“Obama Floats Offering First-Ever Drilling Lease in Atlantic” – AP, 27 January 2015

President Obama has introduced a plan that would allow drilling in parts of the Atlantic Coast, while simultaneously putting an end to any drilling in certain areas in Alaska.

The administration’s proposal concentrates on Virginia, North Carolina, South Carolina, and Georgia, and will sell areas 50 miles off the states’ coasts to oil companies beginning in 2021. Oil companies have been denied access to these areas in the Atlantic Ocean for years, particularly since drilling in those areas was banned in 2008. Additionally, the proposal includes leases for regions in the Gulf of Mexico and Alaska coast. Leases will be sold between 2017 and 2022.

Many politicians cited the 2010 BP oil spill in the Gulf of Mexico as a reason not to move forward with the proposal, which remains the biggest oil spill of its kind in the US. Since then, regulations on offshore drilling have not improved; Congress has yet to adopt new laws that would make drilling safer. Many believe that drilling in these regions is a misguided way of developing energy — and acquiring energy independence — in the US.

However, politicians in the Southeastern states are backing Obama’s plan, asserting that the new venture will boost the economy by creating jobs and encouraging investments. Currently, the US is experiencing a flood in oil, which has caused oil and gas prices to significantly drop.

Areas chosen to be leased and sold are subject to change. Oil generation from offshore drilling supplies 16 percent of the US’s oil. In order to find oil and gas deposits under the ocean, firms will have to run seismic imaging surveys; a process that can take years, the firms attach seismic air guns to their boats that they will drag for miles on the ocean surface. The guns then radiate air and sound, which assists in mapping 2D and 3D images of the ocean floor.

(From Associated Press)

Developed and Written by Dr. Subodh Das and Tara Mahadevan

January 28, 2015

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“California’s Cap-and-Trade Revolt” – Wall Street Journal, 30 June 2014

While West Virginia and Kentucky Democrats are bucking Obama’s climate policy, California Democrats are also fighting similar policy in California, the state’s cap-and-trade program, which is directly effecting the poorest Californians.

Recently, 16 of members of California’s Democratic Assembly wrote a letter to the California Air Resources Board, encouraging the board to revise or postpone California’s cap-and-trade program. The program calls for big manufacturers and power plants to adhere to a state-ordered carbon cap by buying carbon permits or limiting emissions. Transportation fuel suppliers will also have to acquiesce to permits in 2015.

via SF Public Press

via SF Public Press

Assembly Democrats’ minds are on gas prices, which could surge anywhere from 15 to 40 cents per gallon. California has the highest gas prices in the country, in large part due to fuel blending obligations and taxes. In 2012, the Boston Consulting Group anticipated that gas prices would rise anywhere between $0.49 and $1.83 per gallon by 2020. While the program’s objectives are pure—boosting gas prices is supposed to persuade people to drive less, carpool, or purchase electric cars—California’s cap-and-trade is invariably hurting those who cannot afford it. A majority of the 16 Democratic Assembly Members represent minorities and low-income populations.

The Air Resources Board maintains that the objective of the program isn’t to finance new state governmental programs, though California’s 2014 budget does allocate $250 million from carbon permit auctions, as well as 25 percent of future yields, to fund a high-speed rail. The auctions will bring in anywhere between $12 billion to $45 billion by 2020.

Assembly Democrats are in agreement with the California Chamber of Commerce, which is suing the Air Resources Board to invalidate California’s program.

Developed and Written by Dr. Subodh Das and Tara Mahadevan

June 30, 2014

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“Keystone pipeline: Obama’s unpleasant options” – Politico, 31 January 2014

It is still unknown whether Obama will approve the Keystone XL pipeline, but after the State Department’s January report on Keystone XL, it is safe to say that Obama will eventually authorize it. It is also safe to say that Obama’s choice will anger his liberal base—the pipeline involves an oil extraction process that expends more greenhouse gas emissions than any other means of production. Moreover, there is a big chance that the pipeline could break.

But advocation efforts by pipeline builder TransCanada—backed by the American Petroleum Institute—and conservatives are relentless, the former promoting the jobs the pipeline will creates, and the latter blaming Obama for US unemployment rates and high gas prices. There is no promise that the pipeline would help with either issue, or that these groups’ lobbying efforts are doing anything to sway Obama.

It’s easy to see why Obama is taking his time. If he outright rejects the proposal, he could face major backlash from the GOP for the remainder of his term. In order to take that extra anti-Obama talking point out of the conservatives’ arsenal, and to dodge any kind of disagreement with Canada, some moderate Senate Democrats are voicing their approval of the pipeline. This might not be a redeeming factor for Obama—the Senate Democrats’ approval or his own—when it comes to the GOP’s views on his energy and climate policies, namely the Climate Action Plan.

Ultimately, the choice is up to Obama; the Keystone Pipeline falls under Obama’s purview, as an executive order. While he gave a nod to natural gas and climate-altering policies during his SOTU speech, Obama didn’t comment on the pipeline. Stalling a decision has proved to be in Obama’s favor—the constant bickering between the GOP and environmentalists will allow the administration to follow up on other climate policy plans without the watchful eye of the public.

A little wait may be good, but we should not prolong the decision. All the major elements of this project—cost, jobs, environmental and strategic—are sensitive issues. It is time to approve the construction of the Keystone XL pipeline to bring the world’s third largest oil supply to US from friendly NAFTA country Canada, with whom we share the globe’s largest land border. Let us stop sending petrodollars to Middle East and Venezuela, but rather share the wealth within our own continent.

See also:
Pipeline Fight Lifts Environmental Movement

Developed and Written by Dr. Subodh Das and Tara Mahadevan

February 18, 2014

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“Exxon Presses for Exports” – 11 December 2013, Wall Street Journal

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Wall Street Journal

According to Exxon Mobil’s annual energy outlook, in the following decades, the world’s rising need for oil and energy will be met by ample amounts of petroleum sourced both in the US and globally. Exxon is asking the US to end embargoes on crude exports, which were originally created during the Arab oil embargo of 1973. The oil giant believes that the nation is now generating enough crude to become an exporter.

The US’s abundant amounts of oil have created some issues for Exxon and many energy companies: increased production has flooded US demand, causing domestic prices to decrease and gnawing at energy companies’ profits. The US doesn’t allow crude to be exported to other countries, except Canada; however, the government will soon allow natural gas to be exported through terminals to countries that don’t have free-trade agreements with the US.

Exxon’s outlook states that, by 2015, more oil will be tapped in North America than from Organization of the Petroleum Exporting Countries (OPEC), excluding Saudi Arabia. However, by 2040, Exxon foreshadows that OPEC will produce 45% of the world’s petroleum. Exxon’s outlook predicts that the world will use 35% more energy in 2040 than 2010, stemming from growing incomes and populations in developing countries like India and China. Exxon also predicts that oil and gas will supply 60% of energy used in 2040. Exxon’s projections are optimistic, noting that 65% of the world’s crude will remain untouched in 2040.

Lifting this embargo might be met with opposition, as consumers worry that crude exports can lead to rising US gas prices, and environmentalists worry about the environmental consequences of enlarged production. Exxon’s outlook reinforces the split between those who promote fossil fuel emission limits, and those — like Exxon — who deem such limits as impractical.

Exxon believes that coal will be mostly forced out by natural gas by 2030. By 2040, sources of gas, from materials like shale rock, will make up one third of the world’s energy.

As guardians of the free-trade market and pragmatism, we believe that US oil companies should be allowed to export (and import) oil and any other energy sources.

Developed and Written by Dr. Subodh Das and Tara Mahadevan

January 2, 2014

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