Bush, McCain & The Energy Crisis Fun House

By Lee Russ

Tuesday, June 24, 2008 at 08:25 PM

There's nothing like the concurrence of a serious economic problem, like the cost of oil and gas, with the pandering and pretzelling of logic that is a presidential election. Claims, counterclaims, distortions, outright lies, and the ever popular partial truths all flying around in print, on the air, and in the massive confusion of voters minds. So is there really anything to the "new" John McCain/George Bush plan to reopen leasing of the outer continental shelf (OCS) and encourage the building of new refineries?

Not that I can tell. And I can't find anyone other than Republican partisans who think this is anything other than an attempt to play on current economic fears to trick people into voting for Mr. McCain.

But there is certainly a lot of fun house special effects to enjoy: funny mirrors that make the fat look thin and vice versa, slanted floors that make it hard to stand upright unless you lean heavily to the right, and several larger than life mechanical clowns programmed to repeat the same loud, annoyingly untrue statements.

The shell game largely consists of three separate claims, not one of which is "the truth, the whole truth, and nothing but the truth."

1. Immediacy of help with gas prices

That added production from new leases on the OCS would bring short term relief from high gas prices is a claim that McCain explicitly made just last week, saying that opening up drilling in the OCS "would be very helpful in the short term in resolving our energy crisis."

The part about "short term" gas price relief is patently ridiculous as many commentators have pointed out. For example, according to a Philadelphia Inquirer editorial:

Besides, exploration and construction will take three to 10 years at best, and an additional 10 years for full ramp-up, leading to a savings per gallon of . . . pennies.

A related deliberate misrepresentation is clear implication that significantly increasing American oil production from any source will have a dramatic effect on gasoline prices. In fact, according to the same Philadelphia Inquirer editorial:

Drilling on a Bush/McCain scale is hardly an "inevitable" measure. Opening up offshore drilling won't affect world oil prices much. The United States produces only 3 percent of the world's oil.

In other words, if we doubled our oil output and the output of everybody else stayed the same, we'd still be providing slightly less than 6% of the world's oil, hardly enough to affect gas prices. Nor would the additional oil produced in the US necessarily stay in the US at all; it's a world market, and a US producer would happily sell US produced oil to foreign countries if they offered the right price.

2. The claim that we've forbidden oil & gas companies from working the OCS and that leasing more of the OCS would result in production of significant new amounts of oil and gas

The Sierra Club paper "THE TRUTH ABOUT OIL AND NATURAL GAS RESOURCES IN OFFSHORE AREAS PROTECTED BY FEDERAL MORATORIUM" states that some 40 million acres of the OCS has already been leased to oil companies for exploration and drilling. Even more telling is that President Bush has, during his time in office, offered a total of 267 million acres of the OCS for lease, but the oil companies only purchased leases on 24 million of those acres. More telling yet, the companies are not now working that much of the OCS on which they already own leases.

3. Claims that our refining capacity is inadequate because we haven't built "any new refineries in over 30 years"

That statement is repeated ad nauseum by every Republican/conservative/corporate shill who discusses the problem of gas prices. But while one part of it is true--that there haven't been any "new" refineries of any appreciable size in the US since 1976--even that part is misrepresentative of the actual situation.

In April of 2007, CNNMoney.com ran a piece including the following (emphasis added):

While refinery capacity may not be growing as fast as demand, it is growing.

For example, [executive vice president at the national Petrochemical and Refiners Association Charlie] Drevna noted that expansion projects at the nation's existing refineries have had the effect of adding the equivalent of a brand new refinery every year. That increase came despite mandates for cleaner gasoline and diesel fuel, which take longer to make.

And the future looks even brighter.

"There is a tremendous amount of expansion," said Tom Kloza, chief oil analyst at the Oil Price Information Service, speaking of projects at existing facilities. "We will have a solid increase in North American refining capacity, but not for another two years."

Kloza said much of the expansion would come along the Gulf of Mexico and in the Midwest, an ideal spot to process heavy crude from Canada's emerging oil sand deposits.

The only place that might not see more capacity is the West Coast, said Kloza, where there is little refinery expansion planned, leaving the region more dependent on expensive imports.

..... Overseas expansion is moving even more quickly, with $300 billion slated for refining projects over the next 20 years in places like India, the Caribbean, Mexico, the Middle East, Africa, and the Asia-Pacific region.

...

Much of the international capacity will feed surging demand in the developed world. But some will also supply the United States and Europe.

"Partly what's going on here is part of a broader trend in manufacturing, and that is the movement of it offshore," said AAA's Sundstrom. "With it go environmental issues, tax structure, legal liabilities."

So not only has refining capacity increased significantly during the alleged 30+ year drought in refining capacity, but a major reason it hasn't increased even more is that the oil companies simply want to outsource refining just like manufacturing companies outsourced the making of consumer goods.

NOTE: How little conscience do you have to have in order to portray the possibility of new refineries in the US as a source of new "good" jobs, as President Bush did in his recent calls for new OCS leases and an overhaul of the refinery permitting process, while being fully aware that the lack of new refineries is actually largely the result of oil company preference for foreign labor and lack of foreign regulation?

And the added refining capacity is, in fact, substantial according to the Energy Information Administration:

In fact, the United States has added nearly 1.7-million barrels per day of refining capacity since 1985, according to the administration’s records.

So, all in all, there's a lot of good evidence that few, if any, parts of the McCain Bush energy proposals would have any short or long term impact on oil production and/or gas prices. The proposals do, however, offer the President a wonderful political opportunity to portray congressional Democrats as obstructionists who don't care about "ordinary people," and they give Mr. McCain an opportunity to do the same.

A dead giveaway to the real motivation is the fact that:

Bush could have taken a bolder step by overturning a 10-year-old executive order that bans drilling off most U.S. shores. But he said he wouldn't do that because he wanted Congress to act first.

In better times, this would be derisively dismissed as not just pandering, but deceptive pandering at that. It's one thing to pander to voters' actual interests by giving them something they want, like lower gas prices; it's another thing altogether to merely pretend to pander to their interests, all the while serving the interests of a different group--oil companies--knowing that the interests of the oil companies are largely antagonistic to the interests of the voters.

In these times, however, all this is merely one small episode in the long running black comedy called "Welcome to the American Monkey House."