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I agree with the strikes on Libya because they’ll pave the way for a no-fly zone…and that will cut down on Gaddafi’s ability to do a lot of damage quickly. And I would agree with air strikes on Sudan who are doing awful things. Let’s remember, many Dems were for hitting Afghanistan hard in 2001 given their role in 9/11.

However, as Andrew Sullivan points out, this does break one of his campaign promises.

From Daily Dish:

“The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation,” – Barack Obama.

Of course that depends on what you define as an imminent threat. Whether any of us like to admit it or not, Libya’s oil and gas reserves are important to the entire world. And that’s why I think we’re seeing intervention right now from a country like France.

As the LA Times points out…

For France, Libya is important, partly because it shares a border with four French-speaking countries strategic to France: Tunisia, Algeria, Chad and Niger. France also imports oil from Libya, and the French oil giant Total controls an important Libyan oil field.

Still, Sullivan laments…

It’s just brutal to have supported Obama’s foreign policy for so long, only to see it morph into a multilateral version of McCain’s so swiftly. The whiplash is jarring.

Things change. And we’re offering air support right now, not ground forces. If we commit any significant number of boots on sand I’ll be against it. Until then I think taking out some military positions that could shoot down our planes isn’t a big deal.

What are your thoughts?

That’s what one former oil exec is saying and based on the increased demand we’re seeing in China…this doesn’t seem unlikely.

From CNN Money:

NEW YORK (CNNMoney.com) — The former president of Shell Oil, John Hofmeister, says Americans could be paying $5 for a gallon of gasoline by 2012.

In an interview with Platt’s Energy Week television, Hofmeister predicted gasoline prices will spike as the global demand for oil increases.

“I’m predicting actually the worst outcome over the next two years which takes us to 2012 with higher gasoline prices,” he said.

Some analysts don’t agree with that timeframe…but the price?

Tom Kloza, chief oil analyst with Oil Price Information Service says Americans will see gasoline prices hit the $5 a gallon mark in the next decade, but not by 2012.

“That wolf is out there and it’s going to be at the door…I agree with him that we’ll see those numbers at some point this decade but not yet.” Kloza said.

So why did gas get so high in 2008? Speculators were artificially driving up demand. That’s why you saw prices plummet so rapidly. Yes, there was an economic downturn, but that should have pushed prices down before the spike. You simply can’t account for a $2.50 price drop in gas prices like that.

Here’s more analysis from 2008…

In June 2006, oil traded in futures markets at some $60 a barrel and the Senate investigation estimated that some $25 of that was due to pure financial speculation. One analyst estimated in August 2005 that US oil inventory levels suggested WTI crude prices should be around $25 a barrel, and not $60.

That would mean today that at least $50 to $60 or more of today’s $115 a barrel price is due to pure hedge fund and financial institution speculation. However, given the unchanged equilibrium in global oil supply and demand over recent months amid the explosive rise in oil futures prices traded on Nymex and ICE exchanges in New York and London it is more likely that as much as 60% of the today oil price is pure speculation. No one knows officially except the tiny handful of energy trading banks in New York and London and they certainly aren’t talking.

I can verify that 60%, but there’s obviously a huge amount of speculation going on the market. We’ve been taught that this is a good thing, but isn’t this what fuels this Boom/Bust economic spincycle we seem to constantly find ourselves in? Find the hot new thing to invest in, exploit the market to its fullest extent, let greed drive prices up, up, up and then CRASH!…time for another recession! Why can’t we have worthwhile regulations in these markets so people can create wealth, but stable, long term wealth?

The Vermilion 380 blew up today, but it looks like we may have dodged an oily bullet.

Still, could it have been prevented?

Well, as the title suggest, it’s very likely. Because fines are usually in the thousands to tens of thousands. So, to be fined the better part of a million dollars is patently absurd.

The facts from Big Think:

Reviewing the Minerals Management Service database, I see that Apache paid a $435,000 fine on April 23 for the following lapse which apparently unfolded over a period of weeks in January 2009:

The level controller had been removed from the caisson sump, therefore the sump system could not automatically maintain oil at a level sufficient to prevent discharge into the Gulf of Mexico.

Apache also paid a $255,000 fine in April for the following infraction:

On May 2, 2009, the Surface-Controlled Subsurface Safety Valve (SCSSV) at Well JA-001, failed due to a leakage rate greater than the allowable rate of 5 cubic feet/minute. Records indicate that no corrective action to remove, repair, reinstall, or replace was taken prior to the May 19, 2009, notification of inspection.

But wait…what about 2007?

Apache paid another spectacular fine of $446,000 in 2007 for repeatedly neglecting blow out prevention (BOP) equipment. A failed BOP was the ultimate cause of the Deepwater Horizon spill:

Records verified that there was not a low or high pressure test conducted on the following BOP related equipment: HCR choke valve, manual choke valve, HCR kill valve, manual kill valve, kill line check valve, IBOP, TIW valve and choke manifold. These violations were for 2 BOP test periods, 7/19/2006 and 7/26/2006. A mud-pit-level indicator with both visual and audible warning devices had not been installed. There was not a BOP station installed in the work basket of the snubbing unit. The secondary power source (air supply) was isolated with a closed manual block valve located on the inlet piping to the accumulator.

Now, I want to show you how many oil rigs are currently in the gulf from 1942 until recently. Short answer: nearly 4,000. Longer answer: this short video…

(h/t: Deep Sea News)

And Obama calling for a short moratorium to make sure we have the proper safety measures in place is a bad thing?

More as it develops…

It seems to be a question that’s popping up a lot lately, and the simple answer is: they don’t know how to stop it.

Of course they have the authority. The Oil Pollution Act of 1990 gives Obama all the authority he needs to take over the spill if need be. But the government just isn’t prepared to respond. And so we have to rely on private companies like BP to clean up their own mess.

Basically, this isn’t a situation like Katrina where we could easily evacuated people or made sure they had clean water to drink and food to eat. Deep water oil spills are special beasts and, unfortunately, only the people who cause them can apparently fix them.

Here’s more from CNN:

Interior Secretary Ken Salazar, who previously threatened a government takeover of the mission, made clear Monday that BP must be involved in trying to stop the leaking oil.

“There are areas where BP and the private sector are the ones who must continue to lead the efforts with government oversight, such as a deployment of private sector technology 5,000 feet below the ocean surface to kill the well,” Salazar said Monday. “BP and the private sector, with the help of federal scientists, are the ones who must get that problem solved and we have the oversight capacity in the administration to make sure that they are doing that.”

In addition, the administration’s point man on the spill response, Coast Guard Commandant Thad Allen, said Monday that BP’s strategies were endorsed by other top oil company executives and he would advise against any shift from BP’s continued involvement.

“They have the means of production,” Allen said at a White House news conference. “They have the logistics in place. They have the ROVs [remotely operated vehicles] that are down there. We are jointly operating in their command post out of Houston [Texas]. Everybody that has a stake in the fight is there. And I am satisfied with the coordination that’s going on.”

By the way, even Republicans admit that the government is essentially powerless in this fight…

“They can fire BP and take it over,” Republican Sen. Lamar Alexander of Tennessee said Sunday on the CBS program “Face the Nation.” “But the truth is, the federal government probably doesn’t have the capacity to do that.”

And why don’t we “have the capacity to do that?” Oh…could it be that we’ve trusted private enterprises too much with our safety?

Wonder where those ideas came from…

Do know that after these wells are finally capped and the oil has stopped leaking…we should ALL demand that the government now know how to do this themselves. Because the fact that we don’t have the equipment or know how to do this right now is crazy, especially given how much of a threat these leaks pose.

More as it develops…

Previous worst case scenarios estimated the spill to be pumping 2M gallons of oil a day into the gulf, but new numbers paint a much darker picture.

Here’s how the two leaks shake out…

Leak A: 70,000 barrels a day +
Leak B: 25,000 barrels a day =
95,000 barrels a day

One barrel of oil is roughly 42 gallons of oil…so 95,000 x 42 = 3,990,000 gallons of oil…PER DAY!

Now…let’s remember that this has been going on a month now. That means that nearly 120,000,000 gallons of oil has contaminated the Gulf since this all began.

Let me repeat that…120 MILLION GALLONS OF OIL!

You know how much the Exxon Valdez spilled? 11 million.

So this spill is already 10 times worse than the worst oil spill in our nation’s history.

And next week…hurricane season starts.

More as it develops…

First it was the wishy-washiness of the civil rights act repeal and now it’s criticism of the administration being tough on BP?

Watch the video…

Here’s the thing…yes, accidents happen on offshore oil rigs. However, most damage is mitigated by appropriate safety measures being put in place to keep spills to a minimum.

However, recent reports have revealed that BP didn’t spend the appropriate time, money or energy to ensure that an accident couldn’t turn into a catastrophe. And now the Gulf is paying the price with 2M+ gallons being pumped into that ecosystem every single day.

Do know I’m genuinely sorry to see Rand suffer these slings and arrows. I liked how earnest his dad was, but that doesn’t make up for being so green. In other words, Rand really has nobody to blame but himself. He just isn’t ready for the national stage and this week has been evidence of exactly that. Maybe he’ll recover, but I think we all have serious doubts.

More as it develops…

Ironically, the star of Waterworld (which I like…by the way) might be just the guy to help save the water in the Gulf of Mexico.

Check out the nifty gadget he and his brother has been funding the development of (to the tune of $15M) for the past 15 years. Apparently, it can remove between 99 and 97 percent of the oil from the water.

So the demonstration is obviously on a very small scale, but the larger versions can collect 3,000 gallons of oil a day…and there are 31 machines available. So you’re looking at 93K gallons of oil being pulled out of the Gulf by these machines per day, and that’s significant.

And here’s the thing…apparently BP thinks so. Because they’re going to use the devices to help with the cleanup.

More as it develops…

A leaked document tells a sobering tale of 10x the amount we thought was escaping the ocean floor before…

“The following is not public,” reads the National Oceanic and Atmospheric Administration’s Emergency Response document dated April 28. “Two additional release points were found today in the tangled riser. If the riser pipe deteriorates further, the flow could become unchecked resulting in a release volume an order of magnitude higher than previously thought.”

Asked Friday to comment on the document, NOAA spokesman Scott Smullen said that the additional leaks described were reported to the public late Wednesday night. Regarding the possibility of the spill becoming an order of magnitude larger, Smullen said, “I’m letting the document you have speak for itself.”

In scientific circles, an order of magnitude means something is 10 times larger. In this case, an order of magnitude higher would mean the volume of oil coming from the well could be 10 times higher than the 5,000 barrels a day coming out now. That would mean 50,000 barrels a day, or 2.1 million gallons a day. It appears the new leaks mentioned in the Wednesday release are the leaks reported to the public late Wednesday night.

“There is no official change in the volume released but the USCG is no longer stating that the release rate is 1,000 barrels a day,” continues the document, referred to as report No. 12. “Instead they are saying that they are preparing for a worst-case release and bringing all assets to bear.”

Also, the following graphic shows what we’re looking at in the immediate future…and there’s no doubt that it’ll be devastating to Louisiana and Florida fishermen.

All we can do now is hope that we can get this under control before it destroys the natural habits of our southeastern coastal region for decades.

The equivalent of 5,000 barrels of oil are being dumped into the gulf…every…single…day.

Folks, we’re looking at a disaster bigger than Exxon Valdez. It’s that serious. And that could have devastating effects on our economy.

From Fox News:

The shrimp season begins in early May, as the shrimp move from estuaries out to sea, Long said. U.S. landings of shrimp were valued at $441.8 million in 2008 — an increase of $9.1 million compared to 2007. Louisiana leads the nation in its shrimp supply — with 89 million pounds produced in 2008 — followed by Texas, Alabama, Florida and Mississippi. [...]

The Gulf states play host to tourists from around the world, and industry officials acknowledge that the spill could have a massive economic impact.

In states like Florida, where tourism is a $65.5 billion industry, and Alabama, which brings in $6 billion, officials are closely monitoring any changes in hotel bookings and travel plans.

And so it goes…

Thanks to Justin and company for welcoming me on here as a regular contributor. I will be posting on a number of issues, but one area you can expect that I will regularly be tracking is technology related developments and how they interact with the political world and policy. I also live less than ten miles from the Nebraska/Iowa border, so I’ll try to keep an eye on 2012 developments as the contenders test the waters there as well, on top of other interests like election reform, social issues, polling analysis and any number of things that I come across while skimming the hundreds of tweets and RSS feeds I go through every day. I hope you enjoy it, and now… on with the show!

We’ve been hearing about cellulosic ethanol for several years now, generally with the caveat that were at least a few years, and a few scientific breakthroughs, away from it coming to market and helping wean us from foreign oil. Unlike corn, which breaks down into the sugars necessary to be processed into ethanol relatively easily, cellulose is a hardy material that takes time and energy to break down. Its upside is that there happens to be more cellulose present than any other organic molecule on the planet. This is why millions upon millions of dollars has been poured into cellulosic ethanol research, genetically modifying naturally occurring enzymes to break it down faster and looking for ways to bring the price per gallon down closer to the price of gasoline.

Unlike corn, which takes land out of food production, is inefficient as far as how much energy it takes to produce and is a high maintenance crop, finding raw material for a cellulosic plant is easy. Wood chips from sawmills, the kudzu scourge spreading through the hot and humid Southeast, agricultural waste and even up to 80 percent of what ends up in our landfills could be used to make cellulosic ethanol.  Thankfully, the millions of dollars in research and development have begun to bear fruit.

A gas station near Ottawa is the first in the world to begin selling a cellulosic blend, called CE-10, to the public. Iogen, the company behind the demonstration plant that produced the fuel, plans to build its first full scale cellulosic ethanol plant in Saskatchewan. It has reached an agreement with the local government and Royal Dutch Shell to convert an old Mill site to their purposes, with the government even agreeing to purchase any green energy produced at the site. The running demonstration plant only has the capacity to produce about 3 million liters of ethanol each year, using wheat straw agricultural waste, while the new plant will be able to pump out about 75 million liters. It will make use of a more diverse feed stock, including agricultural waste from other crops, grasses native to nearby areas and even wood chips from area mills.

The march of progress continues, with a number of large companies making big investments into these technologies. Last year GM purchased a large share of Coskata, a big player in the emerging cellulosic ethanol industry, who claims to have developed a process that simplefies the complex and costly process of breaking down cellulose and brings the cost of production down to being competitive with gasoline. There are as many as two dozen companies with plans to build plants similar to Iogen’s, but the economic downturn is effecting their ability to finance these projects. Coskata is hoping to get some stimulus money, in the form of loan guarantees, to help finance its plant, with an estimated production of 50-100 million gallons a year.

As President Obama often says, if we intend to be a leader in the green energy industry of tomorrow, we need to move boldly in that direction today. Now is not the time to let companies who wish to lead us in there falter because of financing problems. Some are talking about a new stimulus bill, which most people reasonably see as a terrible idea, that would focus on these kinds of projects and job creation. The first should have done so, and I have little confidence that a new one would make it through congress without being similarly unfocused and pork laden.

We don’t get too many of these chances, where we can kill three birds with one stone. Job creation, independence from foreign oil and environmental progress can all be had with some smart funding priorities. Lets hope the administration recognizes this in time.

Found this on Political Wire and it’s typical of the nonsense we heard from her during the campaign…

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.

Haha, yeah, imagine that! The people collectively owning the land and spreading the wealth derived from it between everybody.

Why, that’s just good ole, Alaskan capitalism!

And the video…

I swear…it’s like a comedy routine.

While attending the Offshore Technology Conference earlier this week (on sponsorship by the American Petroleum Institute), one truth became very apparent: opening up the outer continental shelf to oil and gas exploration would create a lot of jobs.

Right now, our government is spending hundreds of billions in an effort to revitalize the economy, but President Obama has extended the “public comment period” on OCS exploration/drilling until later this year, preventing any movement forward in that sector. The message is pretty clear: all jobs are not equal. Ideologically, this might make sense, but from a practical standpoint – with our need for jobs and for future energy sources – shouldn’t we proceed with exploration sooner rather than later?

According to the API, the industry employs 1.8 million Americans directly and supports another 4 million jobs in ancillary industries. Furthermore, wages for exploration and production jobs are double the national average. Better yet, creating more of these jobs would cost the nation nothing – in fact,ICF International estimated for the API that currently untapped offshore oil and gas resources could generate $1.3 trillion in government revenue over the life of those resources.

Even if the numbers above are overstated, it’s surprising how little attention offshore exploration and drilling has received during discussions on how to improve the economy. For various reasons, some of our leaders have a reflexive dislike of the oil and gas industry. But there is no reason why we can’t pump money and efforts into renewable energy and “green” jobs even while we create jobs in oil and gas (and help generate a bit more energy security in the process).

In my mind, offshore exploration and drilling should be one prong in our multi-pronged approach to both job creation and energy policy.

Today at the Offshore Technology Conference (which I am at on sponsorship by the American Petroleum Institute), I attended a panel discussion titled: The Case for Access to Oil and Gas Resources on the U.S. Outer Continental Shelf. As the title and graphic to my post probably reveal, the panel was less reasonable than the one I attended yesterday.

Let me say, first of all, I support exploration of the outer continental shelf. It’s been nearly 30 years since anyone has done oil and gas surveying and we need to know how much hydrocarbons are recoverable in the waters off our Eastern and Western seaboards. Exploration should be a no-brainer — we’re going to need oil and gas for many years to come, no matter how fast we ramp up renewable energy sources.

All that said, I was put-off by the anti-environmentalist (as distinct from anti-environmental) attitude of the panel. There seemed to be a general perception that if the environmentalists just got out of the way, the oil and gas companies would take care of things in the best possible way. The situation devolved to a point where one member of the audience accused characters like Dora the Explorer of “indoctrinating” our youth — and no one on the panel seemed to disagree.

As far as I’m concerned, there is no reasonable link between teaching children to conserve and recycle (as Dora does) and the issues surrounding OCS exploration and drilling. The panelists consistently said we need to find common ground, and yet they often had no problem lumping positive environmentalism with the kind of short-sighted, anti-oil crusades being waged by some of the less intellectually honest members of the left. You can’t say you want engagement on the issue (as these industry leaders say they want) and then act like Dora the Explorer is some leftist plot to ruin our future.

I know those on the panel and in the audience were just voicing their frustrations in a closed environment. In the real world, I imagine they are more willing to interact with their Green counterparts. However, I don’t think progress can be achieved so long as oil and gas interests see themselves as some kind of victim. Yes, we need to explore and drill in areas previously off limits. We have the clean technology and high-end machinery capable of making such efforts efficient and of minimal impact to the environment. But if the oil and gas industry wants to convince the majority of Americans of this necessity, they need to be able to separate positive environmentalism with ill-informed obstructionism.

There should be a common ground solution to our future energy needs. But both sides need to move away from demonization.

From today through mid-week, I’m in Houston attending the Offshore Technology Conference. I’m here on the sponsorship of the American Petroleum Institute which has brought in a cadre of bloggers, presumably to help generate coverage and discussion of petroleum issues. Since I believe energy and climate change policy will be some of the most important debates we have over the coming years, I wanted to take this opportunity to delve deeper into the issue.

This morning, I attended a panel focused on meeting our energy challenges. The panelists included an array of wonks, consumer groups, politicians and industry leaders. Going in, I was wary I might be subjected to a bunch of spin. But the group managed to present some very reasonable arguments, concerns and ideas about our nation’s energy policies.

Jason Grumet, who is the Executive Director of the National Commission on Energy Policy and who advised President Obama during the campaign, set the tone with his assertion that in order to move forward, we must first “move beyond the debate careening between ANWR and Kyoto.” Roger Ballentine of the Progressive Policy Institute also pushed this idea, stating that energy policy has become too politicized and we can’t afford to have two sides who talk past each other.

Needless to say, this kind of post-partisan rhetoric caught my attention. As did the statement by Marvin Odum, president of the Shell Oil Company, that he supports cap and trade. That came with the caveat that the policy be “done right,” (i.e. with safeguards to prevent shocking the economy), but in my naiveté, I assumed an oil company would be reflexively against measures such as CO2 cap and trade.

In fact, throughout the nearly three hour discussion, I heard wide agreement that we need to focus on both climate change AND energy policy — and separating the two and picking sides will only prevent anything from being achieved.

In the face of the current financial crisis, we easily forget that a year ago, we were all talking about $4 gasoline. While those costs have fallen dramatically, we’d be foolish to think our problems are resolved. We need a multi-pronged approach to addressing our future energy needs: conservation, alternative energy sources and, yes, more exploration.

Over the next few days I’ll be reporting on and discussing all of these. Check back in.

Following up on my earlier post about oil speculation, there’s news that 50 million barrels of oil are being hoarded on supertankers.

The market calls it “contango.”

I call it irresponsible.

From Marketplace…

“Contango” refers to a market condition in which the future price of a commodity is higher than the cost of buying it today. Right now, investors can lock in oil futures contracts to get paid $46 a barrel in March. They can fill a supertanker right now for just $41 and change. It’s pretty cheap to keep the tanker floating around in the ocean. When it unloads in the spring, the investors make a tidy profit: more than $3 a barrel.

Daniel Yergin is author of the Pulitzer-winning book, “The Prize.” He says there’s a glut of oil right now, caused by the global recession. But futures prices are going higher, because OPEC has promised to cut production. And, says Yergin, oil traders are reading something else in the economic tea leaves.

Daniel Yergin: “There’s a bet here that all of the stimulus, new economic programs, are going to work, and that by the second half of the year, we’re going to move out of recession, back into economic recovery, and that demand will start rising for oil again.”

As I’ve said before, only companies that can actually use the oil should be able to buy contracts. Not that hoarding was a responsible practice in the first place, but it’s particularly offensive now that we’ve seen what it can do to the market.

But hey, tell me why I’m wrong.

And they find that the folks who were trying to make a quick buck were affecting oil prices far more than the normal market forces of supply and demand.

Gee, that sounds oddly familiar…

Last year I argued time and time again that the energy speculators were the cause and that supply and demand couldn’t cause such massive price hikes. And yet some of you continued to fight me on it and claim that this was a result of market forces.

Well, here we are and I’m guessing you’ve watched the story above by now.

However, I’m completely uninterested in who’s right and who’s wrong. What I’m interested in is a fix so this doesn’t happen again.

I think it’s pretty obvious that allowing speculators to enter into this game is extremely damaging to both our short and long term goals. I’m not suggesting we should abolish the commodities market, but what I am saying is that we should only allow companies that can actually use the oil to purchase the contracts. I don’t think that’s an unreasonable notion, and I hope that’s some common ground we can agree on.

I’m glad to see we learned our lesson…

From CNN:

After nearly a year of flagging sales, low gas prices and fat incentives are reigniting America’s taste for big vehicles.

Trucks and SUVs will outsell cars in December, according to researchers at the automotive Website Edmunds.com, something that hasn’t happened since February.

Meanwhile the forecast finds that sales of hybrid vehicles are expected to be way down.

“Despite all the public discussion of fuel efficiency, SUVs and trucks are the industry’s biggest sellers right now as a remarkable number of buyers seem to be compelled by three factors: great deals, low gas prices and winter weather,” commented Michelle Krebs, Senior Editor of Edmunds’ AutoObserver.com.

Well, the one good thing about hybrid sales being down is that those who were on waiting lists will have access to the autos.

Still, this type of news makes me shake my head and wonder how Americans can be so shortsighted. We collectively stopped using as much gas and that forced speculators to drop their supplies on the market and the price plummeted.

Now it looks as if we’ll just start using more again because the price is cheaper and guess what’ll happen.

Ugh.