Newt’s Gaseous 2.50 a Gallon Fantasy

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“It is occupied by self-selected bureaucrats who see themselves as dictators over the rest of us, they have no application of common sense. They have no application of economic reality.”

You thought that was someone talking about the Republican-controlled House, didn’t you? Not this time; it’s just Newt off on another rant about the EPA.

Speaking to Oklahoma House members Tuesday, he reiterated his claim that opening more areas for oil exploration would

“…reduce America’s dependence on foreign countries…[and] would result in a safer world and lower fuel prices for Americans.”

On the issue of that tired GOP mantra that more drilling will bring gas prices down, Economist Bill Conerly at Forbes offers up a little dose of reality:

“Political candidates treat energy independence as something that will make gasoline prices low and stable and the world safer. Neither result is likely, however.

Companies in the United States will continue to buy and sell energy on global markets. If our domestic oil price falls below the world oil price, our oil producers will export their black gold.”

The reality is that those companies that Americans subsidize, to the tune of around $41 billion a year, aren’t going to do anything to forego a dime of profit.

The situation of U.S. oil leases, long a bone of contention between politicians and environmentalists, also takes center stage when gas prices climb.

In 2004, there was a push in the Bush administration to open more public land to oil leases, but as MSN reported at the time,

“An Associated Press computer analysis of Bureau of Land Management records found that 80 percent of federal lands leased for oil and gas production in Wyoming are producing no oil or gas. Neither are 83 percent of the leased acres in Montana, 77 percent in Utah, 71 percent in Colorado, 36 percent in New Mexico and 99 percent in Nevada.”

Federal records showed

“Nearly three-fourths of the 40 million acres of public land … leased for oil and gas development in the continental United States outside Alaska [wasn’t] producing any oil or gas…”

that’s partly because just procuring the leases is a financial advantage for the oil companies:

“…the leases, which companies can lock up for 10 years with annual rents of only $2 to $3 an acre, are an economic boon to some companies because they count as assets that can make debt refinancing easier while also attracting potential investors.”

Fast forward to June, 2011, and a story on CNN Money:

“The oil industry isn’t drilling on leases for millions of acres of land that could be producing energy.

During recent congressional hearings many Democrats cited a recent report from the Interior Department showing that over 70% of the offshore acres the industry has leased from the federal government are sitting idle.

Onshore, nearly 60%, or 22 million acres in total, aren’t producing any oil or gas.”

Erik Milito, director of exploration and production at the American Petroleum Institute admitted to CNN,

“The huge amount of untapped land being leased is accurate, but to just look at that number and say the industry is sitting on its hands is too simplistic, it doesn’t explain the oil and gas businesses at all.”

He also made one statement which proves Gingrich and other politicians are just flapping their gums when they claim they can have an immediate impact on gas prices by opening new areas to drilling:

“…it takes [time] to go from bidding on a lease to producing oil. It can take seven, eight, nine years to do the seismic work, line up the contractors, conduct the exploratory drilling, and then build the infrastructure needed to bring the oil and gas market.”

NewsOK reported of Gingrich’s visit,

“The former speaker of the U.S. House said he wants to replace the EPA with an agency that uses more common sense.”

What he means, is one with no teeth, so the oil and gas companies can operate with impunity; hardly  surprising considering Gingrich’s friendship with big oil goes back years. As Joe Romm at Think Progress Climate reported, Gingrich’s now defunct “American Solutions For Winning the Future”, famous for the “Drill Here, Drill Now, Pay Less” campaign was

“… bankrolled by a cadre of the right-wing billionaires and oil and coal companies who put George W. Bush into office and destroyed the national economy.”

Not surprisingly, a recent survey of U.S. energy executives by Market Watch reports

  • 66% Claim Believe That Regulations are the Biggest Concerns Facing the Energy Industry in the Long Term
  • 40% Favor the Abolishment of the Department of Energy

While Gingrich is currently focusing on gas prices to jump start his campaign, he made a remarkable admission in last night’s debate in Arizona, which his opponents evidently missed; here’s his statement with my emphasis:

“The leading developer of North Dakota oil estimated recently that, if we would open up federal land and open up offshore, you would have $16 trillion to $18 trillion — not billion — trillion dollars in royalties to the federal government in the next generation, an enormous flow which would drive down prices to $2.50 a gallon, would help us balance the budget and would create millions of jobs.”

For those of you who don’t know, the term “generation” normally refers to a period of approximately 20 years. If we don’t have alternative, renewable energy before then, you’re family vacation will consist of showing your kids pictures of what this country used to look like.

This entry was posted in Campaigns, Debates, Deregulation, Election, Newt Gingrich, Oil and Gas Prices, Oil Companies, Politics, Primaries, Republicans and tagged , , , , , , , , , , . Bookmark the permalink.

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