More Facts On Drilling, Permits, and Obama

Drilling Increased and he's not blocking anything. So sayth Obama.

Hey folks,

Well, here are even more FACTS on Drilling, Permits, and Obama.

Fact: Secretary Salazar Is Not Issuing New Deepwater Permits

Interior Is Allowing Existing Permit Holders to Resume Exploration in the Gulf of Mexico

NEW ORLEANS, March 18, 2011 /PRNewswire/ -- Jim Adams, president and CEO of the Offshore Marine Service Association (OMSA), said that BOEMER's late day announcement that it has issued an additional permit for deepwater drilling is misleading.

"There were 32 deepwater drilling operations already permitted when the President imposed his moratorium last year. Interior Secretary Salazar is merely allowing existing permit holders to resume their operations," said Adams. "This administration has yet to approve and permit a new deepwater exploration proposal submitted in the last 11 months."

Adams continued, "Secretary Salazar is treating Gulf workers like peasants, tossing us work crumb by crumb and expecting us to be grateful," Adams said. "We're tired of fighting for scraps. We want to get back to work—all of us, not just a handful of crews."

Adams noted that Secretary Salazar's latest announcement follows on the heels of another round of Congressional hearings this week on the Obama administration's de facto moratorium on deepwater drilling in the Gulf.

"It still takes Congressional intervention or court orders to compel the Interior Department to issue a scant number of 'permits'," Adams said. "And still, energy producers don't have a clear picture of what it takes—or how long it takes—to satisfy Secretary Salazar."

"No one is sure what Secretary Salazar really wants," Adams added. "All we want is to get back to work."

OMSA represents the owners and operators of U.S. flag offshore service vessels and the shipyards and other businesses that support that industry.


SOURCE Offshore Marine Service Association

What Secretary Salazar really wants? He doesn't know what he really wants. He wants whatever the new dictate is coming from Obama.

Look, take this, couple it with everything we talked about last week, add in there the Transcript of the API / Blogger Conference Call, and then you have a REAL snapshot of what is going on with our Energy Costs, and American Security. Then you will have the Truth and the FACTS of what is REALLY happening on the Enrgy Front. It is NOT as Obama attempted to get you to believe.
Peter

Do Not Fear Japan Radiation In America.

It has arrived. It is no big deal.

Hey folks,

Since the Japanese tragedy, some have absurdly used this to further Political Agendas. In doing so, they have created a bit of panic, HERE, in this Country. Some in this Country, actually believe that there is going to be this big Gaseous Cloudy of Nuclear Fallout was going to follow the same path of the Tsunami, hitting Hawaii, then the West Coast.

Well folks, there is nothing to fear. According to the AP - Testing finds no health threat along West Coast

SAN FRANCISCO – Minuscule amounts of radiation from Japan's stricken nuclear plant have reached the west coast but federal and state officials say it poses no health risk.

They said Friday that the doses of radiation that a person normally receives from rocks, bricks, and the sun are 100,000 times the dose rates detected at a monitoring station in California and another in Washington state.

So you absorb more Radiation just living in certain areas than this big Gaseous Cloudy of Nuclear Fallout.

Concerns that Japan's nuclear disaster was assuming international proportions grew as a radioactive plume released from the Fukushima Dai-ichi reached Southern California on Friday,

But the results of testing reflected expectations by the U.N.'s International Atomic Energy Agency that radiation had greatly dissipated by the time it reached the U.S. coastline.

The U.S. Department of Energy said extremely small amounts of the radioactive isotopes iodine-131, iodine-132, tellurium-132 and cesium-137 had reached a Sacramento monitoring station tied to the U.N.'s Comprehensive Test Ban Treaty Organization, but the readings were far below levels that could pose any health risks.

A detector at the Pacific Northwest National Laboratory in Washington State earlier this week also detected trace amounts of xenon-133 — a gas produced during nuclear fission — the DOE said.

The DOE and the U.S. Environmental Protection Agency said in a joint statement that the doses of radiation people generally get from the surrounding environment are 100,000 times greater than dose rates detected at the two monitoring sites.

That assessment confirmed statements from diplomats and officials in Vienna earlier in the day.

Air pollution regulators in Southern California said they have not detected increased levels of radiation. The South Coast Air Quality Management District said radiation measured at its three sites was not higher than typical levels.

The agency's monitors are part of the EPA's network of more than 100 sensors across the nation that track radiation levels every hour.

In Alaska, Dr. Bernd Jilly, director of state public health laboratories, also said monitoring had shown no readings of above-normal levels of radiation.

The same was true in the state of Washington, health department spokesman Donn Moyer said. The levels would have to be hundreds of thousands of times higher than current readings before health officials would recommend any response, he said.

Graham Andrew, a senior official of the Vienna-based International Atomic Energy Agency, said that the International Civil Aviation Organization — after consultations with the IAEA — found there was no reason to curtail normal international flights and maritime operations to and from Japan and "there is no medical basis for imposing additional measures to protect passengers."

While set up to monitor atmospheric nuclear testing, the U.N.'s Comprehensive Test Ban Treaty Organization's worldwide network of stations can detect earthquakes, tsunamis and fallout from nuclear accidents such as the disaster on Japan's northeastern coast that was set off by a massive earthquake and a devastating tsunami a week ago.

Since then, emergency crews have been trying to restore the Fukushima Dai-ichi nuclear plant's cooling system and prevent overheated fuel rods from releasing greater doses of radioactivity.

Japanese officials on Friday reclassified the rating of the accident at the plant from Level 4 to Level 5 on a seven-level international scale, putting it on a par with the 1979 Three Mile Island accident.

Which caused NO Death or Birth defects, or long term problems to speak of.

The International Nuclear Event Scale defines a Level 4 incident as having local consequences and a Level 5 as having wider consequences.

So relax folks. Fear not. I'm sure that there are people watching this closely, and as we already know the Media LOVES to report on disasters, we would have heard if, and will hear if, this becomes a threat. Until then, just live your lives, do not worry, and continue to send you thoughts, Prayers, Well Wishes, good vibes.
Peter

Sources:
AP - Testing finds no health threat along West Coast

DLA For Sunday 032011

Decision to defend the Law.

Hey folks,

OK. So, back on Friday, February 25, 2011, I posted this. If Bush Decided? I said this.

Obama, knowing he is losing the Unions, the revenue, losing Obamacare, the Medical Field and Insurance Companies Votes, and some Minority Votes due to States doing the Federal Government's Job, Illegal Immigration Enforcement, "Hello Gay people. Remember me? I made all these promises to you. Well, I've decided that the Defense of Marriage Act is Unconstitutional and I have ordered my Justice Department to stop defending it." The problem is, he CAN'T do that. No President has the authority to declare a Law Unconstitutional and ORDER the Justice Department to stop enforcing it. The Legislators have to Legislate. Congress has to change it. Not the president.

Well, well, well. Seems that since the President decided that he did not like it, AKA, needs the Gay Vote, the Justice Department will not enforce and defend the Law, The Republicans WILL. According to Qnotes - GOP will defend DOMA by David Stout March 19, 2011

GOP will defend DOMA

WASHINGTON, D.C. — LGBT rights groups condemned U.S. House Republican leadership for formally voting to authorize intervention to defend the Defense of Marriage Act (DOMA) in court. The Bipartisan Legal Advisory Group, convened by Speaker Boehner, voted 3-2 to authorize the House to retain legal counsel. Minority Leader Nancy Pelosi (D-CA) and House Minority Whip Steny Hoyer (D-MD) voted against the action.

With at least nine cases challenging the constitutionality of DOMA, spanning three appellate courts and four district courts in six states, the March 9 vote sets up an expansive and expensive undertaking. In February, the Obama administration announced that the president had concluded that a key section of DOMA is unconstitutional and the administration would no longer defend the discriminatory law.

Who care what Obama thinks. He doesn't have the Authority to pick and chose what Laws to enforce and what not to. So the Winner of the Display of Logic Award this Week , is ALL the Republicans that decided, "It's the Law of the Land, signed into Law by President Clinton, therefore the Federal Government shall defend the Law in court." While Obama panders for Votes, the Adults decided to do their Job and Defend the Law.

Congratulations House GOP, you are the Winner, uh, Winners, of the Display of Logic Award for Sunday 032011. Now about that Deficit?
Peter

Sources:
Qnotes - GOP will defend DOMA News Notes: Beyond the Carolinas by David Stout March 19, 2011

IWA For Sunday 032011

How is this guy STILL in Office.

Hey folks,

SERIOUSLY. I'm asking. Is it for the sheer entertainment value? If he had an R after his name, or claimed Christianity, or was anyone that was remotely popular with those on the Right in ANYWAY, he would have NEVER got elected. However, if he HAD, he would have been thrown out LONG ago. Lets look at some of his little Pearls of Wisdom over time.

"Just talk to me as a father - not what the Constitution says. What do you feel?"

"Now, people when I say that look at me and say, 'What are you talking about, Joe? You're telling me we have to go spend money to keep from going bankrupt?'. The answer is yes, that's what I'm telling you."

"A man I'm proud to call my friend. A man who will be the next President of the United States — Barack America!"

Of course, all time classics, and what should have doomed him in Politics FOREVER.

"I mean, you got the first mainstream African-American who is articulate and bright and clean and a nice-looking guy. I mean, that's a storybook, man." --Joe Biden on Barack Obama

"You cannot go to a 7-11 or a Dunkin' Donuts unless you have a slight Indian accent.... I'm not joking."

Folks, this is just, well, not even scratching the surface. Now we have some new ones to add.

“When a woman got raped, blame her because she was wearing a skirt too short, she looked the wrong way or she wasn't home in time to make the dinner,” Biden said.

“We've gotten by that,” he said. “But it's amazing how these Republicans, the right wing of this party – whose philosophy threw us into this God-awful hole we’re in, gave us the tremendous deficit we’ve inherited – that they’re now using, now attempting to use, the very economic condition they have created to blame the victim – whether it’s organized labor or ordinary middle-class working men and women. It's bizarre. It's bizarre.”

No. It's YOU that's Bizarre. Joe. You. I have no idea why you are in Office.

Now I'm not going over the numbers again here. They are there. Check the archives here, or just look it up yourself. This President and this Administration spend more in a MONTH than the Deficit in 2007. I think it was 2007, it may have been 2008. Non-the-less, this past Congress, with the Leadership in Democrat Control, complete with Obama and Crew steering the Ship has spent more than any other in the History of this country, COMBINED! This is NOT what they inherited. This is what they CREATED.

Then to compare the Adults that want to cut spending, to Rape? The Liberals are the Victim? That's why they lost in a landslide last Elections. The People understand who's to blame here. Liberals and their Policies.

Congratulations VP Joe Biden, you ARE the Idiot of the Week. But he IS very Entertaining. And if you think about it, he may have even been trying to warn us with this one.

"A man I'm proud to call my friend. A man who will be the next President of the United States — Barack America!"

Joe Biden, at his first campaign rally with Barack Obama. We know that Obama wants to remake this Country into the Obanation, with him in charge. Maybe Joe was trying to warn us. "Barack America!"
Peter

Sources:
The Hill - At campaign event Biden mentions rape in criticizing Republicans
By Sam Youngman - 03/18/11 06:47 PM ET

API / BLOGGER CONFERENCE CALL 031511

Transcript of the API / BLOGGER CONFERENCE CALL

MODERATOR:Jane Van Ryan, API

SPEAKER:John Felmy, Chief Economist, API.

Tuesday, March 15, 2011

The bloggers on the call included:

Bear, The Absurd Report
Bob McCarty, Bob McCarty Writes
Brian Westenhaus, New Energy and Fuel
Bruce McQuain, The Q and O Blog
Carter Wood, Shopfloor.org
Gail Tverberg, The Oil Drum, Our Finite World
Geoff Styles, Energy Outlook
Jazz Shaw, Hot Air
Joy McCann, Little Miss Attila, RightNetwork
Merv Benson, Prairie Pundit
Peter Carlock, OPNTalk
Rich Trzupek, Big Journalism
Steve Kijak, Rightside VA
Tina Korbe, The Foundry

(Music intro)

OPERATOR: You’re listening to Energy Conversations with API, brought to you by the people of America’s oil and natural gas industry.

00:13 JANE VAN RYAN: Now we’ve got John Felmy on the line. He is not in the sameroom that I’m in but he is online at the moment and he would like to start the blogger conference call with a small opening statement. So John, if you’re ready, go right ahead.

00:26 JOHN FELMY: Well, thank you very much, Jane, and thanks for you all – thank you all for attending. I appreciate it. This is an important topic. And I’ve talked with many of you over the years and I’ll try to hit the high points and then we can turn to questions.

I guess gasoline prices are of course in the news everywhere. And the presidentaddressed them last week, of course. And it’s pretty straightforward, sort of our story. In themany, many years I’ve been doing it, it really comes down to explaining this with just plainarithmetic.

What we’ve seen over the last several months from November, we’ve seen gasolineprices rise to $3.558 on the day before yesterday – which is the highest point that we’ve seen,according to AAA data, since October 2ndof 2008, when you had prices equal $3.576.

And so over this period, how much have they increased since they started increasing inNovember? We’ve seen gasoline prices rise from 2.854 (dollars) up to, as I said, 3.558 (dollars),or roughly around 70 cents a gallon. And that’s an important number. The first number is 70 cents.

And then the question is, well, why? It really comes down to costs at this point thatwe’ve seen. Since November, we’ve seen crude oil start to rise before gasoline prices, from $80a barrel to $105 a barrel last week. And that’s equivalent of about 60 cents per gallon. So we’veseen crude oil increase by 60 cents a gallon.

And as you all know, I tend to only look at this in calculations per gallon, because you can’t do percentage changes because with taxes in gasoline, you can’t compare them because thetax system changed so the percentages would not be a fair comparison.

We’ve also seen, over that period, in addition to the cost of crude oil increasing, we’veseen the cost of ethanol increase. As you all know, we’re required to use 12.6 billion gallons of ethanol this year. And that’s getting to a blend that’s close to 10 percent. That is on a basegasoline use of around 140 billion gallons.

And so if you’re blending in 10 percent the way most of the areas, particularly reformulated-gasoline areas are doing, you’ve got one-tenth of that. So you basically have hadan additional five cents in cost increase in terms of producing blended gasoline at 10 percent E10, if you will.

And so at 65 cents, compared to the price increase of 70 cents, yeah, the margin didincrease a little bit. And that’s not a surprise given that I just saw the earnings data for refinersfor the fourth quarter, and they lost money in the fourth quarter in terms of the independentoperations. So it’s not surprising that you would see an improvement in the margin to at least bebreaking even.

And so the story is plain and simple – cost. We have seen – now, this is with West Texas Intermediate; Brent blends are probably a little higher – I don’t have those numbers in – because we did see the Brent spread increase more and they’ve come down.But in any case, let’s just focus on WTI because I think that’s a good comparison. Put it simply, there’s plenty of product out there. We’ve got record or near-record production of gasoline so far this year. We have stocks that are above average or above five-year average, above last year in terms of the latest data. And so it’s really a case of – even though demand is up some as the economy starts to improve, it still is really a question of cost.

Now, the alternative way you could look at it is, what’s the differential between the retail price and crude prices? It’s another helpful measurement to look at. Historically, I look back since 1968 and, adjusted for inflation, the historical difference between crude prices, in a sense, per gallon, and retail or regular is about $1 to $1.10, adjusted for inflation. And so right now, we’ve seen that the differential yesterday was about $1.14. So it’s about average in terms of the differences.And in that difference, what you have is, of course, the biggest chunk is taxes, right now about 48 cents. And then you’ve got all the refining, marketing, transporting, delivering and earnings that you have. And in the case of refiners last quarter, it wasn’t very much. But they have improved this quarter. So it’s a real simple cost story driven by crude and ethanol.

So then the question is, why crude? Well, that’s kind of a two-fold story, of course. Prior to January 27th, when Egypt started to erupt, we saw continued global demand growth. We saw the demand for petroleum, according to International Energy Agency, hit a record last year –an all-time record – up from a previous year – at about 87.9 million barrels per day, driven fundamentally by China and other developing areas.

And they’re forecasting, as of this morning – they just released their latest forecast for their monthly report – that they’re forecasting an even higher increase, up to 89.4. So you had an increase from 85 (million) to 87.9 (million) last year and then 87.9 (million) to 89.4 (million) this year. So fundamentally, it’s demand increasing.

And that’s on top of relatively slow supply increases, particularly here in the United States where of course, you know, we had a moratorium and a permatorium and we’ve seen setbacks in other parts of the country in terms of some production. Positives in terms of the Bakken area, for example, but relatively weak supply.

There is some excess capacity in OPEC, especially in Saudi Arabia, but at this point we haven’t seen that come online.

Now, the second – the second point in terms of the change started, as I mentioned, on January 27th, where you had the Egyptian situation. And since then, we’ve seen prices go up even more. And that was driven by concerns about, first, Egypt, in terms of the – it was relatively small increases – or, relatively small net exports they have, but concerns about the Suez and the Sumed pipeline.

And then, of course, Libya, where Libya does supply roughly 2 percent of the world’supplies. And as tight as markets are, even a small decline in supply can have a disproportionate effect on the market because of what economists would call “price inelasticity.” And so we saw subsequently an increase, you know, up to a point where you had up to $105 a barrel which is, you know, the highest we’ve seen for – oh, I guess it’s going back to, again, November or October of 2008, when you had – actually, September – on September 26th, you had $106.89 was the closing price.

So in a nutshell, it’s supply and demand for crude, which is to drive in most of it, increased costs of ethanol in terms of blending requirements because of the mandates that we had. And so we’re concerned, clearly, about this. Gasoline is an important component of household budgets, roughly about 5 percent right now.

And we strongly encourage folks to use fuel wisely, to do everything you can in terms of fuel economy – things like inflating your tires, tuning your engines, not carrying around a lot of stuff in your trunk. If you don’t, there is – my wife caught me one time. She said, now, John, why do you have both golf clubs and a snow shovel in your trunk? That’s either optimism or foolishness.

So I’ll stop there and say, you know, thanks very much for your time and I’m happy to try and answer some questions.

08:22 MS. VAN RYAN: (Chuckles.) I just remind you to give us your name, please, if you have a question you’d like to ask, before you ask the question. That’ll help out. Who’d like to start?

08:32 PETER CARLOCK: I will. This is Peter from OPNTalk.

08:35 MS. VAN RYAN: Yes, sir. Peter, go right ahead.

08:38 MR. CARLOCK: Now, talking about the supply and demand, you also have to figure in that equation this administration’s energy policy. Now, back in the early days, during the campaign and during the early days of the presidency, Obama came right out and said that he wanted to bankrupt – bankrupt the coal industry and our energy costs would necessarily skyrocket. And with his cap-and-tax, everybody would see an increase on everything.

Now, it looks like he’s getting what he planned on. We have all the chaos in the Middle East. We’re not really allowed to drill anymore. He’s stolen from -- doing everything he can to stand in the way to, I guess, you know, dream green.

I was wondering if you had any comment on the House Energy Tax Prevention Act, H.R.910. It was introduced by Fred Upton and Ed Whitfield, who are Republicans, Collin Peterson and Nick Randell (sic) – believe that’s his name – who are Democrats. So it is bipartisan in the House. And they’re working to block the EPA from, in effect, establishing cap-and-tax without going through the necessary systems.

10:12 MR. FELMY: Well, we’re very concerned about that, of course. The Clean Air Act was never intended for it to be used in this type of purpose, in terms of greenhouse gasemissions. And, you know, the consequences of it could be quite severe in terms of raising energy costs.

You know, if you take, for example, refiners who may want to make modifications, it throws in a whole host of restrictions and permitting requirements and maybe not getting permitting, and so on. And so it creates the refiners in a situation where they’re facing heavy international competition to begin with. And if you raise their costs by forcing them to adopt new technologies and changes and so on, it could result in lost jobs, lost value-added, lost taxes, worsened trade deficit – kind of a host of things that we remain concerned about.

And so, you know, this focus is to say, you know, look: The intent should be that if Congress wants to legislate greenhouse-gas policies, they should do it explicitly and not rely on administrative rules, because to the extent that you try – you know, we love, across all dimensions of our industry, to be able to make investments, employ more people, pay the government to be able to develop energy resources and so on. And unfortunately, yes, we’re disappointed in terms of the restrictions that have been imposed, the lack – the moratorium, the permatorium, the very slow release of permits that really are keeping people unemployed.

So it’s one of these things that yes, there is administrative attempt to move forward in that. And we think that it’s ill-advised.

11:58 MR. CARLOCK: Yeah, just a follow-up for you guys. I know that there’s a fineline that you have to walk. But you guys would be interested in the passing of H.R. 910?

12:10 MR. FELMY: You know, we’re in the business of trying to recommend what we think is proper energy policy. And clearly, a policy moving forward trying to administratively regulate greenhouse-gas emissions was not ever intended under the Clean Air Act.

12:29 MS. VAN RYAN: Let me add something to that, if I can. Peter, I’ve got an e-mail in front of me right now that says, in fact, the markup on that bill is going on right now in the Energy and Commerce Committee. I think we’re probably going to have to wait and see what the final bill looks like. There are a number of amendments that people are trying to attach to the bill. So far, they’ve been struck down, but it’s hard to know what’s going to happen. So it maybe a little early for us to take an official position.

12:58 MR. CARLOCK: Well, that’s fair enough. Thank you.

13:04 MS. VAN RYAN: Another question?

13:06 GAIL TVERBERG: This is Gail, from The Oil Drum. (Cross talk.)

13:10 MS. VAN RYAN: I’m sorry. Gail, go ahead.

13:12 MS. TVERBERG: Yeah, I was just going to ask – there’s been quite a bit of talk lately about an interest in natural gas liquids and doing the form of natural gas that produces more liquid content. In fact, there’s been quite a bit of drilling for that kind of thing.

Can you tell me to what extent those liquids can actually be used to extend gasoline supply? Is it only in the winter, or how does this work?

13:39 MR. FELMY: Well, you’re right. The development of some of these shale gas resources have been relatively liquid-rich, particularly in southwest Pennsylvania, southwest of my home in the hills of Pennsylvania. And so you’ve had liquids be able to be extracted – infact, have to be extracted to be able to meet specs in terms of much of the transmission grid and so on.

Those liquids, however, are, you know, things like ethanes and so on that can be used either as feedstocks; in the case of propane, you can use it for heating. There’s a prospect of a new resurgence in petrochemicals in areas that have had a decline. You’ve had some discussions about pipelines of it.

And the liquids, of course, are – propanes, of course, you can use – is primarily used as a winter fuel, although it’s a wonderful fuel for a lot of things like cooking and hot water, which what I use at home. And so it’s got a year-round dimension. It may jumpstart an industry in some places that we haven’t seen before.

That opens up a whole other – you know, the whole natural gas development, of course, opens up other potentials in terms of, how can you use that natural gas, either, say, for power generation, which is something we’re going to need in the future, and potentially transportation?

But there, in terms of using it for transportation, it’s an infrastructure question in terms of the cost of the infrastructure, the filling stations, the actual engine conversions and so on and so forth. But it’s just a wonderful thing to see because having grown up dirt-poor in the hills of Pennsylvania, I remember seismic trucks going up and down all those highways as a kid in the ’60s and I always wondered what they found and now we know. And it’s just a wonderful opportunity for economic development in a part of the world that hasn’t had it for a hundred years.

15:41 MS. VAN RYAN: All right. Someone else had a question at about the same time that Gail did. Who was that?

15:48 JAZZ SHAW: Think it was a couple of us. But I can go if you like.

15:51 MS. VAN RYAN: Okay. And who’s this?

15:53 MR. SHAW: John, this is Jazz –

15:54 MS. VAN RYAN: Jazz.

15:55 MR. SHAW: – with HotAir.com. I published an article on Friday, where I got an unusual question that came back and maybe you’re the person to answer this. I was totally unprepared. And this may have more to do with distributors. If so, let me know. The question was: Why is that when crude prices go up, even though there’s a certain amount of product in the supply line, prices at the pump go up almost immediately, but when crude prices go down, it takes a while for the prices at the pump to catch up and go down until supposedly, that product makes it out of the pipeline?

16:36 MR. FELMY: Well, there’s two answers to that. First of all, it doesn’t always happen. I’ve looked back over several intervals where we’ve seen the prices go up and they’ve come down almost exactly symmetrically. And so it doesn’t always happen. Sometimes, it does. It depends on the nature of the adjustment.

You know, you see the price adjustment is a cost – you know, because of the cost of crude oil is the most important component and it varies. I mean the Department of Energy has indicated that, I believe, their estimates are that you have a certain share of the cost, you know, in a few weeks and then another share a few more weeks. And ultimately, you know, you see it reflected in retail, I think in a period of about 10 weeks.

But you know, that really depends on the supply and demand conditions for gasoline itself. If gasoline is plentiful and in low demand, then you can’t always pass on your costs at any point. If it’s a tighter market, you may see a different response. So you know, in terms of the middle, it really does depend on the supply and demand for the product itself.

And gasoline [demand] has been relatively, you know, weak and especially, for example, for last year, where it was only up about half a percent. So it’s, you know, it’s not necessarily a great market. The other thing with retailers are – is that it’s a cash-flow challenge. You know,you’ve seen the retailer, see prices go up and he wonders if he’s going to have enough cash on hand to be able to pay for the next load of gasoline to come in.

So they tend to – as described the retail side of the community, they tend to be concerned about cash flow because you’ve got to pay for the load when it comes in. If prices are going down, it’s a little bit a different reaction. So it depends on the nature of the change and a whole lot of things, but you know, the retail folks are – they face an enormous challenge all the time.

On average, their gross margins are about 9 cents and then they’ve got to take all of their costs out of that and that includes credit card costs, which go up with the price. So it’s really challenging and when you knit everything out, if they make a penny on a gallon, that’s a probably a pretty good return.

So you know, with all these things, unfortunately, the retailers who are flying the flags of the companies, people don’t know that they’re individual businessmen who, you know, for the most part, react to the market in terms of their competition, and in terms of their wholesale costs.

19:14 MR. SHAW: Okay, thanks.

19:17 MS. VAN RYAN: John, I’ve got a couple of questions that have been sent to me by e-mail and they both involve refinering – refineries, rather. The first one is: You said that the refineries lost money in the fourth quarter. Do you have a citation for that?

19:31 MR. FELMY: Yes, it just came out in Oil Daily a couple days ago and let’s see –it’s Oil Daily, March 10th issue and they said for the fourth quarter of last year, refiners, on average, for the independent refiners, lost, let’s see, their adjusted income was minus 472(million dollars) on a revenue of $37 billion. And for the whole year, their returns were positive 500 million on 140 billion, so something like three-tenths of a percent positive margin.

20:07 MS. VAN RYAN: OK. Now, here’s a related question, at least it has to do with refining: From everything I’ve read, the refineries are running at 24/7, 365 days a year. Do they have any excess capacity? And getting back to the laws of supply and demand, how does that affect price?

20:26 MR. FELMY: Well, refineries are now – I guess the latest data we’ve seen at the end of, you know, in February, they were running roughly around 80 percent of capacity. And so there is some – there is some ability to be able to increase that output. But what the challenge is, is what’s the demand situation that they’re facing and what’s the international competition because in refineries, there is a lot of gasoline available in world markets because the world has moved more toward diesel.

And so I would say that the refining situation – refining capacity really is not the root cause of what you have. Sometimes, it can be if you have interruptions and you have, you know, disturbances like hurricanes, things like that, where you lose significant capacity. For the most part, it’s the cost of operating – cost of buying the raw material, whether it be crude oil orethanol.

21:27 MS. VAN RYAN: Okay, do we have other questions now from the bloggers that are online?

21:32 BRUCE MCQUAIN: Yeah, John. Bruce McQuain, Q and O. I have one for you. Ethanol – you talked about the relationship – crude to retail running about 110 and that right now, it’s averaging about 114. Now, how much – how much of that can be attributed to ethanol and you know, the delivery ethanol, blending, all of that gets done?

21:56 MR. FELMY: Well, you’re looking at ethanol costs right now that are running around, oh, I guess, as of yesterday, the CBOT cost of ethanol was $2.54 per gallon. If you’reblending at 10 percent, that’s about a 25 cent cost. So roughly on that order in terms of the total out of – out of all the cost that you’re combining.

22:28 MR. MCQUAIN: So my obvious next question, then, if we remove ethanol, what happens?

22:34 MR. FELMY: Well, it really depends. I mean right now, ethanol is at a premium when you adjust – it’s at a premium even if you adjust for the BTU contents. It, of course, is cheaper without a BTU adjustment, but to be fair in terms of it, you’ve got to look at that. You know, it’s a case of we’re using 30 to 40 percent of our corn crop on ethanol. Clearly, it’s a mandate to use a significant amount. It’s also got a subsidy and a tariff – a tariff on imported ethanol. So there’s no question it’s a cost component. I’m not in the business of forecasting prices in any way, so you’d have to factor in how would you have a change in the demand for you know, the pure gasoline component without ethanol and that’s a fairly complicated analysis. So I only tend to look at what the changes are from the current policy.

23:30 MR. CARLOCK: This is Peter from OPNTalk. I’ve got kind of a follow-up on that.

23:35 MS. VAN RYAN: Go right ahead, Peter.

23:37 MR. CARLOCK: Yeah, look, just with all the – the mandates to increase the E – I think it’s E15 – and to add more ethanol, that’s also – like you were saying, John, it reduced the crops. We’re seeing some problems worldwide with different food prices going higher. And I don’t believe that ethanol – at least at that percentage – has been well-tested with the current engines and the engines to be, obviously, would be more formulated to run better with ethanol. But has there been any full tests on the – you know – long-term usage?

24:26 MR. FELMY: The tests are underway and they haven’t been completed and that was one of the key things that we were concerned about in terms of EPA giving a waiver for E10-plus in terms of the model/year of cars and so on that until the full range of testing has been done – well, I can assure you I wouldn’t put it in my vehicle, but I mean it’s also a question of, if you put this out there, you know, what’s the consumer going to do? What’s the impact on their vehicles? And then if you have damage, who’s going to bear the responsibility for it? It’s a wholehost of things that we were very concerned about. It’s not a mandate, but it’s a waiver on it.

And it was – it’s done because we’re approaching what’s called the blend wall very quickly, where you know, we’ve got about 140 billion gallons of gasoline consumed right now at thecurrent rate.And so even if you’re at the 10 percent max, you can only get to 14 and by 2015, we have to be at 15. So it’s an enormous challenge and we’re very concerned about it and we certainly think that these policies shouldn’t be put in place until a full range of testing is done.

25:43 MR. CARLOCK: I agree, thank you.

25:45 MS. TVERBERG: This is Gail Tverberg again. I was wondering if you could elaborate just a little bit more on the Saudi oil situation. I know in 2008, I think they came through with a half a million barrels per day, which wasn’t a whole lot in terms of our need and it didn’t do much for the price at all. Do you think they really are going to come through thistime or do they just talk big?

26:09 MR. FELMY: Well, they said they will. And so I have to take them at their word. So far, we have not seen it, of course. Net OPEC crude oil out in February was down. So you know, primarily driven by Libya. That doesn’t mean that it’s not in the works. You know, you can only take folks at their word that they’re going to do what they say and that – they have the capacity to be able to do it.

One of the challenges, though, is how long will it take them to do it and what type of oil will they be producing because of course, Libyan oil is relatively good quality, light sweet oil.

And while I’m sure the Saudis have some ability to be able to produce that type of oil, I certainly don’t know the specifics in terms of whether it’s heavy or light or sweet or so on. And so those are – those are the unanswered questions. You know, it’s – we’ll just have to see.

27:08 MS. TVERBERG: Thank you.

27:10 MR. SHAW: John, this is Jazz again, from Hot Air. Going back to the supply-demand equation, the question we were tackling last week had to do with the president’s comments that he took from Ken Salazar, mistakenly confusing the number of rigs that are currently active with production.

But it seems that it did indicate that there were still a lot of rigs. Some people were saying a record number, blah, blah, blah. We know that a lot of the rigs aren’t producing because of the permatorium, but over the winter, we had also seen reports that some of the producers were pulling up stakes and moving their rigs to other places because of the permatorium. There seems to be a bit of a disconnect there.

Could you talk a little bit about the number of rigs we do have, how many of them are sticking around, how many have left and is it true? Do we have a record number of rigs sitting, parked out in the Gulf right now?

28:00 MR. FELMY: Well, I think, you know, we do have rigs that are out there or in dry or – dock in some form. We have seen the maybe, I guess, half a dozen or so, that have pulled up stakes and moved. But that’s a difficult decision to make because you’re talking about moving 1,000 miles at five miles an hour and so it’s a very difficult challenge. And then you have to have a customer on the other end.

There’s no question that this has been a slow down, that exploration has dropped sharply.

You know, the Interior Department’s statement that well, we have increases in production and the highest levels of production in 2003 was really – I thought – an unfortunate statement because they can’t claim credit for that increase.

As I like to say, there is a Democratic president who is probably responsible for that increase in production in the Gulf and it’s William Jefferson Clinton because his Deep Water Royalty Relief Act bill that he signed was a tremendous increase in policy and a wonderful piece of energy legislation that largely jump-started the deepwater industry in the U.S. and is a model of legislation, because it jump-started an industry and is going to result in more revenue for the government, along with increased production, reduced trade deficit – really, everything – and it improved security – everything that you want.

So the statement that, well, “you’re criticizing me unfairly because production was up” was just – maybe in the first part of the year production was up, but you still had production decline through the end of the year, and it continues to decline. And so we really do need energy policy that focuses on, what can we do as a country? We can’t do anything about the world situation, but we’re part of it. With continued strong growth that I mentioned earlier, we can produce more in this country, and irrespective of the arguments over price, it’s a good thing to doin terms of jobs, revenue and improved security.

30:01 MR. SHAW: Whoever thought we’d be sitting here missing Bill Clinton? Okay, that covers it, thanks.

30:06 MS. VAN RYAN: (Chuckles.) Do we have another question?

30:08 CARTER WOOD: Jane, it’s Carter from the NAM. Any impact of the Japanese earthquake, the tsunami, the nuclear power on supply chains, demand – can you give us a sense of what effect that might have?

30:24 MR. FELMY: Well, right now we don’t know much, other than it appears that the last number I saw was about 1.4 million barrels a day of refining capacities offline, either because of not being able to bring in fuel – although they did release SPR oil for Japan.

So you’ve got refining capacity offline, and the net effect of that fairly quickly is a decline in crude demand. And so we’ve seen crude prices decline to where the last tick I saw was, they were down below $100 a barrel down a couple dollars and so on. And we saw some of the futures markets for gasoline and heating oil declined in tandem. So that’s all we know at this point. Now, then the question is – going forward is, how soon will we be able to return those refineries back to operations and what will demand be?

Now, demand, we learned from the Chinese experience back in 2008, demand can increase sharply when you have all the things you’ve got to do to recover from an earthquake. So that’sthe first aspect.

The second aspect is of course the nuclear situation and losing quite a bit of electric generation can be replaced with either fuel oil, some – even a possibility, I believe, in the past, of direct crude burning and of course natural gas. So how much of those are going to be broken out is really too soon to tell. I’ve seen some estimates, but I can’t say that I know exactly how they’re based to be able to even be willing to share that with you.

And then finally, of course, is if the overall Japanese economy slows down, if you have major highway destruction and people can’t drive, then that could be a decline in demand. So I guess that’s the long way, Carter, of getting to – a kind of a cloudy crystal ball.

In the past, we have tended to see more increases in demand after earthquakes. So I would tend to – tend to believe that a little more. But there is just as many reasons saying there could be a decline.

32:24 MERV BENSON: Hi. This is Merv Benson. Coming at – (inaudible).

32:34 MS. VAN RYAN: Merv, I’m sorry – (inaudible, cross talk).

32:35 MR. FELMY: I’m sorry. I couldn’t hear you now.

32:36 MS. VAN RYAN: Could you repeat that?

32:38 MR. BENSON: Sure. Do you have any idea what Japan is going to do to replace the nuclear capacity, whether there are going to be moves to generate electricity in the future? Isit going to be oil and gas, or is it going to be some other form?

32:58 MR. FELMY: Well, historically when they had their major challenges back – they had a series where virtually all of one of the company’s nuclear plants was shut down because of concerns about fraudulent record keeping on the safety kind of processes and so on. And so they had to work through all of the things.

They used a combination of all those things – you know, natural gas, heating – distillate fuel, resid fuel, some direct crude burning. So I would expect that those systems as backup are still in place unless they happened to be, you know, taken out by the tsunami or earthquake. So that, I don’t know.

Longer term, I would expect they’ll probably look at their portfolio and do what most countries do. And that’s recognizing you need a balanced portfolio across all resources, whether it be, you know, coal, oil, natural gas, renewables, things like that, recognizing what the relative costs are, and so on. But at this point, I’m not even sure what’s happened with their immediate backup generation. It may have been affected because, you know, we’ve seen them already movetoward rolling blackouts.

34:13 MS. VAN RYAN: Anyone else have a question? Don’t be bashful.

34:19 MR. CARLOCK: This is Peter from OPNTalk again, if nobody has a question right this second. Could we just clarify one more thing from the president’s speech? And I know that a lot of people on the left jumped all over it when he said it. There are a lot of permits already in existence that nobody is drilling yet, or drilling now. And is the explanation not as simple as, well, there’s just not enough oil to produce to justify the expense?

34:52 MR. FELMY: Well, I think you mean leases. And there are leases that aren’t being explored for right now primarily because of the permitting situation. If you can’t get a permit, you can’t explore in those leases. And it’s also a case that – you know, this issue hascome up before. And it’s being spun in a way that’s just ridiculous.

You know, you got all these idle leases, and you have companies that are just sitting on them. I mean, that’s just plain silly. These companies have spent millions of dollars in terms of looking at getting bids out and looking for it. And they’re going to prioritize where they think the best opportunity is based on their seismic work and whatever. And you got a series of priorities that you would focus on irrespective of the permitting issue.

But now, it’s hard to make an argument: Well, why aren’t you drilling when the same, you know, folks are not releasing permits to drill? So that’s the added dimension. You know, we heard this back a couple years ago. And it was just silly. It was a desperate attempt to, you know, add Washington political spin.

35:57 MR. CARLOCK: Very good.

36:00 MS. TVERBERG: This is Gail again. I was wondering, where do you see gasoline prices going this summer? I know we usually have the prices go up in the summer just because of the switch in the gasoline blend.

36:13 MR. FELMY: Well, you’re right, Gail. We tend to have an increase in cost, and because you’re moving on May 1st from winter to summer gas. And so you’re moving to a less evaporative component of gas that tends to be more expensive to produce. So you have seen those cost changes in the frame.

I’m not in the business of price forecasting for antitrust law, and also, if I could forecast prices, I assure you I wouldn’t be talking to you because I’d be very wealthy. But, you know, I would refer you to the latest EIA’s outlook. They’ve put together a monthly forecast where they’re, you know, looking at prices that are peaking above these current levels. But again, that’s a function of their – their position has been for quite a while of, continued tightened markets, primarily crude-oil markets. But again, I don’t forecast and I don’t endorse it and so on. But these are professional folks who do this very, very frequently.

37:17 MS. TVERBERG: Thank you.

37:18 JOY MCCANN: This is Joy. I just have one question about, what do we think –or, do we have any way of estimating what the breaking point is going to be for consumers interms of how far prices can go up on gasoline before this becomes a very, very – before it gets onto the cover of TIME Magazine and all that sort of thing?

37:41 MR. FELMY: Well, it’s hard to say. You know, if we look back at historical experience, and in ’08 you saw, you know, declines in gasoline consumption pretty continuously, even in the earlier parts of ’08, when you didn’t have prices anywhere near what they were atpeak. And so you saw consumers already starting to adjust their – you know, their purchases based on that.

Now, that may also have been part of the recession, of course, because the recession began in December of ’07. But you did see really sharp increases – decreases in gasoline use as you got to the May, June, July time frame. So it looks as though it’s not a real breakpoint, it’s akind of continual adjustment that consumers make, because it’s real hard. You have limited ability to be able to switch to other forms of transportation.

I know here in Washington with the Metro system we’ve had continued challenges of what they’ve gone through here. You can’t change your job, your house, your car very quickly.

You can’t – daycare – I mean, a whole host of things. And what you tend to see is more – and studies have shown this, that people tend to make adjustments in other things as first.

I know there was an interesting study from – I believe it was Yale University, where they had data on loyalty programs for – with supermarkets that had both gas – had gasoline stations in addition. And they found by tracking that, that consumers would tend to – as the prices went upor went down, consumers would adjust some of their other purchases, not so much in the type of purchase they had but in kind of the quality, whether they’d buy the blue label or would perhaps buy a lesser-cost item.

And the other things, of course, we see consumers tend to – you know, gasoline’s about 5 percent of a consumer budget. You tend to see reductions in consumption in two other budget items that are larger, and that’s food away from home and entertainment. You tend to see consumers adjusting to those items. So I guess that’s a long way of getting to that it depends on the consumer, it depends on kind of the swing and it depends on the economy.

We have seen continued growth in gasoline [demand] so far. But we’ll see how it goes asfar as both the price and the economic changes continue.

40:14 MS. MCCANN: I guess what I was curious about is whether we have historical data, like, dating back to the ’70s that give us an idea that – just the dollars of when the natives start to get restless. You don’t have anything like that, that goes back decades?

40:31 MR. FELMY: Well, we really don’t have data back in some of the critical periods. There is data that goes back quite a ways. If you look at, for example, the budget share of gasoline back in 1981, it was much higher than today. It was roughly about 6.9 percent. And that’s the highest data that I’ve seen, because that was the highest real prices before the latest changes in ’08.Consumers had an even more challenge back then because they were driving big old landbarges that got eight miles and nine miles to the gallon. And so it was an even more painful adjustment for them at that point.

I’ll have to go back and look to see on a month-to-month basis if I can find anything. So I’ll ask Jane to get your contact and I’ll have – if I can glean anything, I’ll dig it up.

41:25 MS. VAN RYAN: That’d be great, John, Thank you.

41:25 MS. MCCANN: Thanks.

41:27 MS. VAN RYAN: One other thing, and maybe if you’ve got some of that data infront of you, on an inflation-adjusted basis, where does the price of gasoline stand today incomparison to where it was back in the ’70s?

41:41 MR. FELMY: Well, the ’70s were not the peak. The early ’80s were the highest peak. And you had a case where – I don’t have the exact numbers in front of me, but the Department of Energy has them. They publish them every month. And if memory serves me,we were about equal to those peak levels in the early ’80s, adjusted for inflation, because you had crude-oil prices that were very high back then.

And depending on whether you look at an annual average or a monthly average, sometimes ’08 was higher, sometimes it was less. But clearly, it was very close in terms of inflation-adjusted cost. But since the share of the household’s budget was much higher back then, then it was clearly a much higher impact on the average consumer.

42:29 MS. VAN RYAN: Thank you. Other questions from bloggers?

42:33 GEOFF STYLES: John, this is Geoff Styles.

42:34 MR. FELMY: Hey, Geoff.

42:35 MR. STYLES: I’ve got a question for you on the trade deficit. Whenever oil prices go up significantly, people start to worry about the impact on the trade deficit, which is already significant. Can you talk about how oil flows through the deficit and whether it’sappropriate for people to attribute the entire value of oil imports directly against that deficit or whether it has to flow through the value of total imports and exports before you can get to a smaller share of the deficit?

43:06 MR. FELMY: Well, the first thing – you’re absolutely right, Geoff. The first thing you have to do is net out exports, because we have had increases in exports, particularly in some– like, for example, 15 to 500 parts-per-million diesel that really just can’t be used on road anymore. So you’ve had increases in those. You’ve had some increases in ultra-low sulfurdiesel because of a good market for it, better than the U.S. And you’ve also had a continued increase in exports of things that aren’t used frequently here – petroleum coke and things like that.

And so the first thing you need to do is just look at what the net is. And so we had a –fortunate increases in production last year and some increase in exports. And so our import dependence actually, I believe, was 49.3 percent. But then you have to also say, well, what about exports of other things that you develop? You know, say, if you’re importing some type of naphtha for petrochemical processes, then you need to do some kind of a calculation to net that out.

So it gets fairly complex. But suffice to say, we do import a lot of oil. We’re still importing roughly in the order of 10 million barrels a day of crude oil and a couple million barrels per day of products. And so that is a negative impact on the economy just from – I won’tsay Econ 101 because it’s macro, so C plus I plus G plus X minus M, impact on the economy –and your security of course. So I’d say the first thing you need to do is get the net calculation right.

44:48 MR. STYLES: Let’s go a little deeper on that, because –

44:50 MR. FELMY: Okay.

44:51 MR. STYLES: – I’m actually dealing with a specific situation with another blogger on this. And basically what he had done is to take the value of imports, which last year on a net basis would have been about $260 billion dollars intake, and said, okay, well, that’s roughly half of the trade deficit. And yet we import well over $2 trillion worth of goods and services. So it seems bizarre to say that oil by itself is half the trade deficit and somehow all of these other things don’t factor into the trade deficit. Do you see where I’m going?

45:24 MR. FELMY: Yeah, I agree. I mean, that’s just trying to reduce it down to simple messaging. And the other half of the trade deficit is China. So yeah, I mean, we’re not going to stop importing iPads from China or iPhones or whatever, and that’s part of it. And so if you singled out a whole host of all the other imports that we do, they clearly are huge.

And I think the bottom line on this is, yes, it is an import that we’re doing. And we have the power to reduce that. We can do it by improving our fuel economies, by improving our efficiencies, but also producing more oil here. So we – irrespective of what shares you want to do, I agree, that’s just singling out acouple items. We have the ability to be able to reduce that number. We don’t necessarily have the ability to reduce imports of televisions because I don’t think we produce any here. And it’s doubtful you could actually do that. So all those plasma TVs and things we’re importing, we don’t have the flexibility to reduce those.

46:24 MR. STYLES: Plasma TV independence.

46:26 MR. FELMY: (Chuckles.)

46:28 MR. STYLES: Thank you,

John.46:29 MR. FELMY: Thank you.

46:31 MS. VAN RYAN: John will have to leave here in about eight or nine minutes. Do we have any other calls – or questions, rather, from our bloggers?

46:41 MR. FELMY: Well, if not, I want to thank you all. And if there’s any thing additional that we can do, please contact us. I’d be happy to try to dig up any additional information and I really appreciate your time.

46:54 MS. VAN RYAN: And thank you, John, and yes, let me reiterate what John said.If you have any questions, please give me a holler, send me an e-mail, and I’ll be happy to followup. Thanks everybody for joining us today. Once again, the transcript and the audio file, we’re hoping to have those completed and have those online by close of business tomorrow.

Thank you, everybody, have a good one.

47:14 MR. STYLES: Thanks, Jane.

47:14 MR. CARLOCK: You, too.

47:15 MS. VAN RYAN: Bye.

(Music plays.)

(END)


NOTE: You can listen to a recording of this call over at Energy Tomorrow.

API Responds: H.R. 910, and Idle Leases

Welcome to Energy Awareness Week

Hey folks,

Welcome to Energy Awareness Week. Here at the OPNTalk Blog at least. Now just yesterday I told you about the Conference Call that I participated in on Tuesday, where I lead the Question portion off with a question about what they thought of H.R. 910.

Now at the time, it was being worked on in the House and API wanted to wait until they could actually read it. I then, yesterday, went into details on what it is and advised you that it moved forward Tuesday. With a 34-19 vote, all Republicans and three Democrats. The Bill now moves to the Full House for a Vote. Those in favor would like the Full Vote to come before Easter Break, and it is pretty assured to pass in the House.

So yesterday, I received the API response to this. Here it is.

API commends House action to block EPA from raising energy costs

WASHINGTON, March 15, 2011 — Marty Durbin, API executive vice president, applauded Members of the House Energy and Commerce Committee who today approved the Energy Tax Prevention Act of 2011. Durbin said today’s action is an important step toward blocking the EPA from raising energy prices on American consumers and stifling our fragile economic recovery:

“API commends the leadership of Chairman Upton and the bipartisan group of Members who have come together to oppose higher energy prices for American consumers. We are pleased to see this legislation moving forward to prevent EPA from imposing excessive and burdensome regulations that could harm our fragile economic recovery and jeopardize job creation. Congress, not the EPA, is responsible for setting the energy policy of the United States.”

I had a feeling that they would be for this. ANYBODY in their right mind would be for this. YOU, unless you like $4.00 to $5.00 a gallon Gas, should be all for this.

So then a bit later in the Conference Call, I brought up Obama's absurd comments about Idle Leases. I asked API Chief Economist John Felmy about this, and he answered pretty much how I thought he would. Why? Because it's the TRUTH. First, some of those Leases must go along with PERMITS. No PERMITS, no Drilling. Second, in some of these locations, there is just not significant supply to justify the expense of Drilling. Again folks, the Transcript will be posted here as soon as it becomes available.

However, Erik Milito, who is "the Director of Upstream and Industry Operations for API. Erik’s work covers regulatory and legislative matters related to domestic exploration and production, including access to domestic oil and natural gas resources both onshore and offshore. Prior to his current position, Erik served as managing counsel at API, covering a host of issues, including oil and gas leasing, royalty, environmental, fuels, transportation, safety, and civil justice reform." just posted a response to this concept that Sen. Reid attempted to further. Here is what Erik had to say over at Energy Tomorrow.

When it comes to crafting a sensible energy policy, once again politics carry the day. This notion of "use it or lose it" is a stale, invalid argument and a political distraction to rising gasoline prices combined with the fact that we're not doing enough in the Gulf to use our own resources and put Americans back to work. Let's get back on track with some facts:

The administration itself is preventing the industry from developing these leases because it is not issuing permits to drill or conduct seismic studies of these leases. They want the industry to develop the leases it already possesses, but they won't grant the permits to do so.

Companies pay millions of dollars to acquire these leases (each lease costs at least $250,000 and some have gone for more than $100,000,000), further fees for renting the leases and the leases have a finite term. If a company does not produce oil or gas from a lease then they are required to return it to the government. In other words "use it or lose it" is already the law.

These are very successful and sophisticated companies that are engaged in this business and it makes no logical sense for companies to pay millions of dollars to purchase leases, sit on them for 10 years, and then give them back to the government. They make money by supplying the American economy with the energy it needs to grow, not from sitting on assets. The level of capital expenditures by the industry to develop these leases demonstrates their commitment to find oil and gas. For example, the industry spent more than $37 billion (with a B) in capital expenditures to develop deep water Gulf leases issued between 1996 and 2000. In addition they paid more than $4 billion (with a B) in bonus bids to obtain those leases in the first place. With that level of investment, it is hard to argue that the industry is not working hard to develop the leases it owns.

Finally, these arguments simply ignore the basics of the oil and natural gas industry. Companies purchase leases for the right to explore for the resources. You don't know if a lease actually contains oil or natural gas until you move forward and drill an exploratory well. Companies purchase a large portfolio of leases to give them the greatest opportunity to find oil and natural gas. They work hard to survey and study all of their leases with the hope that they can narrow the list down to a subset that have the best likelihood of actually containing oil or natural gas. However, it is not uncommon for a company to spend $100 million to drill a well and find no oil or natural gas. In fact, companies drill more wells that have no oil or natural gas than wells that actually do.

With one election just concluded, the positioning for the next one has started, but it's time to stop the stupid and start getting smart on creating jobs, growing our economy and increasing our energy security.

So there you have it. Again, talk to those that KNOW the FACTS on any situation, and you will be better informed than you will listening to those that DON'T. Or those that have agendas and like to, well, LIE, to further their agendas.

Instead of playing games, this Administration needs to get out of the way, and LET those that actually KNOW what they are doing, have the tools to do it, ACTUALLY help us: jump start the Economy, lower the Unemployment Rate, Lower Energy Costs, and INCREASE Revenue to all levels of Government, Local, State, and Federal.
Peter

Top lawmaker protests 'whistle-blower' demotion

So much for Obama's Transparency

Hey folks,

Yeah, we still do not have Obama's Medical Records. We still do not have his School Records. We still do not have a Birth Certificate. When Reporters and the new Congress actually ASK for information, they are stalled, and in some cases, do not get it at all.

Well, one Federal Employee complained about this. What happened? She was demoted. According to the AP- Top lawmaker protests 'whistle-blower' demotion By TED BRIDIS, Associated Press Ted Bridis, Associated Press – 1 hr 30 mins ago

WASHINGTON – The Homeland Security Department demoted a senior career employee who confidentially complained to the inspector general that political appointees were improperly interfering with requests for federal records by journalists and watchdog groups.

The new Republican chairman of the House Oversight and Government Reform Committee investigating those practices told the Obama administration that the decision "appeared to be an act of retaliation" and warned, "Obstructing a congressional investigation is a crime."

Rep. Darrell Issa, R-Calif., urged Homeland Security Secretary Janet Napolitano to remind employees about their rights and whistleblower protections and "make DHS managers aware of the consequences for retaliation against witnesses who furnish information to Congress."

Issa accused the administration of improperly demoting Catherine Papoi, listed on the DHS website as a former deputy unit chief in charge of the Freedom of Information Act. It escalated the political drama over a broad congressional inquiry into President Barack Obama's promises to improve government transparency.

Issa sent a five-page letter, obtained by The Associated Press, to the department late Wednesday, describing his concerns about Papoi's employment. It did not ask Napolitano to reinstate her.

"Denying or interfering with employees' rights to furnish information to Congress is against the law," Issa wrote. "Federal officials who retaliate against or otherwise interfere with employees who exercise their right to furnish information to Congress are not entitled to have their salaries paid by taxpayer dollars."

So what happened to Transparency? Didn't Obama just receive some kind of reward for being the most Transparent Administration, like, EVER? Where IS the Mainstream Media? Why is this not front page news? Oh yeah, they would not like to upset their Boss, Obama.

The Homeland Security Department said Papoi was not technically demoted because she never lost pay or benefits, although Papoi's new boss, Delores J. Barber, took over her title as deputy chief FOIA officer and moved into Papoi's office. As a GS-15 federal worker, Papoi, who has a law degree, earns between $99,628 and $129,517. Under the federal employment system, a demotion usually involves loss of a pay grade. Papoi is on leave.

A department spokeswoman, Amy Kudwa, said Issa's letter was "rife with inaccuracies and distorts the facts." She said the agency will continue to cooperate with the congressional investigation.

Issa disclosed in his letter that Papoi complained confidentially to the inspector general in March 2010 that the Homeland Security Department had illegally sidetracked hundreds of requests from journalists, watchdog groups and others for federal records to top political advisers, who wanted information about those requesting the materials.

In some cases the release of documents considered politically sensitive was delayed, according to more than 1,000 pages of e-mails subsequently obtained by the AP, which wrote about the practice last summer. The AP reported that the DHS inspector general's office had conducted interviews to determine whether political advisers acted improperly, but their findings have not been made public nearly one year after Papoi's complaints.

"I knew full well I could be jeopardizing my career, but I have to be able to sleep at night," Papoi told the AP in an interview late Wednesday.

Concerns about the political reviews continue to resonate. Earlier this week, at a Senate Judiciary Committee hearing, Sen. Charles Grassley, R-Iowa, said, "It would seem obvious that the political vetting process at the Department of Homeland Security that was uncovered by AP violates both the president's and the attorney general's orders."

Grassley said he has asked inspectors general at dozens of executive branch agencies to investigate whether other parts of the administration are conducting similar political reviews of federal information requests.

A senior Justice Department official in charge of openness policy for the administration, Melanie Pustay, told senators on Tuesday, "Certainly if the statements in the (AP) article are true, it would be very serious, and we would have very serious concerns with that."

She said Justice Department rules make clear that the identity of the person requesting records shouldn't affect whether the government provides information. She acknowledged that political appointees in the Justice Department are told about information requests "for awareness and management purposes, and that's all."

Are you buying this? So Catherine Papoi, who is now the FORMER Deputy Unit Chief in charge of the Freedom of Information Act, who was moved out of her Office, and is now on LEAVE, was not demoted? The Obama appointed Justice Department Cronies are advised, who is asking for what, "for awareness and management purposes, and that's all?" Why? SO THEY CAN BLOCK OR CHANGE the information before it is released. We already know that they are not busy. They are not investigating anything where the Defendants are Black. They are not defending DOMA. So? I guess they do have nothing better to do than run interference for Obama and Crew. Of course, the Media, for the most part, will not ASK for ANY Information to begin with. Most simply report whatever they are told to.

Kudwa, the Homeland Security Department spokeswoman, said the agency was not aware until Issa's disclosure that Papoi was the one who had complained about her bosses to the inspector general in March 2010. Papoi accused political appointees of "breaking the law by knowingly and intentionally delaying and obstructing the release of agency records" under the Freedom of Information Act.

Issa said administration lawyers also believe Papoi has been secretly providing information to congressional investigators, who interviewed Papoi with her private lawyer on March 3. In the interview, Papoi criticized political appointees in Napolitano's office. The Homeland Security Department said Papoi was notified about her new boss' hiring on Jan. 10, the same week in which Issa has separately acknowledged that his investigators began obtaining materials that raised new questions about the agency's political reviews.

Issa said Papoi was told on March 4, the day after meeting with investigators, that Barber would begin as her new boss on Monday this week and that she needed to vacate her office before March 10.

"By notifying Ms. Papoi of her less desirable office assignment and diminished job responsibilities the day after she appeared before the committee, the department created the appearance of retaliation against a witness," Issa wrote. "The department's decision to marginalize the FOIA Office's most senior career official after two years of record performance is hard to countenance."

It's the Chicago way folks. They do whatever they want, to hell with the Law, the Constitution, or YOU. THEY are in charge and you will not question them. You will not interfere with them. Or you will be destroyed. One way or another. The Press? Well, they see nothing, hear nothing, and only SAY what they are told to, when it comes to Obama. Now if this had happened under Bush? Yeah. You know. Not only would this be Front Page Headline News, there would be a full fledged investigation, and calls for impeachment for violating the FOIA. Obama? Nope. No big deal. Uh, lets move on. What's Charlie Sheen up to?
Peter

Sources:
AP- Top lawmaker protests 'whistle-blower' demotion

Energy Tax Prevention Act HR910

House Bill Moves Forward

Hey folks,

Happy Hump Day to ya. Glad you stopped by. Yes. Yesterday was Tuesday, when we normally check in at the Energy Front. I was not here. But one of the places I was, was attending an API {American Petroleum Institute}/ Blogger Conference Call. As always I will post the Transcript of the Conference Call as soon as it is available. Also as always, it is jam packed with REAL information that you will not find in the regular State Run Mainstream Media. Filled with FACTS vs the agenda driven Bunk you normally get anywhere else.

Now I'm always invited to these things when they happen. It's just as of late, scheduling conflicts have keep me from attending. Well, not yesterday. I started things off with a question I have about House Bill H.R. 910. Unbeknownst to me, at the time I asked this question, H.R. 910 was being marked and Voted on in the House. So it really is too early for the API to take an official position on it. Unlike most of our Representatives, they would prefer to actually READ it in total, before coming to conclusions and taking a position. {Smile}

Now what is H.R. 910? It is a BIPARTISAN Bill that will strip the EPA from their completely unConstitutional authority to enforce "Cap and Tax." We have talked about this before. Obama and Crew simply do not have the Votes to pass Cap and Tax, so he gave the authority and task to the EPA. This is not Constitutional. Congress is the only one allowed to create and enforce Laws and Environmental Polices. Not the EPA.

So four Representatives, two Democrats and two Republicans introduced H.R. 910, the Energy Tax Prevention Act. This Bill will block EPA’s backdoor "Climate Change" agenda. If they are allowed to enact their agenda, it will further drive up the price of Energy for American consumers, as we talked about many time, this will raise the prices even further on EVERYTHING, it will kill more Jobs, and put the EPA in the Role of Lawmakers and Enforcers.

Introducing the Bill were Collin Peterson (D-MN), Nick Rahall (D-WV), Commerce Committee Chairman Fred Upton (R-MI), and Energy and Power Subcommittee Chairman Ed Whitfield (R-KY). This is TRULY a Bipartisan measure by people who understand REALITY. They "Dream Green" too. But they also know that there is no switch. Nothing to switch to. There are no Alternatives at this time. So giving a Group such as the EPA authority of this type, will do NOTHING to "Save the Planet" nor help anything in dealing with our already hurting Economy and dwindling American Security.

I agree with these Representatives when they came out and let you know why they were introducing this.

“Whether at the pump or on their monthly utility bills, American families, farmers, and employers feel the pinch when energy prices go up. The very last thing the federal government should do is make matters worse by intentionally driving up the cost of energy. Yet that is exactly what’s in store if the EPA moves forward with its plans to regulate and penalize carbon emissions under the Clean Air Act,” said Chairman Upton.

“The EPA is pursuing a dramatic shift in our nation’s energy and environmental policy that would send shock waves through our economy,” said Chairman Whitfield. “Setting the course of our energy policy is the job of Congress, not a single federal agency acting without authority. The Energy Tax Prevention Act is a sensible, straightforward plan to end the uncertainty and economic threat posed by the EPA’s climate change agenda.”

“The EPA needs to be reined in. If Congress does not do something about the regulations being imposed on our farmers, ranchers and rural communities, the economic effects could be devastating. This is the last thing we need when our economy is beginning to show signs of recovery,” said Ranking Member Peterson.

Well, it seems others agree as well. It moved forward Tuesday during our Conference Call. With a 34-19 vote, all Republicans and three Democrats. The Bill now moves to the Full House for a Vote. Those in favor would like the Full Vote to come before Easter Break, and it is pretty assured to pass in the House. Now the Senate? Well, we'll have to wait and see.

Again folks, the Full Transcript will be up as soon as it becomes available and I'm sure we will talk about some of the wealth of information that was discussed. I will also be following this closely and will let you know of any update.

Have a great day folks. See you soon.
Peter

Sources:
House Energy and Commerce Committee - Leading Bipartisan Voices on Energy Policy Introduce Energy Tax Prevention Act

NOTE: The text of the Energy Tax Prevention Act is available online along with letters of support for the legislation from American Electric Power, the American Farm Bureau Federation, the Industrial Energy Consumers of America, the National Association of Realtors, and the National Mining Association.

Japan Earthquake and Tsunami, Call for Prayers Well Wishes

Preview for Sunday 031311

Hey folks,

You know who this is. You know what this is. The links are Twitter and Facebook, and as always the Email is opntalk@gmail.com.

First up, our hearts and prayers go out to all the people in Japan. Here's the latest on Japan's Earthquake and Tsunami aftermath. According to Reuters - Radiation levels rise above limit at quake-hit plant: Kyodo TOKYO Sat Mar 12, 2011 10:26pm EST

(Reuters) - Radiation levels have risen above the safety limit around Tokyo Electric Power Co's (TEPCO) nuclear plant hit by a massive earthquake and the company has informed the government of an "emergency situation," Kyodo agency reported on Sunday.

It did not mean an immediate threat to human health, the company said.

The company said earlier that it had started releasing steam from a reactor at the plant. A similar rise in radiation levels occurred after the company released radioactive steam from another reactor to let go of pressure. Then again the company was obliged to inform the government of an "emergency situation."

Many are heading over to lead help and support. One such group is coming right up a little later. Also coming right up today:

Response to Obama's Idiotic Oil Claims
Help On It's Way To Japan, and Their Children
Big Headed Babies, Barbless Penises
Caution: Adult Content. We will be discussing the Male Penis. It is intended for Adults only. If this type of conversation offends you, do not read this Week's Health and Science Segment. Thank You.
DLA for Sunday 031311
IWA for Sunday 031311

So I have a request. Can we PLEASE not use this, as Obama did Friday, can we not use this tragedy in Japan to attempt to further Political Agendas and or causes. I'm asking this of BOTH Parties.

What I would love to see is all of us, coming together as one People, and issuing Thoughts, Prayers, Well wishes, good vibes, whatever you chose to call it, to all the people of Japan? There will be plenty of time to get back to Politics as usual in the future. But right now, the people of Japan need our support.

Lets give them all the support we can and leave the playing games for another time. What say you?

Going to fill my cup. This week it's Ghirardelli, Caffe Gourmet Coffee, Chocolate Hazelnut. Two of my favorite flavors, together at last. Be right back.
Peter

Response to Obama's Idiotic Oil Claims

He completely lied through his teeth.

Hey folks,

I really didn't want to start off with this, but we have to. Obama comes out Friday and completely lied through his teeth. He said that he was not blocking Drilling. He shut it down. He cost Americans over 50,000 Jobs. He forced Companies to leave town. He is STILL preventing exploration and Drilling.

I have the transcript, but it is nonsense. It's a bunch of bunk. It matters not what he said on Friday, what matters is REALITY. What he has done and what he continues to do. It's so far out there from Reality, that it's almost hard to stomach.

So what is the Industries response? According to the President of API, Jack Gerard, Obama is not addressing the real issues. Who is API?

API represents more than 450 oil and natural gas companies, leaders of a technology-driven industry that supplies most of America's energy, supports more than 9.2 million U.S. jobs and 7.5 percent of the U.S. economy, and, since 2000, has invested nearly $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.

So they KNOW Energy. According to the President, Jack Gerard,

"Long-term problems call for short-term leadership. Suggesting that we rely on other nations to solve our energy challenges is irresponsible and will not increase our energy security. The Obama administration continues to delay or defer action on developing our domestic resources of oil and natural gas at every turn.

The trend is alarming. The administration has postponed lease sales in offshore areas. It has cancelled lease sales in onshore federal lands. It has extended permitting timelines for current leases and added unnecessary regulatory burdens. It has chosen inaction on essential energy projects that would create jobs, drive economic growth, and boost federal revenues.

The administration is well on its way toward creating higher gasoline prices for Americans.

To get more oil and gas, we need more access. Placing more government lands and waters off-limits and forcing companies to focus on areas that may show little promise even if already under lease will not solve our energy challenges.

The best thing the administration can do on gasoline prices is to encourage greater oil production and greater fuel efficiency here at home. Launching another gasoline price investigation, when it's obvious strong demand and world events are driving today's markets, is pointless."

It's POINTLESS especially when you add into the equation the inability to ADD and USE our OWN resources. Remember, we talked about this in the past. We can go from NOTHING, bring in a Drilling platform that weighs more than Ten Thousand Cars, higher than the Eiffel Tower, retrieve the Oil and ship, refine, and get to market in under two years. When done? You will never know it was there.

But you all know this. You all know that we have more Oil and Natural Gas than the entire Middle East combined. And so do they. Why else do you think that just the mere mention of us Drilling by Bush caused the price to plummet. Now they KNOW we are not doing anything about it, the Price is rising again.

Yes, World Demand and what is happening in the Middle East IS affecting the Price of Crude. But we are not going to be adding to the Supply with our own anytime soon. Not if Obama has his way.

You want the REAL facts on this, The Canadian Oil Sands, The REAL Facts on Fracking, or the reality of why we need Oil and Natural Gas, Visit our friends over at Energy Tomorrow, and the API itself.

Do not be misled folks. Obama IS causing the Price to Skyrocket. But this is no surprise. He said he would. He said he likes it too.
Peter

Sources:
Energy Tomorrow - API to White House: Long Term Solutions Require Short Term Leadership