The Last Barrel

 Vol. 233 No. 10

As you leaf through the pages of this issue, you will see several significant items of coverage related to energy issues in the Nov. 6 presidential election. In our humble opinion, as regards the future of the U.S. oil and gas industry, this is perhaps the most crucial election since World War II. Accordingly, we have worked hard to bring our readers a variety of substantial, objective pieces on energy issues, based on the facts and the current administration’s track record.

Item number one in our selection is a very thorough analysis of the election by Washington Contributing Editor Roger Bezdek, beginning on page 80. Roger has done a fine job of examining the energy plans of President Barack Obama and former Gov. Mitt Romney, and he has also analyzed the two parties’ energy planks in their platforms, the stands on issues by ranking members of the congressional energy committees, and summarized the status of a dozen key races that will affect the battle for control of the U.S. Senate.

Item number two, on page 17 is a well-done examination of the history of U.S. energy policy (or lack thereof) by our Editorial Advisory Board chairman, Bill Pike. In going back 100 years, Bill has dug up a number of interesting facts about U.S. oil and gas history, some of which our readers my not know. Bill’s contention that the defacto U.S. energy policy is a creature created more by accident and reaction than by deliberate, sound strategy is “spot on.” Last but certainly not least, we are honored to feature a guest editorial in the Executive Viewpoint column (page 27) by IPAA Chairman Virginia “Gigi” Lazenby. This fact-laden, strongly-worded opinion about Mr. Obama’s record vs. the performance of the upstream industry is a must-read item. At this point, I would strongly encourage readers to go look at these items, and then come back to this page and finishing reading my additional comments.

Additional details. Now that you, the reader, have taken a look at our special election article and columns, it should be fairly obvious as to who has the better plan for America’s energy future, particularly oil and gas. But in case you’re still not sure, let me point out a few additional facts about the Obama track record:

• The Bush administration, responding to $4/gal gasoline prices mid-2008, opened nearly all offshore areas to drilling, but Obama tossed that decision aside when he took office in 2009, spending the last 31/2 years devising a plan that effectively re-imposes the moratoria lifted in 2008.
• Earlier this year, Mr. Obama announced that he would raise royalties charged operators for producing on federal lands by 50%, overnight
• Just like offshore, Mr. Obama claims to have an “all of  the above” energy policy, but he continues to exclude operators from drilling on federal lands in the Rockies, where leases are down 70% during his tenture
• Mr. Obama plans to take away the Section 199 tax deduction that oil and gas firms receive for “job creation”
• Mr. Obama wants to strip away the “dual capacity” credits that producers receive, to take out the sting of double taxation on earnings abroad
• The Obama administration wants to extend its proposed rule (to take effect in 2015), that operators must capture emissions of certain air pollutants from production, to hydraulic fracturing, even though shale wells emit far fewer volatile organic compounds than conventional wells
• Mr. Obama continues to embrace “fuzzy math” with regard to accurately portraying the U.S. energy situation. For example, he loves to say, “We’ve got 2% of the world oil reserves, but we use 20%.” 
• Mr. Obama has unleashed the EPA on a never-ending attack on the coal industry, making it virtually impossible to build a new coal-fired plant and break even, much less make a profit. Never mind that various studies have shown that the U.S. cannot guarantee a reliable supply of electricity without a significant chunk coming from coal-fired generation.

Based on these items, plus the many details in the aforementioned election articles, it is clear that Mr. Obama should be flunked on his energy record. Accordingly, we want to encourage all of our readers in the U.S. to get out and vote on Nov. 6 (or earlier) for Gov. Romney. The country can ill-afford another four years of Mr. Obama taunting oil and gas at every turn.

Potential metaphors. Last month, the Houston area experienced two major milestones in its history, and each one, in its own way, could be construed as a metaphor for how many Americans feel that the country’s best days have been behind it. The first of these concerns the retirement of 85-year-old Houston Astros baseball broadcaster Milo Hamilton. After a roughly 65-year career, the Hall-of-Famer worked his final radio game on Sept. 26, leaving many Houston fans wondering whether the future will ever yield another broadcaster of his stature.

The other great milestone was the visit of the Space Shuttle Endeavour and its 747 transporter to the Houston area, on its final voyage from Florida to Los Angeles. The Endeavour and the 747 made numerous passes over portions of the Houston area before landing for the night at Ellington Field, and again the next morning, they flew directly over the heart of the city, as they headed west. As the Endeavour and the 747 disappeared over the horizon, a collective sigh could almost be heard over Houston, as people wondered whether NASA will ever regain its former glory and achievement.

Each of these milestones could be construed as metaphors representing the decline of American greatness, particularly over the last four years. But it doesn’t have to be that way—get out and vote, and make a difference!