Saturday, August 31, 2013

‘The President’s All-of-the-Above Energy Strategy’ and Other Self-Delusions

We’ve been having area-wide lease sales over the same portions of the Gulf of Mexico for the last 30 years. Despite this week’s tepid response at the Western GoM Sale (shelf and deepwater offshore Texas, mostly), the press release from the Bureau of Ocean Energy Management would have you thinking it was a smashing success.

Western Gulf of Mexico Lease Sale Yields $102.4 Million in High Bids on More Than 300,000 Acres

As part of President Obama’s all-of-the-above energy strategy to continue to expand safe and responsible domestic energy production, the Department of the Interior’s Bureau of Ocean Energy Management today held Western Gulf of Mexico Lease Sale 233, . . . [blah, blah, blah & etc.]
But the Oil and Gas Journal cuts through the self-congratulatory baloney:

Lackluster western gulf lease sale draws $102 million in bids

The US Bureau of Ocean Energy Management’s western Gulf of Mexico Lease Sale 233 offshore Texas netted $102,351,712 in apparent high bids—less than the first two sales in the Obama administration’s Outer Continental Shelf oil and gas leasing program for 2012–17.
Twelve offshore companies submitted 61 bids for 53 tracts covering 301,006 acres. Nearly 21 million acres were available for oil and natural gas exploration and development.
It was even worse than that. Two adjoining blocks accounted for fully 50% of the total high bids. Almost all of the action was in deepwater, and few blocks drew bids that substantially exceeded the minimum bid level. Only four, count ‘em four, shelf blocks drew any bidding attention at all.
In fairness, the shelf in the Western Gulf is gas-prone, and gas prices are historically low compared to oil. But industry’s tepid response to the sale also reflects concern about Interior’s increasingly stifling and costly approach to regulation.
Also this week we were graced with a blog post from White House economic advisors Jason Furman and Gene Sperling (AFAIK no relation to the Hair Club for Men guy). The thrust of it is taking credit for the positive impact that the energy sector has had on GDP growth, the balance of trade and on job creation. I’ll only comment about a couple of their more noteworthy claims, which have become talking points for the Administration:
The President established a national goal in 2011 to reduce oil imports by one third by 2020 and elevated the goal in 2012 to reduce them by one half by 2020We are currently on track to meet this ambitious goal if we continue to follow through on the policies that are critical to achieving it.
That’s accompanied by this graph:
EIA overview

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