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Senator Biden and Governor Palin on oil resources

I'm up late sleuthing and found an issue on which both vice presidential candidates have opined, oil resources.

The first essay is authored by Senator Biden, and appeared on July 9, 2008 in The News Journal (Wilmington, DE)

The second piece is authored by Governor Palin and is an excerpt from her January 17, 2007 State of the State Address.

Oil companies have lots of leases to drill . By Senator Joseph Biden (D-DE)

When you first hear the idea "let's allow offshore drilling and it will cut gas prices," it sounds like it makes sense, especially when gas is more than $4 a gallon. But the facts say otherwise.

The only way we can achieve energy and climate security in this country is to reduce our dependence on oil.

Unfortunately, President Bush and Sen. John McCain are trying to sell us on the oil companies' old argument that repealing the 27-year old moratorium on drilling in protected areas offshore will lower gas prices. Americans need to put this tired debate to rest. Our security -- both here at home and abroad -- depends on it.

First, the oil companies in this country now hold 7,000 leases to drill offshore, yet only 20 percent of those leases are producing oil. That is 68 million acres for which they already have the rights to drill. Nearly 80 percent of our offshore oil is already available for leasing -- approximately 54 billion barrels total. They could be drilling in these areas, but they are not.

Assuming oil companies drilled in new areas, it would take at least a decade for new production to begin. Just last week, the U.S. Energy Information Administration concluded new drilling would have no impact on oil prices before 2030.

Prices would still be determined by the world market, which will be adding billions of new consumers from growing economies in China, India and other countries.

OPEC countries control two- thirds of the world's oil reserves. If we add a bit more oil to the market, they can cut their own output to keep prices high.

Moreover, the majority of the world's oil is in unstable regions. Prices surge when officials threaten to attack Iran or raids shut down production in Nigeria.

Here in Delaware, we are paying $10 more a day for gas -- around $3,600 a year -- than we were seven years ago. That is a bite out of a family's budget.

During the same period, permits for new oil drilling leases increased by 361 percent. Put simply, allowing more drilling does not equal cheaper gas.

Instead, we should be talking about a cleaner, more fuel-efficient future. Oil companies have the money to make new investments. In the first quarter of this year, the five largest domestic oil companies made $37 billion in profits. Since 2001, the number is close to $600 billion.

We should take back tax breaks for big oil companies, which total more than $2 billion over 10 years, and invest in green energy technology. We should have a windfall profits tax to fund everything from mass transit to high-speed rail to the next generation of safe, efficient cars. Finally, we should restrict speculation and price-gouging, and stand up to OPEC's monopoly.

We need solutions of the future, not drilling ourselves deeper into dependence on oil.

Excerpt from January 17, 2007 State of the State Address. by Governor Sarah Palin (R-AK)

To sustain our future, we must look to ramp up responsible resource development. As if we need another reminder about fluctuating oil prices, this summer was the primary example of what we need to prepare for... record high prices just months ago are now below what we need to balance our budget. Additionally, I'm keenly aware of sharply declining production from North Slope fields. The amount of oil currently flowing through the Pipeline is less than half of what it was at its peak. So, we must look to responsible development throughout the state - from the Slope all the way through and down to Southeast - every region participating! From further oil and gas development, to fishing, mining, timber and tourism, these developments remain the core of our state. And one thing we can do in our volatile market is provide stability in regulations for our developers.

We're excited about many great prospects, and naturally our focus is on energy supplies because we're blessed with them. We can lead this nation, to help this nation, with a zealous energy plan which contains renewable energy components and cost-effective alternatives, especially for rural Alaska. We'll support real energy conservation efforts, and we'll engage in safe development, and we'll show the way for the rest of the world - that we can be good stewards of God's green earth. We haven't always done that.

To prove we can responsibly develop, we'll beef up oversight on the North Slope because we've seen some legal obligations ignored. Greater oversight ensures proper maintenance of the lines that carry our oil to market. I won't tolerate corrosion eating though pipelines while crippling our state economy with costly shutdowns. I'll establish a dedicated state team to ensure rigorous inspections and line integrity analyses. Our oil must, and will, flow and continue to help fund essential services.

In traveling across Alaska, I'm always struck by this absurd situation we're in - where our state - so blessed with energy sources - has many communities facing threats to safety and well-being because of the high price and limited supply of energy.

Some communities face closure of their schools because they can't buy fuel or pay electric bills. This burden is nonsensical because we're sitting on some of the most plentiful reserves on the globe.

The State needs to coordinate its energy programs to find local sources, to help communities become self-sufficient.

So, D-N-R will inventory potential sources of energy, including renewables like tidal, wind, hydro, and geothermal.

Taken together, new initiatives can finally provide new energy.

New energy must come from proven reserves, too! And we will aggressively defend the state's obligations to responsibly develop ours.

A perfect example is Alaska's Pt. Thomson. Huge reserves up there. "Leases" held by producers are iron-clad contracts - they're promises to develop the public's resources for mutual benefit - or give back the leases. There's a large producer who's held the lease at Pt. Thomson for roughly 30 years with no development - three decades to develop or step aside. WAREHOUSING Alaska's resources is not an option anymore. We can't afford it!

The state should be trusted to keep its promises. The standard should be no different for industry. Ironically, we're trying to convince the rest of the nation to open ANWR, but we can't even get our own Pt. Thomson, which is right on the edge of ANWR, developed! We are ready for that gas to be tapped so we can fill a natural gas pipeline. I promise to vigorously defend Alaska's rights, as resource owners, to develop and receive appropriate value for our resources.

Of course, the primary focus of our long-term energy plan can be summed up in three words -- NATURAL GAS PIPELNE! This gasline will fuel our homes, our economy, and careers for Alaskans - for generations. The gasline is critical not just for our future, but for the nation's future. It's also an essential component of our nation's energy policy. Truly, for energy independence, the nation will look to Alaska. We've already begun working with the White House. In fact, I had a nice conversation with Vice President Cheney today. And we are also blessed to have a strong ally in former State Senator Drue Pearce, who's been tasked by the President to get the gasline built. The energy industry is also engaged and I look forward to working with Congress and our legislators - our "partners" to deliver our natural gas to market.

There's currently more than 30 trillion cubic feet, or "T-C-F," of proven reserves on the North Slope. However, if you talk to most geologists, you'll hear there's a good chance there's actually hundreds of "T-C-F" in the ground.

It's in Alaska's and America's interest to get that gas to market. We need a project that ensures any viable explorer or producer can access a gasline on reasonable terms and we need a project that can be expanded when there's more gas found.

However, we must be realistic about the complexity of this. It won't happen with the snap of a governor's fingers. It can't happen overnight. The process involves many entities with differing considerations, and requires a lot of discussion with experts and stakeholders.

While bringing natural gas to market is costly and risky, there's no question - THIS IS A SOUND, ECONOMIC PROJECT.

Over the last year, Alaskans have learned a lot from the prior attempt to develop our gas, under the old "Stranded Gas Development Act." For instance, Alaska's gas is not stranded.

And we learned what the Oil Producers' terms are. We learned that under the old act, some producers will talk to us, and talk to us, and talk to us until we agree to their terms. The terms were unacceptable. They demanded that, in a sense, we give up some fundamental rights as a state, as part of these United States, because the deal removed our taxing, regulatory, and judicial authorities for DECADES.

In fact, under those terms, my youngest daughter, Piper, would be older than I am right now before the state could amend those terms!

The deal was a "no deal." And our Legislature was handed a plan that even exceeded the administration's authority. Remember, in exchange for unnecessary concessions, the producers didn't have to commit to preparing applications, much less build a gasline.

We need progress on this project - and competition to result in the best project. We don't need endless discussions behind closed doors. It's time we leave the Stranded Gas Development Act in the past and move forward with a new vehicle. A vehicle that builds on the knowledge and experience gained from a valiant - but futile - effort previously in a non-competitive process.

So let me tell you our plan. My gasline cabinet is developing a bill, entitled the Alaska Gasline Inducement Act or "Agia."

The centerpiece of this is to INDUCE construction of the gas pipeline. A gasline constructed on OUR terms, without selling Alaska's sovereignty. This law allows a transparent and competitive process. It jumpstarts progress with incentives, and strikes the right balance on a project for the state, the nation, project proponents, and producers. It will be good for all!

We'll introduce "Agia" this legislative session. We're scrutinizing its legality, strategy, and efficacy with top experts right now. With legislation this important, it's more important to "do it right than to do it fast."

Comments (4)

I approach this as a both/and, to a certain extent, inasmuch as both make valid points; oil companies do hold leases to areas they are not exploiting, and yet they wish to secure leases to other areas entirely, and even were all of these resources to be brought online (assuming that they are as robust as the most optimistic projections would have it), the world market price for oil would still not fall sufficiently to restore the days of buck-and-a-half gas and 10 mpg SUVs; and yet responsible development of these resources is still necessary, within reason. Development of existing/potential resources and preparation for a gradual transition to alternate sources of energy should be pursued simultaneously.

Lunchpail Joe wrote his own article; he stock just went up.

"Put simply, allowing more drilling does not equal cheaper gas."
That statement does not hold up Joe.

Please don't buy this stuff about the oil companies having leases and not using them. Obviously, with the price of oil being what it is, if there were oil available they would want to get it. They are not using them because they did not find oil there. They get leases to explore, and lots of them don't pan out.

Don't be fooled by this nonsense. The Democratic leaders are trying to distract us.


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