President Obama supports offshore drilling!

President Obama supports offshore drilling; but not in the U.S. of course. Instead he's loaning a couple of billion dollars of your tax money to Petrobras to drill off the coast of Brazil. At the same time he supports so called environmentalists who use all manner of legal maneuvering to make it impossible for oil and gas companies to drill off the coast of this country.

This makes not one lick of sense in any dimension.

Since our government is running a deficit it must borrow money by selling bonds in order to loan this money out. So our government is borrowing money from China and others in order to lend the money to an oil company owned and run by the Brazilian government.

And, on another level, Petrobras must be the only oil company in the world that can't make enough money to do its own drilling. Which says something about just how inefficient government run businesses can be.

The Wall Street Journal has the whole story at the link below. I've quoted some of it below.

http://online.wsj.com/article/SB10001424052970203863204574346610120524166.html


Obama Underwrites Offshore Drilling
The Wall Street Journal - 8/18/09

You read that headline correctly. Unfortunately, the Obama Administration is financing oil exploration off Brazil.

The U.S. is going to lend billions of dollars to Brazil's state-owned oil company, Petrobras, to finance exploration of the huge offshore discovery in Brazil's Tupi oil field in the Santos Basin near Rio de Janeiro. Brazil's planning minister confirmed that White House National Security Adviser James Jones met this month with Brazilian officials to talk about the loan.

The U.S. Export-Import Bank tells us it has issued a "preliminary commitment" letter to Petrobras in the amount of $2 billion and has discussed with Brazil the possibility of increasing that amount. Ex-Im Bank says it has not decided whether the money will come in the form of a direct loan or loan guarantees. Either way, this corporate foreign aid may strike some readers as odd, given that the U.S. Treasury seems desperate for cash and Petrobras is one of the largest corporations in the Americas.

But look on the bright side. If President Obama has embraced offshore drilling in Brazil, why not in the old U.S.A.? The land of the sorta free and the home of the heavily indebted has enormous offshore oil deposits, and last year ahead of the November elections, with gasoline at $4 a gallon, Congress let a ban on offshore drilling expire.

The Bush Administration's five-year plan (2007-2012) to open the outer continental shelf to oil exploration included new lease sales in the Gulf of Mexico. But in 2007 environmentalists went to court to block drilling in Alaska and in April a federal court ruled in their favor. In May, Interior Secretary Ken Salazar said his department was unsure whether that ruling applied only to Alaska or all offshore drilling. So it asked an appeals court for clarification. Late last month the court said the earlier decision applied only to Alaska, opening the way for the sale of leases in the Gulf. Mr. Salazar now says the sales will go forward on August 19.

This is progress, however slow. But it still doesn't allow the U.S. to explore in Alaska or along the East and West Coasts, which could be our equivalent of the Tupi oil fields, which are set to make Brazil a leading oil exporter. Americans are right to wonder why Mr. Obama is underwriting in Brazil what he won't allow at home.

Meanwhile, it appears we're not doomed to freeze in the dark

Quietly and stealthily the drilling companies have been finding ways to produce potentially enormous amounts of natural gas right here in the U.S. And the politicians have started to list natural gas along with wind and solar when they talk about "alternative" sources of energy.

Laissez les bon temps roulez.

http://online.wsj.com/article/SB124104549891270585.html#mod%3Darticle-outset-box%26articleTabs%3Dcomments

As is usual on the Wall Street Journal site the comments on the article are well worth skimming if you're interested in the topic. The WSJ limits comments to subscribers who provide their full name with the comment so there are fewer annoying trolls, and the commenters generally know a bit about economics, unlike politicians and many so called environmentalists.

Makes me think of Monticello

Talk about a rookie mistake. President Barry's press secretary let the thermostat out of the bag by revealing that The One like the Oval Office kept at subtropical temperatures. He'd better let his staff in on the fact that it won't do to rub the noses of the little people in the smelly fact that he's like most leaders in wanting us to "do as I say, not what I do."

At some level we realize that our leaders are eating high on the hog off of fine china in front of roaring fires up in the fancy rooms of the big house while we're eating scraps out of wooden bowls in our drafty little quarters in the basement; but that doesn't mean it's wise to say it out loud.

Makes me think President Barry shares some of Thomas Jefferson's ideas and attitudes with respect to social hierarchies. I hope he turns out to be as good a President as Massa Tom.

http://www.weeklystandard.com/weblogs/TWSFP/2009/01/obama_flinty_chicago_oak_or_de.asp

Global warming and energy independence - Solved!

I read a lot of stuff written by liberals proposing all manner of complicated schemes to cut use of fossil fuels and force energy efficiency. And I read all kinds of things by conservatives about how they want the US to become independent of foreign oil. But I never hear anyone with the guts to propose the only simple way to achieve both of those ends - tax all fossil fuels heavily; but start the tax slowly and raise it steadily and predictably so people and businesses can adapt in the natural course of things. Finally, give the proceeds back to the country's whole population as an equal payment to each citizen and legal resident. That way the cost would fall primarily on heavy users of fossil fuels, and lesser users would actually end up ahead.

If something like that had been started in the 1970's we would already be a lot less dependent on fossil fuels.

This is the perfect time to enact such a plan because prices of all forms of fossil fuels are falling, and people and industry are already somewhat accustomed to the pain of higher prices. Congress should pass a tax starting at say three cents per gallon of gasoline and fuel oil (and an equivalent amount on coal and natural gas by energy content). Congress should also mandate that the tax will increase by three cents per month indefinitely - ideally it would be set up to increase automatically unless congress votes to stop it by a significant supermajority, so that it would be very hard to stop. That way everyone would have a clearly defined incentive to buy cars and homes based on energy efficiency, and industry would have clear expectations as to future costs of energy from fossil fuel sources. People developing alternative sources of energy would also have clear expectations of the energy markets in which they will compete.

Such a tax would also leave it to the free market to decide on the details of energy efficiency and alternative energy issues - by far the most efficient way to decide among those things. Some will argue that a time of recession is not the time to start such a plan, but I'd fire back that putting some reasonable expectations around the issue of global warming and energy independence and defanging the threat of truly disastrous types of government intervention (like cap and trade which will certainly turn into a huge political honeypot) would itself have a major stimulative effect on the economy.

Being a humble person I decline the honor should someone want to name this The Sully Plan.