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Filed under energy production, Joe Kirkpatrick, oil, Tennessee

>Is There Anything We Won’t Do For Oil?

>Turns out it wasn’t humanitarian, compassionate reasons that prompted the British government to release Lockerbie bomber Abdelbaset Ali Mohmed al-Megrahi.

It was oil:

Gordon Brown’s government made the decision after discussions between Libya and BP over a multi-million-pound oil exploration deal had hit difficulties. These were resolved soon afterwards.

The letters were sent two years ago by Jack Straw, the justice secretary, to Kenny MacAskill, his counterpart in Scotland, who has been widely criticised for taking the formal decision to permit Megrahi’s release.

The correspondence makes it plain that the key decision to include Megrahi in a deal with Libya to allow prisoners to return home was, in fact, taken in London for British national interests.

[…]

The exploration deal for oil and gas, potentially worth up to £15 billion, was announced in May 2007. Six months later the agreement was still waiting to be ratified.

On December 19, 2007, Straw wrote to MacAskill announcing that the UK government was abandoning its attempt to exclude Megrahi from the prisoner transfer agreement, citing the national interest.

[…]

Within six weeks of the government climbdown, Libya had ratified the BP deal. The prisoner transfer agreement was finalised in May this year, leading to Libya formally applying for Megrahi to be transferred to its custody.

For those who haven’t been following this story:

On Aug. 20, 2009, the Scottish government released him on compassionate grounds, saying that medical evidence showed he would die within months of prostate cancer. Mr. Megrahi, who served 8 years of a 27-year minimum sentence, was flown to Tripoli, Libya, and welcomed home as a hero, setting off angry protests in Britain and the United States.

I’m wondering just what, if anything, the West won’t do for oil.

We invade countries that were not a threat to us, killing tens of thousands of civillians.

We lie to our own people.

We poison our air and land and threaten the future of the entire globe.

We torture and indefinitely imprison people who, if they didn’t hate us before, surely do now.

And we release a convicted terrorist, who killed 270 people, to a hero’s homecomning.

It seems to me that oil is a pernicious thing, bringing us so much wealth and such a high standard of living over the past 50 years. But at what cost?

I ask you this: What good will it be for a man to gain the whole world, if he loses his soul? What price have we placed on our souls?

Is this it? Easy living, big cars, cheap food, big houses, nice clothes? Are we bought so cheap, then?

Surely the devil is laughing.

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Filed under Libya, oil, terrorism, UK

>I Don’t Think Sarah Palin Knows What Socialism Means

>Seriously. From Political Carnival:

Alaska Gov. Sarah Palin (R) was interviewed last night by Sean Hannity on Fox News:

Palin: We are the only state with a negative tax rate where we don’t have any income, sales or property tax statewide, and yes we have a share of our oil resource revenue that goes back to the people that own the resources. Imagine that.

Hannity: And it went up higher since you’ve been the governor and you negotiated with the oil companies. That all went up so people get a bigger check.

Palin: There was a corrupt tax system up there and we had a couple of lawmakers end up in jail because of the tax system that was adopted so we cleaned it up and said we wanted a fair and equitable share of the resources that we own, and the people will share in those resource revenues that are derived.

Not long after that Palin made her famous “socialism … that’s where we’re headed” remark.

Umm …. Someone needs to take the Governor aside and tell her what socialism is. Looks like you guys have a taste of it up in Alaska.

In the meantime, why don’t we nationalize our oil companies the way socialist countries like Norway do. Like Alaska, Norway believes oil revenues belong to the people, not a corporation. Except in Norway, it belongs to all the people, not just those who live near the oil platforms.

Of course, in this country these royalties–when they are collected–are supposed to go to the Dept. of the Interior. However, Houston, we have a little problem:

WASHINGTON – June 9 – The U.S. Interior Department is wrongly withholding information that will reveal whether taxpayers are being ripped off in a controversial oil and gas royalty program, according to a lawsuit filed today by Public Employees for Environmental Responsibility (PEER). Interior claims that disclosure of bidding and contracting information about its Royalty-In-Kind sales would reveal oil company trade secrets.

Oh, whah. That would just be too fucking bad, now wouldn’t it. Geez, what is it with the graft at the Interior Dept.? Must be too many loyal Bushies still left behind.

Why don’t we natonalize the oil companies and get rid of the middle man. And in the meantime, we can create the dream socialist state that the wingnuts are saying we already have?

I”m not serious of course, but I think it’s funny that people like Sarah Palin can have their socialism when they want it, and then can call for drilling “our” oil. It’s not “our” oil. It’s ExxonMobil’s. The government gets a royalty but half the time the energy companies are paying someone off with hookers and blow and Toby Keith concert tickets.

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Filed under oil, Sarah Palin, socialism

Iraq Cancels No-Bid Oil Contracts

Say goodbye to those no-bid contracts for Iraq’s oil that western oil companies snapped up earlier this summer:

Iraq Cancels Six No-Bid Oil Contracts

By ANDREW E. KRAMER and CAMPBELL ROBERTSON
Published: September 10, 2008

An Iraqi plan to award six no-bid contracts to Western oil companies, which came under sharp criticism from several United States senators this summer, has been withdrawn, participants in the negotiations said on Wednesday.

Iraq’s oil minister, Hussain al-Shahristani, told reporters at an OPEC summit meeting in Vienna on Tuesday that talks with Exxon Mobil, Chevron, Shell, Total, BP and several smaller companies for one-year deals, which were announced in June and subsequently delayed, had dragged on for so long that the companies could not now fulfill the work within that time frame. The companies confirmed on Wednesday that the deals had been canceled.

While not particularly lucrative by industry standards, the contracts were valued for providing a foothold in Iraq at a time when oil companies are being shut out of energy-rich countries around the world. The companies will still be eligible to compete in open bidding in Iraq.

I criticized these deals here when they were first announced in June. They further proved my suspicion that we are in Iraq for oil; it was especially suspicious that the exact same Western oil companies that Saddam Hussein had thrown out of the country 36 years ago—Exxon Mobil, Shell, Total and BP—were the same companies now negotiating for no-bid oil contracts. Just a coinky-dinky, I’m sure!

Of course, oil and natural gas deals are still being signed at a fast and furious pace. Most noteworthy is that Iraq’s Oil Ministry signed a major deal with China’s national oil company, China National Petroleum Corporation. Our little Iraq War has worked out very well for the Chinese. Maybe they’ll send us a thank you note.

Meanwhile, an interesting little sidebar to all of this comes buried at the end of the story:

Senator Schumer said Wednesday that he would propose an amendment to the defense appropriation bill in Congress that would specify that should Iraq sign any petroleum contracts before passing the [hydrocarbon] law, profits from those deals would go to defray United States reconstruction spending in Iraq.

I’m wondering how fair that is. One the one hand, Iraq is sitting on $79 billion in oil profits while we’re sinking deeper into debt.

On the other hand, they certainly didn’t ask us to invade their country and ruin their infrastructure and stoke the fires of sectarian violence that left Iraq teetering on the precipice of civil war.

Plus, we’ve done a piss-poor job of reconstruction–and yes, I know security has been the main stumbling block hampering this effort. But still, corruption has been rampant , war profiteering and fraud by contractors like KBR has added considerably to the cost. So who should pay for this? The U.S. taxpayers? The Iraqis? Should KBR and Halliburton give back some of the billions of taxpayer dollars they stole misused?

Maybe we should just send the bill to George and Dick.

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Filed under Iraq, oil

Mission Accomplished!

[UPDATE]:

Jennifer Johnson of WSMV just sold this deal as “cheap gas for Tennesseans–eventually!”

Just shoot me now.
———————————–
No one could have anticipated this:

Deals With Iraq Are Set to Bring Oil Giants Back

BAGHDAD — Four Western oil companies are in the final stages of negotiations this month on contracts that will return them to Iraq, 36 years after losing their oil concession to nationalization as Saddam Hussein rose to power.

I bet you didn’t know that Saddam Hussein threw Western oil companies out of Iraq 36 years ago, did you? I didn’t either. Funny how these things never really came up in the run-up to war. But I digress.

Exxon Mobil, Shell, Total and BP — the original partners in the Iraq Petroleum Company — along with Chevron and a number of smaller oil companies, are in talks with Iraq’s Oil Ministry for no-bid contracts to service Iraq’s largest fields, according to ministry officials, oil company officials and an American diplomat.

The deals, expected to be announced on June 30, will lay the foundation for the first commercial work for the major companies in Iraq since the American invasion, and open a new and potentially lucrative country for their operations.

The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including companies in Russia, China and India. The contracts, which would run for one to two years and are relatively small by industry standards, would nonetheless give the companies an advantage in bidding on future contracts in a country that many experts consider to be the best hope for a large-scale increase in oil production.

Isn’t that special! The four largest Western oil companies are preparing to sign no-bid contracts in Iraq, bringing them back to a position they had 36 years ago. Is that some long-range planning or what!

This is an interesting turn of events, since the last time an American oil company was signing deals in Iraq, the Bush-connected Hunt Oil of Dallas, the Bush Administration was none too happy that the news had leaked out, since it would undermine the Iraqi government’s attempts to write an oil revenue sharing law. President Bush himself claimed to “know nothing about the deal,” but hey, he always claims to know nothing about everything so that’s no surprise.

This deal certainly looks bad, since critics of the American invasion have said all along that the occupation of Iraq is and always has been about the oil. Well, duh.

For their part, the oil companies claim they are “helping Iraq rebuild its decrepit oil industry.” It’s a humanitarian gesture! They get nothing out of it, nothing at all!

Er, except this:

The first oil contracts for the majors in Iraq are exceptional for the oil industry.

They include a provision that could allow the companies to reap large profits at today’s prices: the ministry and companies are negotiating payment in oil rather than cash.

Mission accomplished! Heckuva job, Bushie!

Look, if invading and occupying Iraq to secure their oil reserves for Western oil companies is part of our energy security policy, then why didn’t they just tell us that? Why not be honest about it? Why tell us our soldiers are dying for some big cause like spreading Democracy across the Middle East, or fighting terorrism? That’s obviously bullshit.

And I have to wonder if this timely announcement, coming as Americans are feeling the tightest gasoline pinch in decades, wasn’t somehow intentional. Americans are more likely to support invading a foreign country to secure their oil when gas is at $4.50 a gallon than at $1.50 a gallon.

Anyway, this proves that we DFH’s on the left were right all along: we’re in Iraq for oil, and you wingnuts who bought the administration line about mushroom clouds and mobile weapons labs were all a bunch of chumps. You do not deserve to be listened to about anything ever again. Yes, I am talking to you, William Kristol, and you Fred Hiatt, and all of the Little Green Snotballs and Johnny Assrocket and all the rest of you Kool-Aid drinkers. You were fed lies by the Administration, hey we all were, but you were the idiots who believed them.

And God help us if you and your cohorts in the GOP are ever allowed near the reins of power again.

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Filed under ExxonMobil, Hunt Oil, Iraq War, oil, oil industry

Public Land, Public Resources

A conversation over at Eschaton yesterday prompted me to do a little research into Norway’s State Petroleum Fund.

Norway is the world’s third-largest oil producer, pumping crude out of the North Sea since the 1960s. Instead of allowing just a privileged few to profit from this national resource, Norway takes the approach that the oil belongs to all Norwegians. So, oil profits are placed in a state fund, and the proceeds benefit every citizen:

Parliament created the oil fund in 1990, but the state had its first budget surplus only in 1995. Until then, oil income was used to pay down Norway’s staggering foreign debt from the tough years before North Sea riches could be exploited. A substantial amount of the profits from the exploitation of a resource that is viewed as belonging to all Norwegians, not just the current generation, is invested in foreign stocks and bonds. The state-owned fund guards against spending too freely on public sector services in boom years so as not to lay off droves of state workers when the economy goes bust.

The Petroleum Fund is an instrument designed to prevent Norway’s substantial oil profits from being taken too rapidly into the economy. State bank officials and government leaders believe that dispersing oil revenues directly would overheat the Norwegian economy and suppress private sector growth. Their view is that the resource rent collected from the sale of their natural wealth of oil should be conserved.

From the perspective of some, Norway focuses more on how to administer and distribute the assets already acquired than on how new value is to be created. There are generous benefits for both men and women of eight weeks’ vacation, liberal sick leave and day care that is reliable and inexpensive. Three-year maternity leaves, broad part-time opportunities and creative application of telecommuting help keep women in the work force. State assistance to single mothers is so generous that there is no need for a father’s income.

According to the U.S. State Department, Norway’s State Petroleum Fund exceeded $388 billion by the end of December 2007.

This approach contrasts sharply with the American model, in which corporations like ExxonMobil and Chevron bear the investment burden, then post record profits with little benefit to anyone else. In the case where resources like oil and natural gas are pulled out of public land which belongs to everyone, this strikes me as rather unfair.

Of course, I’m not suggesting that America nationalize its oil companies. I don’t think it would ever fly here, the American public is far too allergic to the notion of “nationalized” anything to even consider it.

But it certainly brings up an issue seldom raised in debates over resources on public lands, where so much mining and drilling takes place. This stuff is supposed to belong to all of us, but when oil and gas leases are given to private corporations, they’re the only ones who profit. Heck, half the time these leases are given out virtually royalty-free.

Let’s take ANWR as an example. Pretend for a moment that ANWR doesn’t contain a mere six month supply of oil. Let’s pretend the resources are so vast that it would keep America awash in oil for years and years. This is public land–it’s a National Wildlife Refuge that belongs to every American, not just ExxonMobil. If we allow the destruction of this wilderness to extract oil and gas, shouldn’t we get something more out of it besides $4/gallon at the Mapco?

The Norwegian way would be to have the government sell the oil and use the profits first to pay off the national debt, then pay for such benefits as healthcare, low-cost childcare, and a free college education, and finally the rest is invested to hedge against some future day when the economy turns south, the oil runs out, etc. That way a citizenry accustomed to free education and healthcare won’t suddenly find itself in dire straits, and an economy which contains a large number of government employees won’t suddenly be laying off thousands of workers.

The American way is far different. Sell the leases (or, if you’re the Bush Administration, give your industry buddies a $10 billion break then lie to Congress about it.) The CEO of ExxonMobil gets $22 million a year and regular Americans, whose oil they are stealing pumping, get nothing.

No free healthcare. No affordable child care. No free education. But CEO Rex Tillerson and his family can now afford to buy these things.

I’m so happy for them.

I realize that the Norwegian way would never work in America. We’re just too different, psychologically and constitutionally. But I do think the current system is inequitable. Raising the royalty rate to 16.7 percent from 12.5 percent of oil and gas sales isn’t enough, not when net profits are in the tens of billions of dollars each quarter.

I don’t like the idea of a “windfall profits tax,” that strikes me as rather silly when all we need to do is get the oil companies to pay us what these leases are worth.

And then I’d like to know where this money is going. It’s certainly not going to the Interior Dept.

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Filed under Norway, oil, oil industry, State Petroleum Fund