(Wall Street Journal) -- Mounting concerns about global energy supply are fueling a drive by the oil industry and some U.S. lawmakers to end longstanding bans on domestic drilling put in place to protect environmentally sensitive areas. However, while there is ample evidence that a lot of oil -- and natural gas -- remains to be found in the U.S. and its territorial waters, expanding U.S. oil production would require overturning decades-old moratoriums that limit offshore drilling and accelerating leasing of federal lands, moves that would trigger a swift and vigorous political backlash. Still, during a meeting with the House Judiciary Committee Thursday, oil executives insisted that Congress should focus its efforts on allowing more drilling and exploration for domestic oil.
‘IEA fears future oil supply may not satisfy demand’
(AP) -- The Paris-based International Energy Agency (IEA) is currently studying depletion rates at about 400 oil fields in a first-of-its-kind study of world oil supply. Though the "results will be released in November, the report is expected to further upset markets as the IEA fears there may not be enough oil to slake the world's thirst. IEA's chief economist Fatih Birol would not speculate on whether the forecast, which will predict supplies through 2030, could go sharply downward.
'Ethanol turmoil a serious threat to some companies'
(AP) — Not long ago, the fledgling ethanol industry was the darling of investors, farmers, the federal government and a lot of Americans who liked the idea of turning corn into fuel. But rising worldwide food prices and shortages have spurred calls in Congress to roll back the federal requirement that increases the amount of ethanol and other biofuels blended with the nation's gasoline supply. Critics say so much corn is being used for ethanol that there's less available for people and animals to eat, raising prices of everything from tortillas to meat. "Consumers are starting to get restless and Washington is starting to listen," said Morningstar analyst Ann Gilpin, who follows Decatur, Ill.-based Archer Daniels Midland, the country's second-largest ethanol producer. The ethanol market would be severely limited if Congress rolled back the federal mandate that calls annual increases in the amount of biofuels added to the fuel supply — 9 billion gallons by the end of this year, increasing to 36 billion gallons by 2022. But the odds of Congress changing that mandate this year are slim because the 10 states — mostly in the Midwest — that produce over 80% of all American ethanol have between them almost half of the 270 electoral votes needed to win a presidential election, said analyst Kevin Book of Friedman, Billings, Ramsey & Co. After the election, though, sentiment about the mandate could change. Congress was already willing to take a modest swipe at ethanol when it approved a farm bill this month with a provision that would shave a tax credit for refiners that blend ethanol into their gasoline from 51 cents to 45 cents. Many analysts say the pressure on the industry would ease with a drop in food prices. Ethanol companies have gone on a public relations campaign in the past few weeks, touting studies that raise doubts about the degree to which ethanol is affecting global food prices. The industry also argues that drivers buying gasoline blended with a small amount of ethanol are paying less than they otherwise would. Nebraska ranks second nationally in ethanol production. The state's Ethanol Board says Nebraska's 21 ethanol plants annually produce more than 1.3 billion gallons of ethanol, using nearly a half billion bushels of corn.
'Energy Advisor Warns of $12-15-a-Gallon Gas'
(Business & Media Institute) -- It may be the mother of all doom and gloom gas price predictions: $12 for a gallon of gas is “inevitable.” Robert Hirsch, Management Information Services Senior Energy Advisor, gave a dire warning about the potential future of gas prices on CNBC’s May 20 “Squawk Box”. He told host Becky Quick there was no single thing that would solve the problem, due to the enormity of the problem. Hirsch told the Business & Media Institute the $12-$15 a gallon wasn’t his prediction, but that he was citing Charles T. Maxwell, described as the “Dean of Oil Analysts” and the senior energy analyst at Weeden & Co. Still. Hirsch admitted the high price was inevitable in his view.
'Experts disagree on reasons for oil surge'
(Washington Post) -- Even experts are confused about oil prices, reporting that oil executives say it's partly the fault of speculators or financial players. Key financial players say it's really a question of limited supply and expanding global demand. Some members of Congress accuse Organization of the Petroleum Exporting Countries (OPEC) for bottling up some of its production capacity. Meanwhile, OPEC blames speculators, wasteful U.S. consumers and feckless U.S. policy. Almost everyone points at China's growing appetite for fuel. Analysts interviewed by the Post argue that oil prices have risen from "$20 to $130 dollars [because] world demand is growing robustly when world supply is not." The experts also pointed out that some developing countries like India are paying large fuel subsidies to keep oil prices down in their countries.
'Back to the 19th century? High fuel prices lead farmers to use mules'
(AP) -- High gas prices have driven a Warren County, Tenn. farmer and his sons to hitch a tractor rake to a pair of mules to gather hay from their fields. T.R. Raymond says: "This fuel is so high, you can't afford it. We can feed these mules cheaper than we can buy fuel. That's the truth."
Senators Warn Climate Bill Could Spike Gas $1.50 to $5 a Gallon
(Business & Media Institute) -- Worried about gas prices hitting $4 a gallon and beyond? Imagine if they were $6, $7 or even $8 a gallon. Those levels are a certain possibility should Congress pass cap-and-trade legislation, which could face a vote in early June, according to Republican Sens. James Inhofe (Okla.) and Jeff Sessions (Ala.). Both lawmakers said energy prices would drastically increase if the Lieberman-Warner Climate Security Act (S. 2191) is signed into law.
According to Inhofe, the bill will make it to the floor of the Senate on June 2. Sessions, a member of the Senate’s Committee on Energy and Natural Resources, cited sources that suggest the increase could be as much as $5 a gallon. Sessions proposed that money should be spent on energy investment versus a regulatory bureaucracy to enforce the provisions of the Lieberman-Warner bill. “I’d rather spend our money in investing in the new the technologies, helping get nuclear power online, improving batteries, researching cellulosic ethanol. Let’s spend our money on that without creating cap-and-trade bureaucracies that have not worked in Europe.” Inhofe said: “You know the Democrats, right down party lines – they do not want to drill in ANWR, they do not want to drill offshore. They don’t want the tar sands. They don’t want more energy. And they don’t want refinery capacity.” The Senate defeated a measure to drill in ANWR on May 13. The vote, an amendment to another bill, was killed by a vote of 42-56, largely along party lines. Only one Democrat voted for the amendment, Sen. Mary Landrieu (D-La.), and five Republicans voting against it.
Inhofe said he predicted fuel prices would soar 10 years ago when President Clinton vetoed the bill that would have allowed production in ANWR. "I said on the Senate floor that day 10 years ago that in 10 years we would regret this."
'Executives call for more oil exploration at Senate committee meeting'
(New York Times) -- As executives from the U.S.'s five largest oil companies met with the Senate Judiciary Committee on Wednesday, Democrats vented their fury over high gasoline prices, grilling the oilmen over their multimillion-dollar pay packages and warning them that Congress was intent on taking action that could include a new tax on so-called windfall profits. And momentum is building for several measures, including a bill that would allow the Organization of the Petroleum Exporting Countries to be sued in American courts under antitrust laws," but "there is little sign that any of the proposals would do much, if anything, to lower prices quickly. The oil executives, representing Exxon Mobil, ConocoPhillips, Royal Dutch Shell, Chevron Corp., and BP PLC, called for Congress to open more exploration in the U.S. -- a plea the Democratic majority has rejected. Some of the executives argued that "the cost of producing a barrel of oil should be about $55 to $65 a barrel, if it were not for a weak dollar, geopolitical concerns about supply disruptions, and speculation in the market.
'Editorial blames high oil prices on Congress'
(Investor's Business Daily) -- Investor's Business Daily editorializes that, though Congress is alarmed by our failed oil markets, it is "mostly the fault of the Congress that we're in this mess." The "markets have failed" because of "Congress's refusal to let oil companies drill on federal lands, thereby cutting sharply into our supply of crude as world demand grows and prices soar both here and abroad." The Daily calls Congress's "ignorance of basic laws of supply and demand...at once bizarre, breathtaking, and frightening," and asserts that "this ridiculous blaming of oil companies must stop, and ... the companies must be allowed to get back into the business of pumping oil." Only then will "the markets that ignorant and demagogic politicians called 'failed' [begin to] again turn out plentiful energy at prices people can afford."
'EDITORIAL: Let’s Sue OPEC! That’ll Teach ‘Em!'
(EnergyTribune.com) -- When it comes to energy policy, Congress keeps getting dumber and dumber. The latest example: a bill passed by the House of Representatives on Tuesday that will allow the U.S. government to sue OPEC for conspiring to raise prices. There are several reasons why the bill, which passed by a margin of 324 to 84, makes no sense. If the U.S. can demand that foreign oil producers increase their output, what’s to stop them from demanding that we produce more of what they want? Corn, for example? A clever chemical engineer said that by threatening to sue OPEC, the U.S. is demanding that the oil-producing countries “produce according to the price we prefer to pay -- not necessarily what's in their own best long-term interest.” The U.S. has no legal right to compel foreign companies (or countries) to produce more of anything. The other problem with the House measure is its blatant hypocrisy. Congress has restricted drilling in the U.S. by making the Arctic National Wildlife Refuge and other areas off-limits to oil and gas exploration. Thus, the U.S. wants to protect its own environment –- by preventing new oil production in America -- while demanding that foreigners spend billions to drill on their lands. We’re told repeatedly that ANWR won’t make much difference in terms of new supplies. Not true. According to the U.S. Geological Survey, the refuge holds about one-third of America’s oil reserves and more than half of its gas reserves. We could replace nearly 10 percent of the oil we import daily with ANWR supplies alone. The new House measure aimed at OPEC comes just one week after a Senate vote that prevents energy companies from drilling in ANWR. On May 13, by a margin of 56 to 42, the Senate blocked a measure that would have allowed oil exploration in ANWR and in areas that lie offshore the Pacific and Atlantic coasts. After the vote, Sen. Richard Durbin, an Illinois Democrat, dismissed the idea that domestic energy production will do any good, declaring that “We can’t drill our way to lower prices.” It just gets dumber and dumber.
