Wednesday, June 11, 2008

Gas Up

From the Santa Fe Reporter by Dave Mass:

"Perhaps most of all, politicians use “energy independence” because it sounds

The Organization of Petroleum Exporting Countries, or OPEC, controls 35.6 percent of the world’s oil production. The 12 member nations are Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Gov. Bill Richardson, in his various roles as Department of Energy secretary, UN ambassador, governor of New Mexico and freelance peacemaker and hostage-negotiator, has met with almost all of them.
a whole heck of a lot better than what it actually means: “Much, much, much more drilling at home.”

The US can’t wean itself off foreign oil without surrogating it with domestic oil. And domestic oil can’t be drilled without domestic risk, whether it’s the Arctic Wildlife Refuge in Alaska’s Anwar Province or the Galisteo Basin here in Santa Fe County.

The question, then, is what’s in it for New Mexico, a state that already produces more oil than it consumes? Some might suggest that the rules of economics that state where there is increased supply, lower prices follow, might bode well for local drivers.

But really, Baca says, any effect of an increase in local production would be slight and indiscernible.

“The problem with oil is that it’s traded on the commodities market,” Baca says. “I don’t care if you drill it in New Mexico and produce it in New Mexico and you sell it to a refinery here in New Mexico, it’s still the same price as if you would sell it in Houston or you were to ship it up to Utah.”

When Houston-based Tecton Energy held its public meetings about drilling in the Galisteo Basin last fall, Managing Partner Bill Dirks promised that whatever sweet crude it sucked from the ground would be refined locally into gasoline. That would potentially create jobs and help the economy, but Dirks stopped short of what could have been the deal-clincher for many skeptics. Had he promised relief at the gas pump, perhaps that would have won over at least a handful of converts. It also would have been a lie.

Instead, the anti-drilling community successfully lobbied Gov. Bill Richardson and the Santa Fe Board of County Commissioners to pass temporary moratoriums on drilling in the Galisteo Basin. Tecton announced it would hold no more public meetings and all press inquiries would be handled by a local public relations agency.

In his first public communication since January, Dirks confirms via
e-mail that Tecton has indeed signed an oil contract with the Western Refining (formerly Giant) refinery in Farmington. Tecton, Dirks says, will have no control over gasoline sales. Furthermore, he adds, it doesn’t matter whether Tecton finds 100 barrels or 100 million barrels beneath the Galisteo Basin—New Mexico’s refineries have a fixed production capacity. This means there wouldn’t actually be an increase in local supply.

“No amount of locally refined Galisteo Basin crude would be able to dramatically lower prices at the pump in Santa Fe,” Dirks writes. “The price will just keep going up with rising global demand unless the US adds major new domestic supply.”

Dirks says there’s another awful truth. Although allowing Tecton to drill won’t reduce gas prices, denying the company the opportunity to drill does have the potential of raising gas prices. Perception is the driving force on the futures market and not-in-my-backyard activists fuel the “scarcity mentality,” he says.

“I do believe Santa Fe and other counties to some extent influence the commodity traders when imposing drilling moratoria,” Dirks says. “But you have to put that into context against other fear factors like Nigeria losing 2 million barrels a day capacity because of tribal conflicts, etc., which are much bigger news.”

And that doesn’t even touch on the obvious: The longer Santa Fe County postpones Tecton’s drilling, the more the company’s potential profit margin grows. Oil prices maybe rising, but the cost of drilling remains unchanged. " full article>>>>

Reality check: Peak oil and rising consumption means spiraling up of fossil fuel costs. We can not drill our way out of this situation. We need bold leadership to take us down the path of alternative energy sources instead of supporting the irresponsible "drill at any cost" policy.

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