Commentary Magazine


Topic: Oil

Keystone Scramble Shows Dems Already Forgetting Midterms Defeat

Republican losses typically produce an outpouring of concern trolling from Democrats, eager to “help” Republicans turn their fortunes around. The advice usually includes loosening the hold of the base on the party’s agenda, to become less extreme; paying more attention to polls; and buying into a proactive, productive legislative agenda. Yet now that Democrats have been on the wrong end of a national wave, will they take their own advice? Not if the machinations around the Keystone XL pipeline are any indication.

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Republican losses typically produce an outpouring of concern trolling from Democrats, eager to “help” Republicans turn their fortunes around. The advice usually includes loosening the hold of the base on the party’s agenda, to become less extreme; paying more attention to polls; and buying into a proactive, productive legislative agenda. Yet now that Democrats have been on the wrong end of a national wave, will they take their own advice? Not if the machinations around the Keystone XL pipeline are any indication.

In fact, it’s quite the opposite. Democrats have for years opposed the pipeline, which would bring oil from Canada’s tar sands to Gulf Coast refineries. But Louisiana Democratic Senator Mary Landrieu is facing an uphill battle in her December 6 runoff election against Republican Representative Bill Cassidy. Keystone would be a “boon” for Louisiana, as even the New York Times admits, so Landrieu is trying to push Keystone across the finish line hoping it’ll drag her there along with it.

Were the situation reversed, Democrats would be doing what Republicans are now: imploring them to stop getting in their own way and support the pipeline. After all, it’s popular, it would show the Democrats can support a legislative agenda that brings jobs to an important industry, and it’s only been sidelined so far because President Obama is hostage to the bidding of his extremist base. And yet, Landrieu is not having an easy time getting enough Democrats to join the 60-vote threshold for the vote expected to be held early this evening.

Of course, even if Landrieu can get the votes in the Senate, the Keystone vote is already a less-than-perfect subject for a Hail Mary, as the Times notes:

On Friday, a Keystone bill sponsored by Mr. Cassidy passed the House. Ms. Landrieu is now close to mustering a filibuster-proof 60 Senate votes in favor of the pipeline in the Senate. She told reporters on Friday that she had 59 votes and was reaching out aggressively to colleagues to round up the critical final vote necessary to send the bill to Mr. Obama’s desk.

That’s right–she’s been handed the baton by her rival, Bill Cassidy. It’s not as though Landrieu is in favor and her opponent isn’t. Landrieu is no better on the issue than Cassidy; in reality, she’s playing catch-up because of Democratic opposition to the plan. It’s unclear how passing the Keystone bill would give her the boost she needs to beat Cassidy, though the high-profile scramble for votes would seem to at least help her by elevating her profile.

But that’s only if it passes. And right now, Democrats aren’t so sure it’s worth helping her reelection, in part because it’s no guarantee they’ll retain the seat even if the bill passes. Here’s Politico:

With Keystone apparently stuck on 59 votes — one shy of the amount needed for passage — Landrieu has turned into a one-woman Senate whip, seeking a vote set for Tuesday night that would show her clout in oil-rich Louisiana ahead of her Dec. 6 runoff. …

Much of the focus of Monday’s guessing games was on Sen. Jay Rockefeller (D-W.Va.), who hails from a fossil fuel state and whose upcoming retirement could leave him with little to lose. But he said Monday evening that he’s voting no.

Another rumored waverer was Sen. Angus King (I-Maine), who caucuses with Democrats. He indicated he’s still leaning no but said, “I’ll make a decision when I vote.”

Sen. Tammy Baldwin (D-Wis.) said she’s voting no because she doesn’t think “Congress should be siting pipelines.”

And what if she does get that 60th vote? Back to the Times:

Even if the Senate supports building the pipeline in a vote on Tuesday night, President Obama is likely to veto the measure on the grounds that an environmental review of the process remains incomplete.

Nonetheless, the events of this week suggest that after the expected veto, Mr. Obama may eventually approve the pipeline, which would run from the oil sands of Alberta to the Gulf Coast. The project is anathema to the environmentalists who are part of the president’s political base.

Obama, who isn’t running again, is expected to choose his extremist base over a member of his party trying desperately to hold her seat. And that environmentalist base has not become any more moderate or levelheaded over the course of this administration; the liberal interest group MoveOn.org sent an email today about the Keystone vote with subject line: “Game over for our planet?”

The Times report also notes that in early 2015 there will be more Republicans in the Senate and thus fewer lawmakers held hostage to a fringe element of the liberal base. In such a case, an Obama veto now (if this bill passes) will invite yet another Keystone bill sent to his desk next year, and this one will be closer to having enough votes to even override his veto. If he’s going to deal with that kind of repeated showdown, the Times reports, he may want a trade.

And maybe he’ll get one. Or maybe he’ll have no leverage. Either way, it won’t do much for Landrieu in 2015. Not that the president cares much one way or the other.

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To Fix Iraq: Administrative Federalism, not Tripartite Division

Max Boot picks up on former Council on Foreign Relations boss Les Gelb’s revival of Gelb’s previous proposal to divide Iraq along ethnic and sectarian lines. Let there be no confusion: Gelb’s idea is as bad an idea now as it was then. The problem isn’t Gelb’s embrace of federalism; rather, the problem is the idea that such federalism needs to be based on ethnicity or religion.

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Max Boot picks up on former Council on Foreign Relations boss Les Gelb’s revival of Gelb’s previous proposal to divide Iraq along ethnic and sectarian lines. Let there be no confusion: Gelb’s idea is as bad an idea now as it was then. The problem isn’t Gelb’s embrace of federalism; rather, the problem is the idea that such federalism needs to be based on ethnicity or religion.

True, there are three main communities in Iraq: Arab Sunnis, Arab Shiites, and Kurdish Sunnis. However, there are many smaller communities as well: The Faylis (Kurdish Shiites); both Sunni and Shiite Turkmen, Christians of different denominations; Shaykhis; and Yezidis. The geographical dividing lines between the communities can be blurrier than an Obama red line: Sunnis live in Basra; Baghdad, despite the civil war, remains a mixed city. Kirkuk is a mélange of almost every community that lives in Iraq.

Nor are those areas which are more homogeneous in ethnic or sectarian terms prone to agree with each other politically. The Kurds, after all, fought a civil war between 1994 and 1997, and despite efforts to bury the hatchet in public, events are still too fresh for three major political parties to come clean with regard to the disappeared. Shiite parties are often at odds with each other; Basra, for example, has long been the focal point of a struggle between Da’wa on one hand and a coalition of Sadrists and Ammar al-Hakim’s Islamic Supreme Council of Iraq on the other. Nor would a Sunni canton address the fundamental problem of ISIS. The primary problem Sunni Arabs face is not poor governance in Baghdad; it is the lack of Sunni Arab leadership within their own community.

I’m fortunate enough to visit three or four times a year, heading to different regions on each trip. In January, for example, I visited Kirkuk, Tikrit, Mosul, and Kurdistan. In March, I visited Baghdad. And my next trip will take me to southern Iraq. And, in July, I was able to sit down with former officials from Saddam Hussein’s regime in Jordan. None of my trips are sponsored by or coordinated with the embassy or U.S. military, and therefore I’m not subject to the security bubble or limited in my meetings only to U.S. military and embassy interlocutors. What is most interesting when talking to Iraqis is not simply the complaints of various groups or communities toward each other or the central government, but rather the subject on which many Iraqis agree: Decentralization.

Concentrating power locally is not the same as communal federalism. Iraq has 18 governorates. Rather than treat some governorates as Shiite, others as Sunni, and the remainder as Kurdish, any federalism should be based on administrative boundaries: Rather than have Baghdad (try to) control the country, the Iraqi central government should focus on defense and foreign affairs and divide Iraq’s substantial oil revenue according to estimated proportion of the population in each governorate. Administrative federalism would be healthier for Iraq than playing into the ethnic and sectarian morass.

Les Gelb cites his 2003 New York Times op-ed; let me dredge up my 2002 New York Times piece that I wrote after having spent nine months in Iraqi Kurdistan, and which discussed the nuance of federalism. Much of the piece holds true today. True, Kurdish leaders oppose administrative federalism out of fear that direct infusions of cash to Kurdish governorates might undercut their own rule, but there is nothing that prevents governorates to act in concert with each other of they so choose, as Iraqi Kurds likely would.

Nor must administrative federalism be based simply on provinces, as I had related twelve years ago. Sunni leaders suggest devolving political power even further, to districts or sub-districts bringing government closer to the people.

The reason for Iraq’s postwar over-centralization has less to do with democracy or Iraq’s long-term stability and more to do with American shortsightedness. When the Coalition Provisional Authority (CPA) was putting together Iraq’s Fiscal Year 2004 budget, there was a brief debate about getting provinces to build a proposed budget to pass to Baghdad which would then mediate and determine a national budget. Patrick Kennedy, then Bremer’s chief of staff, vetoed the idea: The CPA leadership was fixated on donor conferences and so needed a budget done more quickly; that required concentrating the process in Baghdad. It was the triumph of narrow, bureaucratic considerations over the big picture, and one for which Iraqis continue to pay a price. Perhaps, a decade later, it is time to reconsider, and encourage Iraq to prioritize local governance over Baghdad’s dysfunctional bureaucracy.

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Throwing a Life Raft to a Failing Iran

One of the most important questions when assessing Iran’s economy and perhaps even the Islamic Republic’s stability is at what price of oil did the Iranian leadership calculate Iran’s budget. The oil market is historically volatile, but prognosticating the average price of oil over the fiscal year is important: Iran’s economy is not only dependent upon petroleum products but it is also beset by a bloated bureaucracy and inefficient management. If Iranian bureaucrats guess wrong about oil prices, then they risk not making payroll. As the price of oil declines, the Iranian government—and even the Islamic Revolutionary Guard Corps—also have less money to engage in special projects or to spend overseas.

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One of the most important questions when assessing Iran’s economy and perhaps even the Islamic Republic’s stability is at what price of oil did the Iranian leadership calculate Iran’s budget. The oil market is historically volatile, but prognosticating the average price of oil over the fiscal year is important: Iran’s economy is not only dependent upon petroleum products but it is also beset by a bloated bureaucracy and inefficient management. If Iranian bureaucrats guess wrong about oil prices, then they risk not making payroll. As the price of oil declines, the Iranian government—and even the Islamic Revolutionary Guard Corps—also have less money to engage in special projects or to spend overseas.

Most analysts believe Iran calculated its budget based on oil being $90/barrel. Brent crude is now trading at $85/barrel, down from $115/barrel in June. Not only does that represent a 26-percent decline in the price of oil in just four months but, if the price remains at $85/barrel, it represents a potential 5.5 percent shortfall in the Iranian budget. If the price falls further and fast, the damage to the Iranian economy and its ability to invest money in international adventures in Iraq, Afghanistan, Syria, Lebanon, and the Gaza Strip will fall even further.

How sad it is, then, that the Obama administration seems to be greasing its diplomatic process on sanctions relief to the tune of more than $7 billion—122 percent of the official annual budget of the Islamic Revolutionary Guard Corps—while European and American firms now chomp at the bit to spend money inside Iran.

There is no coherent regional strategy in the White House or State Department: Heck, it’s been hard enough for the Obama administration to understand that it cannot treat Syria and Iraq as problems detached from each other. While the Obama administration increases its desperation to deal with Iran, it is prepared to ignore Iranian interference in Iraq, Syria, Lebanon, the Gaza Strip, and Afghanistan. Any cash crunch will negatively impact Iran’s influence and involvement in these countries and territories, especially given the cost of Iran’s subsidies of groups like Hezbollah and Iraq’s various Shi‘ite militias. There should be no argument that the activities of the Qods Force and various Iranian-backed militias are antithetical to regional security and American national interests. Over the past year, the Obama administration has been willing to compartmentalize and ignore this fact in order to advance its nuclear diplomacy.

Perhaps it’s time to recognize that continuing to compartmentalize not only risks letting Tehran off the hook for its actions, but now risks snatching defeat from the jaws of possible victory. Rather than provide Iran cash (or enable investment which does the same thing) to help the regime in time of need, the United States should be doing everything in its power to reduce the price of oil further. This would give Iranian officials a choice: Either cease interfering in and destabilizing countries like Syria and Lebanon, or risk collapsing Iran’s own economy. And if the United States managed to play its cards right, it might just cripple the regime enough to set itself and Iran down the path of solving myriad other regional problems.

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Of Pipelines and Fundraisers

For six long years, the Obama administration has been holding up the Keystone XL Pipeline that would bring oil from the Alberta oil sands to Gulf Coast refineries. Approving the project would provide thousands of well-paying construction jobs, boost the economy, help lower the world price of oil (which has been declining sharply on its own in recent weeks—as you have probably noticed at the gas pump), and reduce the influence of Russia and OPEC in world affairs. In other words, Keystone is a win-win-win-win project.

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For six long years, the Obama administration has been holding up the Keystone XL Pipeline that would bring oil from the Alberta oil sands to Gulf Coast refineries. Approving the project would provide thousands of well-paying construction jobs, boost the economy, help lower the world price of oil (which has been declining sharply on its own in recent weeks—as you have probably noticed at the gas pump), and reduce the influence of Russia and OPEC in world affairs. In other words, Keystone is a win-win-win-win project.

Obama, however, prefers to cater to self-appointed environmental interests that are a major component of his base. They, of course, being uniformly affluent, don’t give a damn about working-class jobs, however well paying. They prefer driving around in their Range Rovers, maintaining more than one large home, jetting off hither and yon, and congratulating themselves on their good stewardship of planet earth. It’s another indication of how much the Democratic Party has become the party of the elite. Siding with the environmentalists, of course, not only injures the American economy, it also injures the Canadian economy and strains our relationship with one of our closest allies and NAFTA partners.

But Canada is a sovereign state. It’s not going to abandon one of its key natural resources because a bunch of over-privileged Americans don’t like its exploitation and go to Obama fundraisers. So Canada is beginning to develop alternatives. One would be to build a 2,900-mile pipeline that would carry a million barrels of oil a day from the oil sands region to the ice-free port of St. John, New Brunswick, on the Bay of Fundy. There it would be refined and then shipped to customers around the world via supertankers.

The oil was always going to reach market one way or another, sooner or later, a fact that the environmentalists and the Obama administration refuse to acknowledge. So the only fruits of Obama’s policy of endless delay will be considerable harm to the American economy and some successful fundraisers. No wonder his Gallop approval rating is down to 39 percent.

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Obama (Still) Out of Excuses on Keystone

Proponents of the Keystone XL pipeline have always had the science, the politics, and the economics on their side. But the Obama administration, wary of upsetting the extreme voices in the environmentalist movement, has been looking for excuses to defy the science, politics, and economics and trash the pipeline anyway.

Last month, the president ran out of excuses–or so it seemed. The great hope of the left was that the administration could be relied upon to find a kernel of bad news on Keystone that it could exploit and exaggerate to kill the project. Thus they waited with bated breath on the State Department’s environmental impact report. At the end of January, it was released: the State Department confirmed the pipeline “would be unlikely to alter global greenhouse gas emissions.”

The left still had one straw at which to grasp, however. An investigation had been launched into whether the State Department violated conflict-of-interest rules in the course of conducting the environmental review. Yesterday, the inspector general’s report was released, absolving the State Department of the charges:

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Proponents of the Keystone XL pipeline have always had the science, the politics, and the economics on their side. But the Obama administration, wary of upsetting the extreme voices in the environmentalist movement, has been looking for excuses to defy the science, politics, and economics and trash the pipeline anyway.

Last month, the president ran out of excuses–or so it seemed. The great hope of the left was that the administration could be relied upon to find a kernel of bad news on Keystone that it could exploit and exaggerate to kill the project. Thus they waited with bated breath on the State Department’s environmental impact report. At the end of January, it was released: the State Department confirmed the pipeline “would be unlikely to alter global greenhouse gas emissions.”

The left still had one straw at which to grasp, however. An investigation had been launched into whether the State Department violated conflict-of-interest rules in the course of conducting the environmental review. Yesterday, the inspector general’s report was released, absolving the State Department of the charges:

The State Department’s inspector general largely cleared the department on Wednesday of allegations that it had violated its conflict-of-interest procedures when selecting a contractor to analyze the Keystone XL oil pipeline — the latest in a series of defeats for environmental groups fighting a last-ditch effort to block the project’s approval.

Republicans quickly claimed victory.

“Another day and another government report that finds no reason to continue blocking this common-sense, job-creating project,” Brendan Buck, a spokesman for House Speaker John Boehner, said in a statement. “It’s long past time the president stop pandering to his extremist allies and just approve it so we can get people back to work.”

The Keystone pipeline system transports oil from Canada to refineries in the U.S. and the “XL” extension would further increase the system’s capacity, creating jobs along the way. The oil from Canada would go somewhere, of course, so blocking the pipeline wouldn’t change the environmental picture, it would simply reject an ally’s mutually beneficial project so leftist extremists wouldn’t be angry with Obama.

For a president who obnoxiously promised to “restore science to its rightful place,” and who has done precisely the opposite, Keystone was a chance for him to come back to reality. He’d rather not. But if the scientific facts, economic benefits, and job creation aren’t convincing to this president, he also has another reason to embrace the pipeline: safety.

There has been an unfortunate amount of scapegoating of the oil industry for accidents involving the rail transport of oil. The oil, after all, doesn’t make a train more likely to crash, regardless of how much the left would like to publicly shame energy companies. But if they don’t want to transport the oil by train, they’ll have to build the pipeline infrastructure necessary to ensure its timely delivery.

Well they don’t have to, I suppose. Perhaps they can teleport it. Or they can try sticking oil into an envelope and have the postal service mail it. Or they can eschew the oil altogether and ask the country’s motorists to follow the Flintstones method of powering their vehicles; the first lady, and her Let’s Move anti-obesity campaign, would surely approve.

This is the natural progression of progressivism, of course. I’ve written before about how the over-regulated state of New Jersey resulted in the government mandating activity it was also essentially legally prohibiting. In such cases, there is almost no way for the average citizen involved in certain activities to follow the law without also breaking the law. It sounds humorous, but to the people living under such a regime it’s not funny at all. It’s also morally repugnant, and evidence of a government filled with bureaucrats mad with power and contempt for the rule of law, to say nothing of basic democracy.

The oil transport situation isn’t quite there yet, to be sure. But it’s reminiscent of the same attitude that leads us there. We must transport oil, but we’re also not allowed to transport oil. The Obama administration is completely out of excuses–the president never had good reasons, only feeble excuses–to reject the pipeline. It’s time to act accordingly.

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The Decline of Oil

So-called environmentalists never tire of predicting the end of oil. They’ve been talking about “peak oil” for decades, after which annual production would inevitably decline as we drain the world’s finite supply.

In fact, proven reserves (oil that we know is there and is recoverable with current technology and under current law) have been steadily rising, despite the fact that the world pumps 83.9 million barrels a day out of the ground, a 32 percent increase over 20 years ago. New techniques, such as fracking and horizontal drilling, have brought new life to both old fields and new ones whose oil had previously been unrecoverable. And vast new fields, such as the giant finds off the coast of Brazil, have added new reserves.

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So-called environmentalists never tire of predicting the end of oil. They’ve been talking about “peak oil” for decades, after which annual production would inevitably decline as we drain the world’s finite supply.

In fact, proven reserves (oil that we know is there and is recoverable with current technology and under current law) have been steadily rising, despite the fact that the world pumps 83.9 million barrels a day out of the ground, a 32 percent increase over 20 years ago. New techniques, such as fracking and horizontal drilling, have brought new life to both old fields and new ones whose oil had previously been unrecoverable. And vast new fields, such as the giant finds off the coast of Brazil, have added new reserves.

Much of that 32 percent increase in world production has gone to power the fast-rising economies of the developing world, such as China, India, and Brazil. Oil consumption has been rising very slowly in the United States, however, up a mere 8.1 percent in 20 years.

But the U.S. population has risen over 20 percent since 1993, so U.S. oil consumption is down significantly on a per capita basis. We used 24.15 barrels a year per person in 1993; today the figure is 21.6 barrels, a 10.6 percent drop per person. The decline in oil consumption on a GDP basis is even more dramatic. In 1993, the U.S. had $1,096 of GDP per barrel of oil consumed. Today the figure is $2,393 per barrel of oil. Taking inflation into account, GDP per barrel of oil is up a whopping 34.8 percent in the last 20 years.

What accounts for that? There are several things. One is a slow but steady switch to other power sources, such as natural gas. In 1993, natural gas produced 13 percent of total U.S. electricity; today it produces 24.7 percent. Oil, meanwhile, went from producing 3.5 percent of total electricity 20 years ago to a mere 0.7 percent today. Another reason is a steadily increasing efficiency. Space heating took 53.1 percent of home energy consumption in 1993; today it is only 41.5 percent. The nation’s fleet of cars and trucks have much higher average miles per gallon than 20 years ago. A third reason is that GDP growth in recent decades has been centered in non-energy-intensive industries. Manufacturing automobiles is energy intensive. Manufacturing software is not.

Once oil drilling began in 1859, petroleum became ever more central to the world’s economy, first as an illuminant (kerosene) and lubricant. Then, just as electricity began to replace kerosene for home lighting, the internal combustion engine produced a vast new market for petroleum. By the mid-20th century, oil was the world’s most important product and therefore it was a main driver of world politics. The Middle East would have been a backwater, seldom mentioned in the nightly news, had it not sat upon a very high percentage of the world’s then known oil.

We are a long way from seeing the end of oil as a major force in the world economy, but it is steadily losing its centrality. You would think that would be good news for environmentalists. But, of course, nothing is good news for them. Chicken Little runs the environmentalist public-relations operations, which goes a long way to explaining why fewer and fewer non-liberals listen to them anymore.

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The Oil Boom Continues

Guess which country is the world’s largest oil producer. No, it’s not Saudi Arabia or Russia. It’s the United States, which passed Saudi Arabia in November of 2012, according to data from the federal Energy Information Administration and reported in Investors Business Daily.

In 2012 American domestic output rose by an astonishing 800,000 barrels a day. That’s more than total oil production in such middling oil producers as Argentina, and the greatest single-year increase in the United States since Edwin Drake drilled the first well in 1859.

That has consequences far beyond the oil patches of Texas, Alaska, and North Dakota. In 2006, the United States imported 60 percent of its oil. In 2013, that might well fall to 30 percent. That would mean roughly a $600 million turnaround in the balance of payments per day.

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Guess which country is the world’s largest oil producer. No, it’s not Saudi Arabia or Russia. It’s the United States, which passed Saudi Arabia in November of 2012, according to data from the federal Energy Information Administration and reported in Investors Business Daily.

In 2012 American domestic output rose by an astonishing 800,000 barrels a day. That’s more than total oil production in such middling oil producers as Argentina, and the greatest single-year increase in the United States since Edwin Drake drilled the first well in 1859.

That has consequences far beyond the oil patches of Texas, Alaska, and North Dakota. In 2006, the United States imported 60 percent of its oil. In 2013, that might well fall to 30 percent. That would mean roughly a $600 million turnaround in the balance of payments per day.

This revolution has been accomplished on private and state lands, thanks to new technologies such as fracking and horizontal drilling. This has not only opened new fields, such as the Bakken shield in North Dakota, but revived old fields such as the great Permian basin in West Texas and New Mexico. West Texas production had been declining for years after peaking about 1970. Now it is growing again.

The Obama administration has been doing its level best to see that this renaissance in American oil production is throttled in its crib. Vast areas of offshore are off limits, as are many areas of federal land. (The federal government owns about 28 percent of all the land in the country, roughly 635 million acres.) And the Obama administration has been slow-walking drilling permits. In North Dakota it takes about 10 days to get a permit for drilling on state land. The wait for federal permits averages 307 days. As a result, oil production on federal land has actually been declining in recent years while increasing everywhere else. Not only does that retard our increasing independence from foreign oil, it costs the federal government serious money, as the government is paid handsome royalties on minerals extracted on federal land.

There’s probably not much to be done about that as long as the deeply anti-capitalist so-called “environmental movement,” is in charge of energy policy in Washington. But the country is very lucky the federal government only directly controls 28 percent of the country’s territory.

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With Gas, Israel Should Wean Itself off Foreign Aid

Jonathan Tobin is absolutely correct to highlight the importance of the Tamar gas field coming online, and the impact that exploitation of the Leviathan field will have once that too comes online. In the course of his post, he notes, “It is yet another sign that the country that was once a basket case dependent on foreign aid from America and world Jewry in order keep its finances afloat irrespective of defense needs is on its way to becoming a major economic power.”

Much of the credit for Israel’s economic turnaround lies with Benjamin Netanyahu, during his tenure as Minister of Finance between 2003 and 2005. Then Prime Minister Ariel Sharon likely awarded Netanyahu the post as a career-killer. Israel’s finances were a mess, and both its unions and old guard socialist traditions made substantive reform seem impossible. Netanyahu tackled the challenge and while he did not win many friends in certain outmoded sectors, he did win enough respect to propel himself to the top slot. Indeed, Netanyahu’s financial reforms will likely trump his premierships when his legacy is written.

Let us hope that Israel’s energy windfall does not simply get wasted in public entitlements and social subsidies. Israel should not aspire to become fat and lazy like Saudi Arabia and Kuwait. Let it truly be a start-up nation, rather than a subsidy nation.

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Jonathan Tobin is absolutely correct to highlight the importance of the Tamar gas field coming online, and the impact that exploitation of the Leviathan field will have once that too comes online. In the course of his post, he notes, “It is yet another sign that the country that was once a basket case dependent on foreign aid from America and world Jewry in order keep its finances afloat irrespective of defense needs is on its way to becoming a major economic power.”

Much of the credit for Israel’s economic turnaround lies with Benjamin Netanyahu, during his tenure as Minister of Finance between 2003 and 2005. Then Prime Minister Ariel Sharon likely awarded Netanyahu the post as a career-killer. Israel’s finances were a mess, and both its unions and old guard socialist traditions made substantive reform seem impossible. Netanyahu tackled the challenge and while he did not win many friends in certain outmoded sectors, he did win enough respect to propel himself to the top slot. Indeed, Netanyahu’s financial reforms will likely trump his premierships when his legacy is written.

Let us hope that Israel’s energy windfall does not simply get wasted in public entitlements and social subsidies. Israel should not aspire to become fat and lazy like Saudi Arabia and Kuwait. Let it truly be a start-up nation, rather than a subsidy nation.

Certainly, Israel’s defense needs are real—and will not likely diminish in the next 50 years given how incitement has poisoned new generations of Palestinians, Syrians, Jordanians, Egyptians, and Lebanese. Iran continues to pose an existential threat. It’s all well and good to describe ordinary Iranians as moderate and even cosmopolitan—they are—but when push comes to shove, it’s the guys with the guns who matter, and the Iranians who would control Iran’s nuclear program would be the most radical and ideological core of the Islamic Revolutionary Guard Corps. Likewise, apology or not, Turkey—where anti-Semitic incitement has become a staple of newspaper and television discourse—will pose an increasing threat to peace and stability in the Eastern Mediterranean. Turkey’s Foreign Minister Ahmet Davutoğlu, whom John Kerry will fete this weekend, threatened both Israel and Cyprus with military force over their plans to develop further energy resources in the Eastern Mediterranean.

Defense needs mean that the United States should continue to guarantee Israel’s qualitative military edge, but they do not mean that an energy-rich Israel should receive U.S. aid in order to supply its military. Israel should be allowed to purchase what it needs, but if can afford to do so without assistance, it should be a matter of pride for Israel and Israelis that they secure themselves without subsidy. Neither Singapore nor Taiwan receive substantial foreign aid, nor does Japan. Israel should not either. Perhaps if Israel forgoes its remaining American assistance, it can not only regain some hearts and minds amidst inward-looking Americans, but it can also spark a debate about why the United States continues to fund so many states and entities that undermine regional security and are detrimental not only to the United States’s security, but to Israel’s as well.

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Outsourcer-in-Chief

President Obama’s outsourcing talking points have been silly and intellectually dishonest even by the standards of political rhetoric, which is saying something. Bain Capital isn’t in the business of creating jobs, it’s in the business of maximizing return on capital. Its principals would be violating their fiduciary duty to their investors if they maximized U.S. job creation instead. Investing overseas is not outsourcing. Outsourcing results in lower costs (otherwise, why outsource?) which means lower prices, which means that American consumers have more money to spend on other goods and services, which creates more American jobs. And so on and on.

But there is a major outsourcer running for president, one who has prevented tens of thousands of American jobs from being created and who has sent those jobs overseas instead. It is not Mitt Romney.

Obama’s obsession with “green energy,” and opposition to traditional fuels such as coal, oil, and natural gas, has resulted in a significant drop in permits for drilling on federal land. These permits increased 58 percent under President Clinton, 116 percent under Bush and are down 36 percent under Obama. But energy is a fundamental economic input. So, for every barrel of oil that is not explored for here, it is explored for in some other country. Every well not drilled here, is drilled there.

And that means that good jobs that could be American ones are not, because Obama won’t let those jobs be created here. On a visit to Brazil, he told the Brazilian president that he looked forward to America being a big customer for the oil coming out of Brazil’s spectacular new offshore oil fields. There is considerable evidence that we, too, have spectacular offshore oil fields. But Obama would rather see Brazilian oilfield workers be paid good wages than American ones.

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President Obama’s outsourcing talking points have been silly and intellectually dishonest even by the standards of political rhetoric, which is saying something. Bain Capital isn’t in the business of creating jobs, it’s in the business of maximizing return on capital. Its principals would be violating their fiduciary duty to their investors if they maximized U.S. job creation instead. Investing overseas is not outsourcing. Outsourcing results in lower costs (otherwise, why outsource?) which means lower prices, which means that American consumers have more money to spend on other goods and services, which creates more American jobs. And so on and on.

But there is a major outsourcer running for president, one who has prevented tens of thousands of American jobs from being created and who has sent those jobs overseas instead. It is not Mitt Romney.

Obama’s obsession with “green energy,” and opposition to traditional fuels such as coal, oil, and natural gas, has resulted in a significant drop in permits for drilling on federal land. These permits increased 58 percent under President Clinton, 116 percent under Bush and are down 36 percent under Obama. But energy is a fundamental economic input. So, for every barrel of oil that is not explored for here, it is explored for in some other country. Every well not drilled here, is drilled there.

And that means that good jobs that could be American ones are not, because Obama won’t let those jobs be created here. On a visit to Brazil, he told the Brazilian president that he looked forward to America being a big customer for the oil coming out of Brazil’s spectacular new offshore oil fields. There is considerable evidence that we, too, have spectacular offshore oil fields. But Obama would rather see Brazilian oilfield workers be paid good wages than American ones.

Despite the best efforts of the Obama administration and its environmentalist allies, the country is undergoing a huge energy boom on lands that Obama does not control. North Dakota is now number three among the states in oil production, surpassing California, thanks to the Bakken oil field. Oil imports are down from 60 percent of annual consumption to 45 percent in just a few years and are sure to fall further. Vast new gas fields, made accessible by hydraulic fracturing (fracking) has caused a dramatic fall in the price of natural gas. One result is that for the first time, coal is no longer the dominant fuel in electricity generation, natural gas—far lower in carbon emissions—now is.

This is no small part of the reason that carbon emissions in this country are falling, not rising. In 2007 they were 6.02 billion metric tons. In 2011 they were 5.473 billion metric tons, down almost ten percent in five years. This year they are down another 7.5 percent over the first quarter last year. In other words, carbon emissions in 2012 will be down to a level lower than when the Kyoto Protocol was signed in 1997. It’s one of the great success stories to come out of the U.S. energy boom (although a weak economy has contributed, to be sure). But because it doesn’t fit the green agenda—they’d rather build windmills and tilt at fossil fuels—it’s been a non-story.

It is capitalism that is lowering American carbon emissions, not government edict. It is government that is sending American jobs overseas.

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We Still Need to Protect Oil Interests

The Wall Street Journal has the umpteenth article today trumpeting the technological advances–primarily fracking–that are allowing oil companies to uncover and exploit vast, untapped fields in North America. This is leading a dramatic decline in our need for imported oil, especially oil imported from the Middle East. As the Journal notes:

By 2020, nearly half of the crude oil America consumes will be produced at home, while 82 percent will come from this side of the Atlantic, according to the U.S. Energy Information Administration. By 2035, oil shipments from the Middle East to North America “could almost be nonexistent,” the Organization of Petroleum Exporting Countries recently predicted, partly because more efficient car engines and a growing supply of renewable fuel will help curb demand.

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The Wall Street Journal has the umpteenth article today trumpeting the technological advances–primarily fracking–that are allowing oil companies to uncover and exploit vast, untapped fields in North America. This is leading a dramatic decline in our need for imported oil, especially oil imported from the Middle East. As the Journal notes:

By 2020, nearly half of the crude oil America consumes will be produced at home, while 82 percent will come from this side of the Atlantic, according to the U.S. Energy Information Administration. By 2035, oil shipments from the Middle East to North America “could almost be nonexistent,” the Organization of Petroleum Exporting Countries recently predicted, partly because more efficient car engines and a growing supply of renewable fuel will help curb demand.

Great news! We can all agree on that. But does this mean that in the future we will be able to ignore developments in the Middle East? That we will no longer have to spend some $50 billion a year (as estimated by Brookings’ Mike O’Hanlon) to protect the flow of oil? Were that it were so. In reality, as the article notes, oil is a global commodity, so supply disruptions in the Middle East–which our European and Asian trading partners remain reliant upon–would still drive up the cost of gasoline in the United States.

Another point worth keeping in mind, which goes unmentioned in this article: Much of the reason we remain concerned about the Middle East is because its oil supplies produce revenue streams that can be used for all sorts of nefarious purposes. Just think of the Saudis funding the promulgation of Wahhabi fundamentalist doctrines around the world–or of the Iranians building nuclear weapons. As long as oil is valuable–and there is scant prospect of that changing anytime in the foreseeable future–we will have to remain concerned about who controls it. And that means we will need to have a substantial military presence in the Middle East.

It’s not simply a defensive deployment either: Don’t forget that China is heavily dependent on the Middle East for its own oil. As long as our Navy can close its supply routes, we will hold a valuable cudgel that could be employed in the event of a crisis.

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ExxonMobil’s Role in Oil Tycoon’s Arrest

On October 25, 2003, machine-gun bearing Russian police raided oil tycoon Mikhail Khodorkovsky’s jet as it was refueling in the Siberian metropolis of Novosibirsk. They arrested Khodorkovsky, and he remains in prison to this day–though his release date, which is consistently pushed back, is now set for the year 2017.

The story that led up to Khodorkovsky’s arrest is fairly well-known: he was one of the “oligarchs” who took control of a state oil company in the 1990s and openly challenged Vladimir Putin in the political sphere. Claiming justice for Russia, Putin charged Khodorkovsky’s firm, Yukos, with tax evasion, declared it bankrupt, and seized control of the oil giant for the state, keeping Khodorkovsky locked up on trumped-up charges. But now there is a new wrinkle in the story, and according to Steve Coll’s new book on ExxonMobil, out today, Putin may have been spooked into arresting Khodorkovsky when he did (it’s not a question of “if”) after a conversation with Exxon CEO Lee Raymond.

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On October 25, 2003, machine-gun bearing Russian police raided oil tycoon Mikhail Khodorkovsky’s jet as it was refueling in the Siberian metropolis of Novosibirsk. They arrested Khodorkovsky, and he remains in prison to this day–though his release date, which is consistently pushed back, is now set for the year 2017.

The story that led up to Khodorkovsky’s arrest is fairly well-known: he was one of the “oligarchs” who took control of a state oil company in the 1990s and openly challenged Vladimir Putin in the political sphere. Claiming justice for Russia, Putin charged Khodorkovsky’s firm, Yukos, with tax evasion, declared it bankrupt, and seized control of the oil giant for the state, keeping Khodorkovsky locked up on trumped-up charges. But now there is a new wrinkle in the story, and according to Steve Coll’s new book on ExxonMobil, out today, Putin may have been spooked into arresting Khodorkovsky when he did (it’s not a question of “if”) after a conversation with Exxon CEO Lee Raymond.

The backstory is as follows. In 2002, both U.S. and Russian leadership believed the moment was ripe for more integration of Russia into the global economy. While there was always risk, American officials and businessmen assumed (correctly) that foreign firms would be safer doing business in Russia, which lacked reliable law and order and which was rife with corruption, if Russian companies had investments in the West. It was an economic strategy based on bringing Russia into the 21st century with regard to global economic cooperation and the safeguards that came with it.

Much of this cooperation was, at least at first, centered on the oil industry. Raymond’s ExxonMobil was ready to invest seriously in the emerging Russian energy sector. At the same time, Khodorkovsky was looking to sell a stake in Yukos to Western investors. For Raymond, Khodorkovsky’s company made the most sense: Khodorkovsky had begun a campaign to clean up his own books as an example to other Russian firms in an attempt to change the culture of Russian business. Khodorkovsky was also young, charming, and well-connected in the West. He believed he was insulating himself somewhat against possible political backlash at home both with these foreign connections and with his popularity growing in Russia.

Raymond, however, was not interested in buying into a firm unless he had a clear path to owning a majority (and controlling) stake in it. Khodorkovsky balked at Raymond’s desire to buy a controlling share. So he suggested a compromise: ExxonMobil would purchase a 30 percent stake in Yukos, and then later attempt to get permission from the Kremlin to buy enough shares for a controlling stake. Putin was open to foreign investment but wary of the idea of an American oilman running one of Putin’s “national champions”–energy exporters of power and pride. Putin would have to sign off on any such deal. But Khodorkovsky told Raymond this was not a good time to approach Putin on the matter. Invest in the initial offering, Khodorkovsky suggested to Raymond, and then later on, when the time is right, seek expansion.

Raymond, understandably, took this to be a weak and opaque attempt at giving him the run-around. So as negotiations continued into 2003, Raymond eventually met with Putin one-on-one during Putin’s trip to New York. Raymond made his pitch. Putin asked, just to be sure he was hearing this correctly, if Raymond was suggesting that after this sale, if Putin wanted to do anything with regard to Yukos, he would have to ask ExxonMobil’s permission? Yes, Raymond responded. Coll then describes the reaction:

Lee Raymond’s remarks about what Russia would have to do to satisfy ExxonMobil may have grated on Putin, however. “The report that we got back later was that Putin perceived him as just totally arrogant and far too aggressive,” [Yukos CFO Bruce] Misamore recalled. “And he just really was totally turned off by Lee Raymond–this big U.S. industrialist coming, and his arrogance, and telling the president of a country how things are going to be, almost…. Putin was just totally turned off by the guy–that was the report we got.”

From Putin’s perspective, Khodorkovsky was challenging him at home and bringing in the well-connected Americans to box him in further. So he threw a brushback pitch.

Raymond’s meeting with Putin may have been something of a final straw, but it’s hard to blame him for Khodorkovsky’s arrest. It’s far more likely that Putin was waiting for an excuse to put Khodorkovsky away, and decided this was it. Though he said he’d never run for president, Khodorkovsky was exercising far too much personal autonomy for Putin’s taste, and Putin has only confirmed his bad faith and disregard for the rule of law since that episode. Nonetheless, it’s an interesting footnote to a case that has become emblematic of the perils of Putin’s Russia.

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Another Legislative Defeat for Obama

Another (not totally unexpected) defeat for one of President Obama’s legislative proposals today. This time, the Senate rejected a measure to repeal oil company tax breaks, which the president urged them to pass in a stern speech this morning. The vote wasn’t completely split along party lines, with two Republicans supporting the measure and four Democrats opposing it.

Obama will continue to frame this as the GOP protecting the interests of Big Oil, but the fact that it failed in the Democrat-controlled Senate takes the edge off that slightly:

Obama has sought to deflect blame for high gas prices, in part by casting Republicans as allies of big oil companies. He used a Rose Garden speech to urge lawmakers to back the plan.

“Today, members of Congress have a simple choice to make,” Obama said. “They can stand with big oil companies, or they can stand with the American people.”

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Another (not totally unexpected) defeat for one of President Obama’s legislative proposals today. This time, the Senate rejected a measure to repeal oil company tax breaks, which the president urged them to pass in a stern speech this morning. The vote wasn’t completely split along party lines, with two Republicans supporting the measure and four Democrats opposing it.

Obama will continue to frame this as the GOP protecting the interests of Big Oil, but the fact that it failed in the Democrat-controlled Senate takes the edge off that slightly:

Obama has sought to deflect blame for high gas prices, in part by casting Republicans as allies of big oil companies. He used a Rose Garden speech to urge lawmakers to back the plan.

“Today, members of Congress have a simple choice to make,” Obama said. “They can stand with big oil companies, or they can stand with the American people.”

I know this fits nicely with Obama’s class warfare strategy, but it sounds completely counterintuitive. Even if there’s no hard evidence that repealing these tax breaks would raise the price of gas at the pump, it still sounds like a reasonable outcome to the average voter. And that’s the argument the GOP has been making:

Republicans alleged the Democratic proposal would hit struggling consumers.

“That was their brilliant plan on how to deal with gas prices: raise taxes on energy companies; when gas is already hovering around $4 a gallon, then block consideration of anything else, just to make sure gas prices don’t go anywhere but up,” Senate Minority Leader Mitch McConnell (R-Ky.) said on the floor.

Sen. David Vitter (R-La.) said the bill “is not a policy that will do anything but increase the price at the pump and decrease supply.”

“That is the opposite of what we need,” Vitter said on the floor ahead of the vote.

So there is honest disagreement about whether repealing tax breaks for oil companies would raise gas prices. But everyone can at least agree it certainly won’t lower the price at the pump. Which is why this is a puzzling and politically stupid move for the Democrats. Their plan to deal with high gas prices isn’t even designed to lower high gas prices.

Instead, the plan was to use the extra money from ending the tax breaks to invest in green energy programs and pay down the deficit. Ending the tax breaks would bring in an estimated $2 billion per year. Our national debt is nearly $16 trillion. So, enough said on that.

As for using the money to invest in green energy, Obama’s stimulus allotted $38.6 billion for a green energy loan program that has been a disaster. Another $2 billion per year is not going to change that. The purpose of repealing the tax breaks for oil companies is more about Obama’s views on fairness than about achieving any practical purpose. And that fact isn’t going to be lost on the general public.

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Obama to Tap Strategic Oil Reserves?

Reuters reported yesterday that President Obama and Prime Minister Cameron inked a deal to tap into the strategic oil reserves, a move that would lower the price of gas in the U.S. during an election year. The White House denied the report, but it could potentially be a trial balloon for the administration. Today, liberal Democratic members of Congress started calling for President Obama to go ahead with the plan. The Hill reports:

Reps. Edward Markey (D-Mass.), Rosa DeLauro (D-Conn.) and Peter Welch (D-Vt.), longtime proponents of releasing oil from the Strategic Petroleum Reserve, said Friday they are gathering support for the letter and hope to send it to Obama next week. …

“We are writing you because we believe that it is essential that the United States have an aggressive strategy for releasing oil from the Strategic Petroleum Reserve to combat the speculators capitalizing on the fear in oil markets and to send a message to Iran that we are ready, willing and able to deploy our oil reserves,” the letter says.

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Reuters reported yesterday that President Obama and Prime Minister Cameron inked a deal to tap into the strategic oil reserves, a move that would lower the price of gas in the U.S. during an election year. The White House denied the report, but it could potentially be a trial balloon for the administration. Today, liberal Democratic members of Congress started calling for President Obama to go ahead with the plan. The Hill reports:

Reps. Edward Markey (D-Mass.), Rosa DeLauro (D-Conn.) and Peter Welch (D-Vt.), longtime proponents of releasing oil from the Strategic Petroleum Reserve, said Friday they are gathering support for the letter and hope to send it to Obama next week. …

“We are writing you because we believe that it is essential that the United States have an aggressive strategy for releasing oil from the Strategic Petroleum Reserve to combat the speculators capitalizing on the fear in oil markets and to send a message to Iran that we are ready, willing and able to deploy our oil reserves,” the letter says.

And, of course, the plan would banish one of the major obstacles to Obama’s reelection:

Moving to tap the four giant Gulf Coast salt caverns that hold 700 million barrels of government-owned crude would still almost certainly knock global oil futures lower, delivering some relief at the pump for motorists and helping Obama in the November election if he can prevent gasoline from rising above $4 a gallon nationwide.

It would also be an unprecedented exploitation of presidential power for election-year gain. The U.S. has tapped into strategic oil reserves in the past, but only when there have been significant disruptions to the global oil supply – for example, during Desert Storm and Hurricane Katrina. This would be the first case in which the reserves would be used to deal with a politically inconvenient spike in gas prices, CNN reports:

Each case included a major disruption in global oil supply.

The market is tight today, but there is no major supply disruption to speak of.

The real driver of rising prices is geopolitical risk associated with Iran. Concerns over the country’s nuclear program have sparked a new round of sanctions by Western countries, and Iranian retaliation could put a major kink in global crude supply.

But supply isn’t being hit now, making any preemptive release look like an effort to keep the economy on solid footing during an election year.

Not only would this set an alarming precedent, it also carries risks. Dipping into the strategic oil reserves in a non-emergency situation means  there will be less resources in the event of a real, long-term disruption in the global oil market – a possibility that’s not hard to imagine considering the situation in Iran at the moment.

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The “Times,” It Ain’t A’Changing

Well, I’m back from my 12-day cruise off South America, lecturing with a Hillsdale College group. Except for two ten-hour flights on American Airlines in economy-class seats that would, were I a prisoner of war, violate the Geneva Convention, it was a great trip, with a great crowd.

Much to my surprise, on my return I found that the New York Times’s editorial page is still utterly predictable. The lead editorial this morning for instance, contains absolutely nothing new regarding drilling in the United States and U.S. waters. The Times writes:

It’’s campaign season and the pandering about gas prices is in full swing. Hardly a day goes by that a Republican politician does not throw facts to the wind and claim that rising costs at the pump are the result of President Obama’’s decisions to block the Keystone XL pipeline and impose sensible environmental regulations and modest restrictions on offshore drilling.

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Well, I’m back from my 12-day cruise off South America, lecturing with a Hillsdale College group. Except for two ten-hour flights on American Airlines in economy-class seats that would, were I a prisoner of war, violate the Geneva Convention, it was a great trip, with a great crowd.

Much to my surprise, on my return I found that the New York Times’s editorial page is still utterly predictable. The lead editorial this morning for instance, contains absolutely nothing new regarding drilling in the United States and U.S. waters. The Times writes:

It’’s campaign season and the pandering about gas prices is in full swing. Hardly a day goes by that a Republican politician does not throw facts to the wind and claim that rising costs at the pump are the result of President Obama’’s decisions to block the Keystone XL pipeline and impose sensible environmental regulations and modest restrictions on offshore drilling.

As any economist (except Paul Krugman) could tell the Times, any restrictions on future supply has an immediate upward price effect (and vice versa–promise of greater future supply brings down prices right away). So the Keystone XL pipeline decision certainly put upward pressure on gas prices. So does “modest restrictions on offshore drilling.” These modest restrictions include putting the entire east coast, the Florida gulf coast, and the entire west coast off limits to oil drilling. I hate to think what immodest restrictions would look like.

Even where drilling has been grudgingly allowed by the government, as off the north coast of Alaska, non-governmental organizations that the Times would never dream of criticizing stand ready to block any drilling. As the Times itself reports this morning, Shell Oil has launched a preemptive suit to try to forestall the inevitable legal challenges from groups masquerading as environmental groups (they are actually anti-business groups). Shell has already spent $4 billion just to get the government’s permission to drill. The Times writes:

Marvin E. Odum, Shell’’s president for the United States, said in an interview that he was “highly confident” that the company’’s plan for preventing and responding to an oil spill would survive any legal scrutiny. He said the company had filed the suit in the hopes of speeding up the judicial review of the plan that will come if and when the environmental groups — who have challenged Shell at every step of the process— file suit.

Their filing suit is more certain than the sun’s rising in the east tomorrow morning.

The Times also notes that we use 20 percent of the world’s oil (not surprising, actually, as we have 25 percent of the world’s GDP), but only 2 percent of the world’s reserves. This is lying with statistics. By definition, “proven reserves” are those that 1) are known to exist, 2) can be economically extracted with present technology and, 3) can be exploited under current law. So the vast reserves that are known to exist offshore (although even exploration is forbidden in many areas–doubtless because the left fears something might be found) don’t count. Neither do the huge reserves locked up in the oil shales of the West. Take away the legal restrictions imposed by the left, and American oil reserves probably exceed those of Saudi Arabia.

It’s nice to be back in the real world, even if it means I have to start reading the New York Times editorial page again.

 

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McConnell: Iran Making “Idle Threats”

Senate Minority Leader Mitch McConnell dismissed Iran’s warnings about closing the Strait of Hormuz as “idle threats,” during a small round table discussion with reporters today.

“This idle threat that they’re going to interrupt the flow of oil through the Strait of Hormuz is not enforceable. We have a carrier there, that will not happen,” McConnell told me. “So this is the time to squeeze the Iranians in every direction possible.”

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Senate Minority Leader Mitch McConnell dismissed Iran’s warnings about closing the Strait of Hormuz as “idle threats,” during a small round table discussion with reporters today.

“This idle threat that they’re going to interrupt the flow of oil through the Strait of Hormuz is not enforceable. We have a carrier there, that will not happen,” McConnell told me. “So this is the time to squeeze the Iranians in every direction possible.”

He added that the Saudis would assist with any fallout in oil production.

“The Saudis have already indicated that whatever reduction in oil production might occur as a result of this, they’ll make up,” said McConnell.

The Senate Minority Leader’s comments put him at odds with many military experts who say the regime’s threats are a real risk. The U.S. Navy has reportedly been training for a potential clash with Iran over the strait.

McConnell also blasted Obama’s leadership on Iran, saying that the president only ordered the latest round of tough Iran bank sanctions because Senate Republicans forced him to do it. Obama was required to institute these sanctions under a bill championed by Sens. Mark Kirk and Robert Menendez.

“We forced it on him. He didn’t want the authority,” said McConnell.

He added that Obama now has “greater tools to use on the Iranians. I hope he uses them all.”

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LIVE BLOG: Soak the Rich!

After a bow to the GOP with his call for medical-malpractice reform, Obama is back to liberal rhetoric with his call for increasing taxes on wealthier Americans. Like the oil companies, rich people are easy targets. But the president doesn’t explain how soaking the rich will lower the deficit, since it will also curtail investment.

After a bow to the GOP with his call for medical-malpractice reform, Obama is back to liberal rhetoric with his call for increasing taxes on wealthier Americans. Like the oil companies, rich people are easy targets. But the president doesn’t explain how soaking the rich will lower the deficit, since it will also curtail investment.

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LIVE BLOG: Everybody Hates Oil Companies

The first true potshot from the podium was aimed at oil companies and the removal of various subsidies given them. Everybody hates oil companies.

The first true potshot from the podium was aimed at oil companies and the removal of various subsidies given them. Everybody hates oil companies.

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LIVE BLOG: Obama Is His Own Dick Morris

Stop giving tax breaks to oil companies! Let’s have lots of good energy by 2035! Help a roofer!

Stop giving tax breaks to oil companies! Let’s have lots of good energy by 2035! Help a roofer!

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The Unraveling of Seymour Hersh

The New Yorker’s investigative reporter Seymour Hersh seems to be unraveling. According to a story posted on Foreignpolicy.com, in a speech in Doha, Qatar, Hersh

delivered a rambling, conspiracy-laden diatribe here Monday expressing his disappointment with President Barack Obama and his dissatisfaction with the direction of U.S. foreign policy.

“Just when we needed an angry black man,” he began, his arm perched jauntily on the podium, “we didn’t get one.”

It quickly went downhill from there.

Blake Hounshell reports that Hersh, who is writing a book on what he calls the “Cheney-Bush years,” charged that U.S. foreign policy had been hijacked by a cabal of neoconservative “crusaders” in the former vice president’s office and now in the special operations community. “What I’m really talking about is how eight or nine neoconservative, radicals if you will, overthrew the American government. Took it over,” he said of his forthcoming book. “It’s not only that the neocons took it over but how easily they did it — how Congress disappeared, how the press became part of it, how the public acquiesced.”

During his remarks, Hersh brought up the widespread looting that took place in Baghdad after the fall of Saddam Hussein in 2003. “In the Cheney shop, the attitude was, ‘What’s this? What are they all worried about, the politicians and the press, they’re all worried about some looting? … Don’t they get it? We’re gonna change mosques into cathedrals. And when we get all the oil, nobody’s gonna give a damn.'”

“That’s the attitude,” Hersh continued. “We’re gonna change mosques into cathedrals. That’s an attitude that pervades, I’m here to say, a large percentage of the Joint Special Operations Command.”

Hersh also alleged that General Stanley McChrystal, who headed Joint Special Operations Command before becoming the top U.S. commander in Afghanistan, and his successor, Vice Admiral William McRaven, as well as many within JSOC, “are all members of, or at least supporters of, Knights of Malta.”

“Many of them are members of Opus Dei,” Hersh continued. “They do see what they’re doing — and this is not an atypical attitude among some military — it’s a crusade, literally. They seem themselves as the protectors of the Christians. They’re protecting them from the Muslims [as in] the 13th century. And this is their function.”

“They have little insignias, these coins they pass among each other, which are crusader coins,” he continued. “They have insignia that reflect the whole notion that this is a culture war. … Right now, there’s a tremendous, tremendous amount of anti-Muslim feeling in the military community.”

These are the mutterings of a fevered, obsessive mind. His strange, conspiracy-plagued world is dominated by neo-conservatives and Opus Dei crusaders who are reliving the 13th century. Such writers now find a welcoming home at the New Yorker.

David Remnick must be so proud.

The New Yorker’s investigative reporter Seymour Hersh seems to be unraveling. According to a story posted on Foreignpolicy.com, in a speech in Doha, Qatar, Hersh

delivered a rambling, conspiracy-laden diatribe here Monday expressing his disappointment with President Barack Obama and his dissatisfaction with the direction of U.S. foreign policy.

“Just when we needed an angry black man,” he began, his arm perched jauntily on the podium, “we didn’t get one.”

It quickly went downhill from there.

Blake Hounshell reports that Hersh, who is writing a book on what he calls the “Cheney-Bush years,” charged that U.S. foreign policy had been hijacked by a cabal of neoconservative “crusaders” in the former vice president’s office and now in the special operations community. “What I’m really talking about is how eight or nine neoconservative, radicals if you will, overthrew the American government. Took it over,” he said of his forthcoming book. “It’s not only that the neocons took it over but how easily they did it — how Congress disappeared, how the press became part of it, how the public acquiesced.”

During his remarks, Hersh brought up the widespread looting that took place in Baghdad after the fall of Saddam Hussein in 2003. “In the Cheney shop, the attitude was, ‘What’s this? What are they all worried about, the politicians and the press, they’re all worried about some looting? … Don’t they get it? We’re gonna change mosques into cathedrals. And when we get all the oil, nobody’s gonna give a damn.'”

“That’s the attitude,” Hersh continued. “We’re gonna change mosques into cathedrals. That’s an attitude that pervades, I’m here to say, a large percentage of the Joint Special Operations Command.”

Hersh also alleged that General Stanley McChrystal, who headed Joint Special Operations Command before becoming the top U.S. commander in Afghanistan, and his successor, Vice Admiral William McRaven, as well as many within JSOC, “are all members of, or at least supporters of, Knights of Malta.”

“Many of them are members of Opus Dei,” Hersh continued. “They do see what they’re doing — and this is not an atypical attitude among some military — it’s a crusade, literally. They seem themselves as the protectors of the Christians. They’re protecting them from the Muslims [as in] the 13th century. And this is their function.”

“They have little insignias, these coins they pass among each other, which are crusader coins,” he continued. “They have insignia that reflect the whole notion that this is a culture war. … Right now, there’s a tremendous, tremendous amount of anti-Muslim feeling in the military community.”

These are the mutterings of a fevered, obsessive mind. His strange, conspiracy-plagued world is dominated by neo-conservatives and Opus Dei crusaders who are reliving the 13th century. Such writers now find a welcoming home at the New Yorker.

David Remnick must be so proud.

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How Obama Could Louse Up the Obama-Comeback Story

We are going to hear, over the next few months, that Barack Obama has staged a dramatic comeback. The story line began last week, with his string of bill signings, and will continue when the fourth-quarter economic numbers show an improved growth rate (maybe up to 3 percent) with expectations of more to come in the first quarter of next year. He has now established, whether honestly or not, that he can work with Republicans, etc. etc. It will be the mainstream media meme to end all mainstream media memes.

That’s fine, and good for him, but here’s the truth: We also judge presidents based on how they react in unexpected and unanticipated situations — when the oil well explodes in the waters off Louisiana, when the Republican is elected in Massachusetts to Ted Kennedy’s Senate seat, when somebody announces something about apartment construction in East Jerusalem, when hundreds of thousands of Iranians take to the streets. Nothing that’s happened since the election should give us any reason to believe that the gut-instinct way Obama reacts to difficulties, setbacks, or disappointments has changed. He seems split between remaining almost affectless (as in the month or so post-Deepwater) and overly angry (his post-election press conference, and the press conference after the tax-cut deal in which he called Republicans hostage takers and Democrats sanctimonious).

Sure, when he gets his way, he’s all smiles and bonhomie, but that’s not going to be the hand he’s dealt next year either domestically or in foreign affairs. He managed to pull off a few weeks of last-minute triumphs that have made him feel good and that do set him up far better than failure would have done. But he’s going to have to fight against his own nature to cope with the kinds of troubles that will be coming at him in the next year, and usually, troubles only deepen people’s core personalities, they don’t alter them.

We are going to hear, over the next few months, that Barack Obama has staged a dramatic comeback. The story line began last week, with his string of bill signings, and will continue when the fourth-quarter economic numbers show an improved growth rate (maybe up to 3 percent) with expectations of more to come in the first quarter of next year. He has now established, whether honestly or not, that he can work with Republicans, etc. etc. It will be the mainstream media meme to end all mainstream media memes.

That’s fine, and good for him, but here’s the truth: We also judge presidents based on how they react in unexpected and unanticipated situations — when the oil well explodes in the waters off Louisiana, when the Republican is elected in Massachusetts to Ted Kennedy’s Senate seat, when somebody announces something about apartment construction in East Jerusalem, when hundreds of thousands of Iranians take to the streets. Nothing that’s happened since the election should give us any reason to believe that the gut-instinct way Obama reacts to difficulties, setbacks, or disappointments has changed. He seems split between remaining almost affectless (as in the month or so post-Deepwater) and overly angry (his post-election press conference, and the press conference after the tax-cut deal in which he called Republicans hostage takers and Democrats sanctimonious).

Sure, when he gets his way, he’s all smiles and bonhomie, but that’s not going to be the hand he’s dealt next year either domestically or in foreign affairs. He managed to pull off a few weeks of last-minute triumphs that have made him feel good and that do set him up far better than failure would have done. But he’s going to have to fight against his own nature to cope with the kinds of troubles that will be coming at him in the next year, and usually, troubles only deepen people’s core personalities, they don’t alter them.

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