Opening Up The East Coast for Drilling - Is Obama Crazy?

Not in the least!

But he is in panic mode.

There are smart people in the administration. OK, maybe not many wise (sapient) people, but definitely clever people. They know about peak oil. They know that it is here. They know the standard neoclassical economics explanation of what happens when supply doesn't meet demand. They know the price of fossil fuels go up. They know that prices have been going up. I'll even bet that they have read the scientific papers about peak oil! We know the military has been studying the issue for quite a while. They have even published their concerns.

So if you were President of the United States and your staff is telling you we are running out of oil and that the whole system is going to come apart at the seams as a result, what would you do?

The president knows that energy is critical to the whole economy. He knows that energy flow has to increase in order to have a 'growing' economy. He knows that the American people are spoiled beyond belief. He knows that they will rebel against any message that suggests that they need to pay more for energy or that they will have to restrict their lifestyles in light of new energy realities. And he knows that the US's access to oil is being pinched off by production capacity and geopolitical and international economic forces beyond his control. He knows that the financial markets are keeping the illusion of wealth production alive and has to be supported to keep the illusion alive.

And he knows that the situation is hopeless.

That is why he is opening up oil drilling off Virginia and will likely open other areas for oil companies to lease and explore. He now understands the Drill-baby-drill message. He has no other choice. He is in panic because he is a political animal, just like all the rest. He wants to hold power and he wants his party to hold power in spite of the fact that it is rapidly becoming obvious that it is a no-win proposition.

This is why I doubted our new president's wisdom during the campaign and why I am now convinced that he is really clever but definitely not wise.

I can't help but wonder how he is going to handle the longer-term problem that is mounting. This is like a game of chess where you have lost most of your power pieces while your opponent maintains a knight, bishop (one that hasn't been accused of child molestation we hope), and maybe a castle. You have to take every escape move you can. Your queen is in constant jeopardy. Now you hope your early move to castle your king pays off. But it won't. This is where our president's foresight fails. His panic move is just as bad as believing his chosen financial advisers about how to save the economy and the bailouts of banks and Wall Street. He will fail (are you listening Rush Limbaugh? You will get your wish. But it will get you too.)

I vacillate between hope for truly sapient people to prepare for the worst case scenario, and despair for what is going to happen to the vast majority of people who actually attend to leaders like Obama (or John Boehner or Glen Beck!). The former stand a chance of a future life. The latter are lost. I would prefer to focus on the potential for the former, but am constantly pulled back to think about the latter. This desperate move by Obama is just one more example of why the latter case is going to prevail. He understands the nature of the problem but completely misses the nature of anything like a solution. Sometimes I wonder if I have cast my last vote in a national election!

Comments

[Robin Datta]

The POTUS's veneer cracked when he said "Go for it!" (in reference to those who are considering running on the issue of repealing ObamaCare.

His panic (two words) if any, is engendered not by the long term outlook, but by the desire to keep the whole contraption from falling apart before the next election. A politician's horizon is the next election.

Unfortunately, "Drill, bro', Drill" won't produce results for a decade or two, and then at $100-$200 (in today's dollars) per barrel. I read somewhere that $85 a barrel is about the most the uS economy can tolerate without crashing again.

Ofcourse, if the prognostication about "my last vote in a national election" are right, there is no need for that panic.

[Noirextreme]

You have to consider the timescale that Obama is operating on. He only really needs to keep issues under control during his time in office which can be a maximum of 7 years from now.

On that scale, the decision of drilling more is the right one (for him): he looks like he is addressing the problem of potential oil shortages and he may even see oil being produced from these new fields during his office.

He obviously doesn't want to be the one breaking the bad news and telling everybody how much they are going to have to scale back on consumption.

[Constant Focus]

I have visit lots of sites which talk about this subject but only your site gives me all the important things that I need to know about the subject. Thank you for posting this one.. Can you give me some other site that same as what you have?

[MollyR]

Alas but "truly sapient" people must live on the same planet as the Great Willfully Ignorant Unwashed, and I fear that we are "mostly" all, more or less, locked into the same fate. Which, I must say, P_____ the holy H___ outa me! While I don't wish anyone pain, suffering and death, the uglier side of my nature IS tempted to wish such things on the likes of Glen Beck, et. al..

[Florifulgurator]

Well, if I were POTUS I would do the same. These oil fields are a strategic last reserve for economic emergencies like the one today. It would have been utter BS to drill during GWB's presidency, but now the situation is different.

Of course the oil-o-nomic contraption will fall apart anyway. The crux is: how fast. The drops of oil now promised by Obama might fuel speculative optimism and keep oil prices a bit lower for some (short) time. Lets hope Obama gets some chance to use it for good.

[George Mobus]

Robin, Noirextreme,

I'm not entirely convinced that this move is only a political calculation. The reason I say that is that some contacts in DOE who are talking to the administration pretty directly have indicated that there is discussion in the White House about the long run and how to manage post-peak oil! I'm sure the political calculus factors into every decision process there, but I do think there is a greater sense of panic because of understanding the consequences of supply decline in this country. Forgive me for not naming names. I want to keep these contacts!
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Constant,

Please take a look at my Blogroll (on the left-hand column). You will find several sites there. I particularly recommend the Oil Drum.
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MollyR,

I actually think that the "Great Willfully Ignorant Unwashed" are going to be the ones caught in the die-off, for the most part. The wise shall inherit the Earth!! You'd have to check out my series on sapience to see why (if you haven't already done so.) See the series index link near the top of the page, left side.
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Flor,

Have missed you!

It is likely that the Pres does think of them as a last reserve. But that is because he is short on understanding the subtleties of EROEI. I suspect that whatever wells might be developed offshore are going to be both energy intensive and low EROEI. Low enough and we'll have marginally lower net energy ramping up quickly.

Don't have a clue how he might influence oil prices, but my gut seems to think it isn't much.
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George

[Florifulgurator]

Meanwhile (remembering the statistics from 2008 or so) methinks the effect on oil prices is more likely zilch. But you never know the craziness of market speculation, which often amplifies or exaggerates signals (which isn't a bad thing in theory). Apropos price: Given the low EROI wouldn't it be wise to bootstrap the drilling when oil is cheap like now?
...DaDada, again I got into defending Obama...
Meanwhile methinks he's most likely just doing politics.
So, again if I were POTUS: If the Palinists demand sh.t why not give them some (e.g. spoil some nice Virginian beach with a glitzy oil refinery)?

[The Seventh Fold]

George, I couldn't agree more with your conclusions about Obama. There are lots of reasons to hate offshore drilling, but the big problem, IMO, is that we have decided to drill thinking that a few more fields will allow the maintenance of the status quo. Quick reality check. Every 500 million barrels discovered only pushes the peak oil moment back a single day.

What we need to do is reorganize our economy in a hurry so that we can continue to meet basic needs into the future. This IS possible, but given the average Joe's expectations, voluntary conservation seems highly unlikely.

Go ahead and drill. It ain't gonna make much difference.

[Larry Shultz]

Hi George,
Drilling could be a positive if it does not reduce fishery yields and you assume that in 10 or 15 years there will be little international trade in oil. We will need oil to power agriculture for the USA for quite sometime. Loss of fish however would use up some of the oil just to get the extra protein from agiculture. If it is a low eroei then it could be a total loss. Did Obama have marine biologists look at fishery impact?

Over the last 2 generation the government has done a terrible job of regulating the commons. Overfishing has caused much loss of harvest off the east coast and much future loss. Lack of regulation can be very expensive.

You also have to figure the marginal climate change costs into the eroi.
I am not sure that Obama was looking at all costs.
He may have been just looking at the front loaded benefits, saddling the future with the backloaded costs...

[J.T.]

This is just good politics. No one is going to start drilling anytime soon, so Obama hasn't really given up anything. HE has taken away one more campaign slogan from the GOP.

[Sukhbir Dadwal]

I hope you've been well Professor Mobus.

Unfortunately, Obama is making political moves, why his 'cleverness' lead them to make the decision to escalate in Afghanistan is beyond me. I think that was a pure political move.

Think of all of the barrels of oil and dollars which we will waste there for years to come.

I love the guy, but in this case making the right decision is better than being a two term president.

[George Mobus]

Flor,

I don't remember which post it was (ancient history) but when the drill-baby-drill cry was rising during the campaign I wrote something to the effect that I thought it would be a good idea to actually do some test drills off shore in what geologists considered the most likely areas, around New York state or Mass, I think. The point was that in doing so, we should collect all relevant cost data and estimates of ultimately recoverable reserves (if any) in those areas. Then if we came up with non-economical recovery it would, hopefully, put an end to the moronic mantra. Offshore Virginia is a good likelihood spot. If we do it, collect the data, and make it transparent, then we would know if it makes sense or not. Actually, the oil companies that lease the areas will do everything I suggested but the transparency part. But if they decide not to exploit the area that is telling us everything we need to know. It just can't be done economically (profit). And in the end, this infers poor EROEI.

George

[George Mobus]

Derik,

Too true. But it would be nice if we could call the bluff and force the issue out into the open.

Maybe (only maybe) Obama has this in mind. Once it became obvious that more offshore development was not economical or would achieve the perceived goal of "energy independence" (whatever that is), maybe we could redirect political will toward solutions that actually stood a chance of working.

George

[George Mobus]

Larry,

"Did Obama have marine biologists look at fishery impact?"

I don't know myself, but since Charlie Hall is a foremost fish ecologist, I would think that if they had, he would know about it.

"He may have been just looking at the front loaded benefits, saddling the future with the backloaded costs..."

Time horizons in politics is pretty short, isn't it?

George

[George Mobus]

J.T.,

Hope you are right. But a lot will depend on how he plays it. If he expects a second term he will still be in the time window for possible exploratory drilling so he will still need a longer term strategy, especially if he wants to see a Democrat government after his.

George

[George Mobus]

Hi Sukhbir,

Long time...

Basically I have come to the conclusion that being a politician automatically means you are 'clever' but NOT sapient! Just deciding to go into politics in today's system shows a lack of wisdom.

George

[constant focus-april]

Great information! It's really interesting to read. Can you suggest more sites with the same topic?

[George Mobus]

Constant,

Check the blogroll on the left hand column. You will find references.

George

[Constant Focus]

I have visit a hundreds of website but no one can give information as much as yours,great posting!thank you! Can you tell me of other source of this information? Thank you.

[422Surviver]

Wow, the oil peak is going to happen then.. And yet noone on the street, none of my friends, in media are seriously concerned. Generally people either seem to have a belief in constant oil aka Moor's law for computers or put almost unquiestioning trust into science ability to solve problems and believe into new, yet to be found energy. It's like a ball on a sinking ship