The solution to the offshore drilling question…

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… is surprisingly simple.

Open up the protected reserves we have to offshore drilling. They are our natural resources, after all, and better we should rely on our resources in the short term than on other nations, particularly nation-states not friendly to us.

Then nationalize the production – i.e. cut out ExxonMobil (ticker: XOM) and the other energy companies.

Nationalize it, use it as a jobs program to create lots of additional jobs that out of work Americans need.

Nationalize it, and divert all the profits from $140/barrel oil to the national debt. Don’t subcontract out to the private sector and push profits to private industry which clearly does not need them. Yes, they may have expertise, but so what? Hire away their experts.$

There are, by some estimates, 28 billion barrels of oil out there that are currently under moratorium.

At100/barrel, significantly under today’s prices, you’re talking enough money to destroy 20% of the national debt.

Open up, drill, create jobs for Americans, nationalize the profits, and use a limited natural resource to start freeing future generations of Americans from the debts we’ve created.

I’d like to think this proposal gets the most out of our limited resources. More jobs for Americans, money for energy staying in America instead of going overseas, profits from oil going not to the private sector which shouldn’t get a dime, but to the national debt.

Disclosure: I’m thoroughly unqualified to be speaking on the topic. Never took geology, don’t know a thing about oil production beyond the basics of refining, and never studied economics. That puts me at roughly the same level of expertise as your elected representatives.

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Comments

26 responses to “The solution to the offshore drilling question…”

July 27, 2008

Tom White Jr.

Interesting… But misfounded… Our generation's debt is our own to carry. Saddling drillers with more needless distractions and expense is no way to compete. Opening up drilling areas will help (ten years from now). We need alternative energy designs now. We need the public to understand its not the oil companies who are at fault. We are simply consuming more petroleum products than can be supplied.

I agree we need new ideas and applaud your enthusiasm. Until we can get everyone to understand the economics behind this issue we will continue to suffer… Just my two cents…

Reply
July 27, 2008

Christopher S. Penn

Oh, I totally agree on alternative power sources. Hell, I use a solar battery to charge my laptop (Xantrex power pack). Small-scale production of solar and wind energy is affordable, practical, and available today. That's why I motioned for this to be used against the national debt – we should be focusing present day resources on alternative solutions now.

Reply
July 27, 2008

tsudohnimh

Yes we need to drill more and produce more oil but I think nationalizing the industry would be a disaster. The federal government does nothing well and it can't even spell efficiency. Government regulation is largely to blame for this mess anyway. Less government is the answer not more.

Reply
July 28, 2008

Tom White Jr.

Interesting… But misfounded… Our generation's debt is our own to carry. Saddling drillers with more needless distractions and expense is no way to compete. Opening up drilling areas will help (ten years from now). We need alternative energy designs now. We need the public to understand its not the oil companies who are at fault. We are simply consuming more petroleum products than can be supplied.

I agree we need new ideas and applaud your enthusiasm. Until we can get everyone to understand the economics behind this issue we will continue to suffer… Just my two cents…

Reply
July 28, 2008

Christopher S. Penn

Oh, I totally agree on alternative power sources. Hell, I use a solar battery to charge my laptop (Xantrex power pack). Small-scale production of solar and wind energy is affordable, practical, and available today. That's why I motioned for this to be used against the national debt – we should be focusing present day resources on alternative solutions now.

Reply
July 28, 2008

Keith

Yes we need to drill more and produce more oil but I think nationalizing the industry would be a disaster. The federal government does nothing well and it can't even spell efficiency. Government regulation is largely to blame for this mess anyway. Less government is the answer not more.

Reply
July 28, 2008

MarinaMartin

Oh goodness, no. No, no.

Exxon Mobil has a 6% profit margin. If you nationalize the oil production, the only possible savings that come into play are within that 6% – and I don't know if you've looked at any government-run program lately, but they are not exactly models of efficiency. (This is the same government that accumulated that debt, I'll remind you.)

The reason we have the gasoline resources that we do is that *profit* provided the motive to invest billions of dollars, explore more areas for oil, build huge refineries, etc. We should be thankful Exxon-Mobil exists to enable our car-centered lifestyles.

In all seriousness, read Atlas Shrugged. Pay attention to what happens when Francisco's mines are nationalized. If you think “hey, that's just fiction” then read up on what's happening right now with Hugo Chavez and how well nationalizing the oil companies is working for Venezuela.

Reply
July 28, 2008

Christopher S. Penn

Based on the results from Chavez's government, it appears it's working quite well for him. Not so well for the oil companies, but okay for him and his political agenda, whether or not we agree with it.

You're right on the efficiency of government. That said, the government does do some things well – NSF is a model of efficiency.

As for Exxon Mobil, I'll disagree. They haven't invested. The last new refinery in the United States was completed a short 32 years ago, in 1976. No new refining capacity has been added despite Exxon Mobil's record profits. Further, both BP and Shell have committed significant chunks of profits towards alternative energy research, recognizing that it's in their own best interests to develop new products that aren't petroleum based. ExxonMobil has given a miss to that research.

Reply
July 28, 2008

MarkHarrison

Opening protected reserves – yes, I still don't understand why that hasn't been done.

Nationalise – erm… no. The reason is simple – you either nationalise by buying shares from shareholders at their current value… in which case you have to take on a HUGE extra debt… or you nationalise by taking the shares away at less than they are currently worth (maybe, but not necessarily down to zero). If you do THAT, then you get EXXON Mobil, but in round terms lose the ability to persuade anyone else to set up a company, well, ever. Why would YOU risk your money in something that the government could just take away from you because they thought they could run it better?

Now, I have to confess here that, as someone who was a senior manager at BP from 1997-2000, I share your views about whether EXXON/Mobil has done the job it could, but nationalisation would be completely the wrong answer.

Reply
July 28, 2008

Christopher S. Penn

In this context, I mean nationalize as in making the resource extraction and sale operated by the federal government. Not taking away from operations or buying out existing oil companies or their private investments and owned resources; simply not putting up these resource fields to the private sector is the context of nationalization here. No bidding, no opportunity for private companies to extract resources at a profit, etc. Not detracting from existing business by energy companies – just not giving them a shot at the resources and this particular segment of new business.

Reply
July 28, 2008

MarkHarrison

So, effectively you're suggesting that the US Government set up an exploration/drilling company, 100% owned by the Treasury, which would act on a commercial basis, in that it would hire staff, build rigs and pipes, and sell oil.

That's worth serious consideration – after all, it's effectively the model that pretty much every other government (including mine here in the UK) adopted – start out owning, and look at selling out only later, once the production is established and stocks are running down 🙂

Likewise, I'm reasonably in favour of the use of Government income to produce jobs – provided those jobs are in areas that produce ongoing infrastructure (ie – you can use government money to build roads or water treatment plants, but shouldn't use government money to, say build Operating Systems or cars.)

Reply
July 28, 2008

Christopher S. Penn

Exactly that model. We do it with student loans – the Department of Education runs 20% of the student lending market. Could it be run better? Sure. But it's a viable alternative, especially when times get tough and the private sector abandons its commitment to the audience it's supposed to serve.

Reply
July 28, 2008

MarinaMartin

Oh goodness, no. No, no.

Exxon Mobil has a 6% profit margin. If you nationalize the oil production, the only possible savings that come into play are within that 6% – and I don't know if you've looked at any government-run program lately, but they are not exactly models of efficiency. (This is the same government that accumulated that debt, I'll remind you.)

The reason we have the gasoline resources that we do is that *profit* provided the motive to invest billions of dollars, explore more areas for oil, build huge refineries, etc. We should be thankful Exxon-Mobil exists to enable our car-centered lifestyles.

In all seriousness, read Atlas Shrugged. Pay attention to what happens when Francisco's mines are nationalized. If you think “hey, that's just fiction” then read up on what's happening right now with Hugo Chavez and how well nationalizing the oil companies is working for Venezuela.

Reply
July 28, 2008

briandigital

I respectfully disagree with the idea that more drilling, especially in environmentally sensitive areas, is a good idea. As a country we invest nearly nothing in alternative energy. We give more in tax breaks to petroleum companies than we invest in all other forms of energy research.

We should cope with the expensive gas in the near term to rid ourselves of it through electricity-producing domestic resources faster than giving ourselves more oil. You don't give a heroin addict more heroin when you're trying to get him to quit. Don't do the same with our addiction to oil.

It won't be comfortable, but breaking addictions isn't a comfortable thing.

If we took the money that we could put into oil/gas exploration and put it instead into upping PV cell efficiency, that would be a much better investment.

Reply
July 28, 2008

Christopher S. Penn

Based on the results from Chavez's government, it appears it's working quite well for him. Not so well for the oil companies, but okay for him and his political agenda, whether or not we agree with it.

You're right on the efficiency of government. That said, the government does do some things well – NSF is a model of efficiency.

As for Exxon Mobil, I'll disagree. They haven't invested. The last new refinery in the United States was completed a short 32 years ago, in 1976. No new refining capacity has been added despite Exxon Mobil's record profits. Further, both BP and Shell have committed significant chunks of profits towards alternative energy research, recognizing that it's in their own best interests to develop new products that aren't petroleum based. ExxonMobil has given a miss to that research.

Reply
July 28, 2008

Christopher S. Penn

Based on the results from Chavez's government, it appears it's working quite well for him. Not so well for the oil companies, but okay for him and his political agenda, whether or not we agree with it.

You're right on the efficiency of government. That said, the government does do some things well – NSF is a model of efficiency.

As for Exxon Mobil, I'll disagree. They haven't invested. The last new refinery in the United States was completed a short 32 years ago, in 1976. No new refining capacity has been added despite Exxon Mobil's record profits. Further, both BP and Shell have committed significant chunks of profits towards alternative energy research, recognizing that it's in their own best interests to develop new products that aren't petroleum based. ExxonMobil has given a miss to that research.

Reply
July 28, 2008

MarkHarrison

Opening protected reserves – yes, I still don't understand why that hasn't been done.

Nationalise – erm… no. The reason is simple – you either nationalise by buying shares from shareholders at their current value… in which case you have to take on a HUGE extra debt… or you nationalise by taking the shares away at less than they are currently worth (maybe, but not necessarily down to zero). If you do THAT, then you get EXXON Mobil, but in round terms lose the ability to persuade anyone else to set up a company, well, ever. Why would YOU risk your money in something that the government could just take away from you because they thought they could run it better?

Now, I have to confess here that, as someone who was a senior manager at BP from 1997-2000, I share your views about whether EXXON/Mobil has done the job it could, but nationalisation would be completely the wrong answer.

Reply
July 28, 2008

MarkHarrison

Opening protected reserves – yes, I still don't understand why that hasn't been done.

Nationalise – erm… no. The reason is simple – you either nationalise by buying shares from shareholders at their current value… in which case you have to take on a HUGE extra debt… or you nationalise by taking the shares away at less than they are currently worth (maybe, but not necessarily down to zero). If you do THAT, then you get EXXON Mobil, but in round terms lose the ability to persuade anyone else to set up a company, well, ever. Why would YOU risk your money in something that the government could just take away from you because they thought they could run it better?

Now, I have to confess here that, as someone who was a senior manager at BP from 1997-2000, I share your views about whether EXXON/Mobil has done the job it could, but nationalisation would be completely the wrong answer.

Reply
July 28, 2008

Christopher S. Penn

In this context, I mean nationalize as in making the resource extraction and sale operated by the federal government. Not taking away from operations or buying out existing oil companies or their private investments and owned resources; simply not putting up these resource fields to the private sector is the context of nationalization here. No bidding, no opportunity for private companies to extract resources at a profit, etc. Not detracting from existing business by energy companies – just not giving them a shot at the resources and this particular segment of new business.

Reply
July 28, 2008

Christopher S. Penn

In this context, I mean nationalize as in making the resource extraction and sale operated by the federal government. Not taking away from operations or buying out existing oil companies or their private investments and owned resources; simply not putting up these resource fields to the private sector is the context of nationalization here. No bidding, no opportunity for private companies to extract resources at a profit, etc. Not detracting from existing business by energy companies – just not giving them a shot at the resources and this particular segment of new business.

Reply
July 28, 2008

MarkHarrison

So, effectively you're suggesting that the US Government set up an exploration/drilling company, 100% owned by the Treasury, which would act on a commercial basis, in that it would hire staff, build rigs and pipes, and sell oil.

That's worth serious consideration – after all, it's effectively the model that pretty much every other government (including mine here in the UK) adopted – start out owning, and look at selling out only later, once the production is established and stocks are running down 🙂

Likewise, I'm reasonably in favour of the use of Government income to produce jobs – provided those jobs are in areas that produce ongoing infrastructure (ie – you can use government money to build roads or water treatment plants, but shouldn't use government money to, say build Operating Systems or cars.)

Reply
July 28, 2008

MarkHarrison

So, effectively you're suggesting that the US Government set up an exploration/drilling company, 100% owned by the Treasury, which would act on a commercial basis, in that it would hire staff, build rigs and pipes, and sell oil.

That's worth serious consideration – after all, it's effectively the model that pretty much every other government (including mine here in the UK) adopted – start out owning, and look at selling out only later, once the production is established and stocks are running down 🙂

Likewise, I'm reasonably in favour of the use of Government income to produce jobs – provided those jobs are in areas that produce ongoing infrastructure (ie – you can use government money to build roads or water treatment plants, but shouldn't use government money to, say build Operating Systems or cars.)

Reply
July 28, 2008

Christopher S. Penn

Exactly that model. We do it with student loans – the Department of Education runs 20% of the student lending market. Could it be run better? Sure. But it's a viable alternative, especially when times get tough and the private sector abandons its commitment to the audience it's supposed to serve.

Reply
July 28, 2008

Christopher S. Penn

Exactly that model. We do it with student loans – the Department of Education runs 20% of the student lending market. Could it be run better? Sure. But it's a viable alternative, especially when times get tough and the private sector abandons its commitment to the audience it's supposed to serve.

Reply
July 28, 2008

Brian Christiansen

I respectfully disagree with the idea that more drilling, especially in environmentally sensitive areas, is a good idea. As a country we invest nearly nothing in alternative energy. We give more in tax breaks to petroleum companies than we invest in all other forms of energy research.

We should cope with the expensive gas in the near term to rid ourselves of it through electricity-producing domestic resources faster than giving ourselves more oil. You don't give a heroin addict more heroin when you're trying to get him to quit. Don't do the same with our addiction to oil.

It won't be comfortable, but breaking addictions isn't a comfortable thing.

If we took the money that we could put into oil/gas exploration and put it instead into upping PV cell efficiency, that would be a much better investment.

Reply
July 28, 2008

Brian Christiansen

I respectfully disagree with the idea that more drilling, especially in environmentally sensitive areas, is a good idea. As a country we invest nearly nothing in alternative energy. We give more in tax breaks to petroleum companies than we invest in all other forms of energy research.

We should cope with the expensive gas in the near term to rid ourselves of it through electricity-producing domestic resources faster than giving ourselves more oil. You don't give a heroin addict more heroin when you're trying to get him to quit. Don't do the same with our addiction to oil.

It won't be comfortable, but breaking addictions isn't a comfortable thing.

If we took the money that we could put into oil/gas exploration and put it instead into upping PV cell efficiency, that would be a much better investment.

Reply