Two, the higher the price soars, the stock market and inventory tick-by-tick more and more valuable the oil in the American West becomes. The oil in the ground, literally, is money in the bank, so to speak.
Three, leases negotiated today are negotiated at today’s prices. Absolutely, the future potential value — the first barrel of at most six-months-of-national-demand crude from ANWR (Arctic National Wildlife Refuge), for example, if the go-ahead was provided this morning, would not find its way to a refinery for more than 20 years (See below) — is, or should be by the administration, considered in any negotiations. Nonetheless, it would be in today’s dollars, the only ones we've got. Thus, leases won today, given the known present and estimated future demand-supply dynamics, become more investment money in the ground and the bank.
Now here is where a basic business principle, one that is often forgotten by many, needs to be recapped: Profit = Gross Sales – Cost. This is also where a legal principle needs to be noted: An executive of a corporation retains the federally sanctioned fiduciary obligation to the stockholders to produce the highest net return. As every added dollar of “cost” diminishes that return, it would be possible to presume that an executive could be found in violation of his or her fiduciary obligation to the stockholders were he or she to add drilling and extraction costs, when not adding them produces a much higher return. (And testifying under oath to a House or Senate Committee hearing that that admission even played a part in the decision could very well lead to such a political and public outcry that every legal means conceivable to avoid referring to that principle is, again, fully understandable.)
So let’s sum this up. The questions are many and complicated. “Drill, drill, drill” sounds simple, and it has the advantages of being easy to grasp by a public not much interested in anything that is not simple, and it thereby works! The evidence has been laid on the table that “Drill, drill, drill” will not likely occur, even if additional leases are approved. And if it did, according to more than a quarter-century of watching how the companies have behaved, "Pump, pump, pump" would not likely be the result. Any “Pelosi premium” catcall by the GOP will be a disingenuous, despicable, cynical tactic, used exclusively to deflect attention from the panoply of realities that in fact compose a panoply of very serious problems; greater and greater national debt, the falling dollar, military interventionism in the mid-East, global climate change, the deteriorating economy, skyrocketing inflation . . ..
As to ANWR, those for it repeatedly try to sell the idea on the fact — and it is a fact — that in a region of exponentially more acreage, only a small percentage would compose the drilling site. But, how do the companies and those lobbying on their behalf propose the site will be accessed, serviced, and the employees stationed there housed and serviced? Specifically, what lands will have to be traversed, what will be the routes and how much consumed to get to the site? Do they propose that, as the Arctic is thawing, everything will be via sea routes? (And, if that’s one reply, it ought to give us further pause to ponder just where the hell we’re headed, anyway.) How many reading this have the first beginnings of a notion the sorts of extraordinary engineering problems that kind of adventure entails? Dealing with permafrost. And what if, as a result of climate change, the frost becomes not as much perma as tens of feet deep slush?
None of this is “easy” folks, as easy as too many want to make “Drill, drill, drill” sound. And this is only part of the why it will be at least 20 years before the first barrel wouldn’t leave ANWR. “Drill, drill, drill” rights, for at best only six months of today’s American demand for the stuff.
And I’m still waiting for a discussion more serious than that which I’d get from Bert & Ernie. I’m not going to hold my breath.
— Ed TubbsPalm Springs, CA