Energy Folly in the New Congress
The House of Representatives climaxed the 100 Hours by passing legislation "to move the country toward energy independence and protect consumers. Lord help us if the Senate goes along.
The bill would remove incentives and tax deductions for "domestic production activities" -- with domestic oil exploration at a 20-year high.
It aims to force companies to renegotiate leases signed with the Clinton Administration (the most recent lease sale brought $462 million in bids).
The bill would continue to ban exploration on the Alaska Outer Continental Shelf (where the US Geological Service estimates resources equal to about one-third of US current proved oil reserves).
It would remove deepwater exploration incentives months after a Chevron discovery (in 1.2 miles of water depth and 5.2 miles beneath the sea bottom) that could add 50% to US reserves by about 2010.
The House wants to spend the additional money on alternate fuels research (oil companies spend more than the government on alternate fuels R&D).
The bill would set up a boondoggle similar to the Carter Administration's SynFuels Corporation -- and with the same results.
Most ironic, California voters in November voted on the same issue. Ballot Proposition 87 would have added "fees" to oil company exploration and development and spent the new income on alternate fuel research. Californians rejected the plan, 55% to 45%. Could it be that they know something their Representatives don't?
Read more!
The bill would remove incentives and tax deductions for "domestic production activities" -- with domestic oil exploration at a 20-year high.
It aims to force companies to renegotiate leases signed with the Clinton Administration (the most recent lease sale brought $462 million in bids).
The bill would continue to ban exploration on the Alaska Outer Continental Shelf (where the US Geological Service estimates resources equal to about one-third of US current proved oil reserves).
It would remove deepwater exploration incentives months after a Chevron discovery (in 1.2 miles of water depth and 5.2 miles beneath the sea bottom) that could add 50% to US reserves by about 2010.
The House wants to spend the additional money on alternate fuels research (oil companies spend more than the government on alternate fuels R&D).
The bill would set up a boondoggle similar to the Carter Administration's SynFuels Corporation -- and with the same results.
Most ironic, California voters in November voted on the same issue. Ballot Proposition 87 would have added "fees" to oil company exploration and development and spent the new income on alternate fuel research. Californians rejected the plan, 55% to 45%. Could it be that they know something their Representatives don't?
Read more!
Thursday, January 4, 2007
Geopolitics or Geobusiness?
Gazprom and Belarus came to a last-minute deal this week, (WaPost, 1/3/07, page D3) enabling Belarus to avoid a natural gas shutoff -- a nationwide, natural gas shutoff. The Russian-owned monopoly will continue supplying natural gas to the former Soviet nation, at twice the previous price. Belarus bargained Gazprom down somewhat, but agreed to sell Gazprom 50% ownership in its national gas pipeline network.
There is international concern about whether these are commercial arrangements or if Gazprom has become a powerful tool of Russian government policy. The answer appears to be: "Yes. Both." Gazprom has squeezed other former Soviet republics with similar deals -- but Ukraine, Georgia and Belarus were all subsidizing natural gas prices to their citizens by paying Gazprom far less than the commercial rates. That seemed to Gazprom to be Sovietism that was one-sided, when the company is in business to make profits.
Of course, Russia will continue to subsidize Russians with Gazprom gas; but it will not put up with such behavior from its customers, if it can find adequate leverage. For now, European worries about natural gas interruptions are eased, Gazprom (and thus Russia) has much more to say about the Central European pipeline infrastructure) and Gazprom will become more profitable.
Just keep your eye on Gazprom and its other relationships. Royal Dutch Shell and its Japanese partners were "convinced" by Russian environmental concerns, to include Gazprom in a huge oil and gas exploration and development project on Sakhalin Island. So the Russian Government is "reclaiming" assets and participation that it had apparently given up with the breakup of the USSR. Geopolitics? Enterprise? Commerce? Yes -- and all with continuing gas subsidies for Russians. Read more!
There is international concern about whether these are commercial arrangements or if Gazprom has become a powerful tool of Russian government policy. The answer appears to be: "Yes. Both." Gazprom has squeezed other former Soviet republics with similar deals -- but Ukraine, Georgia and Belarus were all subsidizing natural gas prices to their citizens by paying Gazprom far less than the commercial rates. That seemed to Gazprom to be Sovietism that was one-sided, when the company is in business to make profits.
Of course, Russia will continue to subsidize Russians with Gazprom gas; but it will not put up with such behavior from its customers, if it can find adequate leverage. For now, European worries about natural gas interruptions are eased, Gazprom (and thus Russia) has much more to say about the Central European pipeline infrastructure) and Gazprom will become more profitable.
Just keep your eye on Gazprom and its other relationships. Royal Dutch Shell and its Japanese partners were "convinced" by Russian environmental concerns, to include Gazprom in a huge oil and gas exploration and development project on Sakhalin Island. So the Russian Government is "reclaiming" assets and participation that it had apparently given up with the breakup of the USSR. Geopolitics? Enterprise? Commerce? Yes -- and all with continuing gas subsidies for Russians. Read more!
Archives