According to report from the AP today, several environmental and native Alaskan groups have asked a federal appeals court to halt exploratory drilling from Shell Oil off the north coast of Alaska.

Evidently, the U.S. Mineral Management Service has approved Shell's plan to drill 12 oil wells in the Beaufort Sea, despite the negative impact this drilling will have on the endangered Bowhead Whale.

All of this coming as it does just weeks after the massive oil spill, and terrible clean up job, in the Bay Area must be making heads turn.

The court, you see, is in San Francisco. So if the judges, whose homes and local environment has recently been adversely affected by the realities of oil drilling can't stop these wells, well then I just don't know what.

It looks like Johnnie Burton is retiring. For those of you unfamiliar with Ms. Burton, she is the top federal official overseeing oil drilling in the Gulf of Mexico.

Under her tenure, the plan to open 48 million acres of offshore drilling off the coast of Virginia was hatched, along with resuming drilling in Alaska's Bristol Bay, which had been offlimits after the Exxon Valdez spill but which was reopened a couple years ago by Congress.

But possibly her top claim to fame is that under her watch, oil and gas companies were able to avoid paying $10 billion in drilling royalties. Under the royalty laws, as gas prices rise, so do the royalty payments, and the agency forgot to put that in place. While the error didn't happen under Ms. Burton's watch, she failed to act on it. But it goes further - evidently three auditors in the agency said they "were ordered by superiors to drop their findings that major oil companies intentionally underpaid the government".

Research into Ms. Burton's past shows a darkly ironic history. From 1981-84, she served as the director of the First Wyoming Bank in Casper.

The price of oil has now hit $75/barrel, and summer (peak driving season) hasn't even started.

I really thought this was something out of the Onion. According to the folks at Autoblog, oil companies see the melting ice caps as an opportunity to search for more oil.

No joke.

As the ice retreats, there is hope utter fear that more oil will be discovered.

So we know that the oil industry is required to explain why prices have jumped in the past four months. Not surprisingly, they've pointed to three things:

1) Increase in the spot price of oil (now over $70 per barrel)
2) Costs of producing various cleaner blends
3) The cost of replacing MTBE as a gasoline additive

Today, the Foundation of Taxpayer and Consumer Rights released a brief analysis which concluded that the industry's explanations don't account for the majority of the price hike.

More than 40 cents of the 60-cent increase in gasoline prices over 3 1/2 months is attributable to increased refinery and marketing profit margins for the oil companies

While I, like the majority of Americans, will be inclined to believe that the oil industry is ripping us off, where exactly does that get us?

Now don't get me wrong, price-gouging is a serious issue and if Americans can avoid giving big oil billions more, I'm all for it. And I suppose, that is precisely the role that a consumer watchdog group like FTCR is supposed to play.

But it is also clear, that this debate—about whether and how badly we are being ripped off—doesn't lead to the solutions that we really need.

It could lead to lower gasoline prices in the short term. Again, good that we aren't handing our money unnecessarily to the oil companies and good that families are saving a bit more money. But bad in terms of ending our dependence on oil.

It could lead to a big push on Capitol hill to stregthen price-gouging laws. Again good in the short-term, but would do nothing in the long-term.

Maybe I'm being overly concerned about having several (somewhat diverging) debates on the same issue. But my (limited) experience in D.C. tells me that it is rare for Congress to act often and in a big way on the same issue.

Medicare: Prescription Drug Bill
Education: Leave no child behind
Energy: Energy Policy Act of 1905 2005

In each case (and others), these legislative efforts took years. It is also unlikely that anything else of any heft will happen for a while.

Perhaps rising gasoline prices will change this pattern. But I'm not the biggest fan of making price-gouging our primary concern.

NPR ran an interesting interview this morning with Kevin Phillips, former Nixon aide, about the ties between the oil industry and the Republican party.

The oil industry's shift in allegiance from the Democrats (who dominated southern politics 50 years ago) to the Republicans adds an interesting layer to the conversations about the South and party politics.

Your only friend against the oil industry. (Besides a hybrid).

If you want to find the lowest gasoline prices in your area.

(Hat Tip to the Progress Report)

The Energy Information Administration predicted today that gasoline prices will increase significantly over the summer months—soaring as much as 25 cents higher than last year's average.

Prices could climb by 10 to 15 cents in the next few weeks alone. And here's the kicker: EIA's estimate doesn't account for any major supply disruptions.

Another hurricane: Spike. Problems in Nigeria: Spike. Iran: Spike Spike.

Over the last several weeks, we sent our door-to-door citizen outreach teams into Virginia to help convince Gov. Kaine to veto legislation that opens the door to offshore oil and gas drilling.

It's clear that should Virginia say yes to opting out of a federal moratorium on new offshore drilling, Old Dominion would be the first domino to fall. Other states would surely follow. And members of Congress, like Rep. Richard Pombo, who want to give states the right to ignore the ban on drilling would get a huge boost. They'd point to states willing to open up their coasts as justification for the bill.

Kaine made his decision today (E&E News PM, registration required). The verdict is mixed. The governor said no to opting out of the federal moratorium, should Congress give states that option.

But he said yes to a survey of energy resources 50 miles or more offshore - as long as the feds put up the money.

That's a dangerous step. There's no reason to map oil and gas resources unless you're thinking about drilling.

The NY Times has a lenghty article rounding out how the oil and gas industry secured $7 billion in royalty relief through various legislative and court maneuvers. I have already written about this issue here and here.

Of course, the absurdity of this is that even after knowing that big oil is making off like bandits, there is still no interest among congressional Republicans to right the situation. While it isn't clear that much could be done about older leases or wells already drilled (at least not without a court challenge), Congress isn't rushing to turn off the faucet.

What did President Bush say?: "Fool me once, shame on...you. Fool me, you can't get fooled again."

And then there are the oil companies. Who swear that they don't need these incentives:

Michael Coney, a lawyer for Shell Oil, said, "Under the current environment, we don't need royalty relief."

Of course a few years ago...

A group of oil companies, led by Shell, defeated the Bush administration in court. The decision more than doubled the amount of oil and gas that companies could produce without paying royalties.

Perhaps they'll consider returning all that money they don't need...

It will be interesting to see how BP recovers from the string of bad press surrounding the largest oil spill ever on Alaska's North Slope. The NY Times has a story today investigating BP's actions leading up to the spill, including warnings from workers on the pipeline.

"For years we've been warning the company about cutting back on maintenance," Mr. Kovac said, adding that he was speaking for himself, not the union. "We know that this could have been prevented."

The story also highlights BP's failure to investigate in a more thorough analysis of corrosion problems.

In the procedure, electronic monitors called smart pigs—successors to an earlier generation of cleaning devices that squealed as they ran through the pipe—are used to measure the thickness of a pipe's walls and detect defects. Mr. Beaudo and Mr. Kovac agreed that since 1998 no such inspection had been performed on the line that leaked. Setting up the device is cumbersome, and its data are hard to analyze. The process also slows the movement of oil to the Trans-Alaska Pipeline.

The real question is given how much BP has invested in its environmental credibility, how will they respond?

More info on the flip about the spill itself, courtesy of the Alaska Wilderness League.

* OFFICIAL SPILL VOLUME ESTIMATE: 201,000-267,000 gallons of crude oil announced Friday, March 10, 2006 from the Unified Spill Response Team (made up of BP, EPA, AK Dept. of Enviro Conservation, North Slope Borough)

* Approximately 1,428 bbls (59,976 gallons) of free-flowing oil combined; 57 yards of contaminated gravel, and 1,668 yards of contaminated snow have been recovered as March 12, 2006.

* This spill is now the largest crude oil spill in the history of oil & gas operations on Alaska's North Slope (this record was previously held by the 1989 Milne Point incident that resulted in 38,850 gallons of crude oil being spilled)

* The announcement of the size of the spill came two weeks before the 17th anniversary of the March 24, 1989 Exxon Valdez Oil Spill, which dumped 11 million gallons of oil into Prince William Sound and devastated the area's residents, economy and wildlife.

There's been a lot about Rep. Bill Thomas' (R-CA) announced retirement today. Much of the media has focused on his efforts in crafting the Medicare prescription bill and the Bush tax cuts, but enviros won't be remiss to see him go. As a staunch supporter of oil & gas (he is from Bakersfield no less), Thomas was instrumental in creating billions of dollars in tax breaks for the oil and gas industry, as well as other polluting sectors. In fact, the original energy tax bill crafted in 2005 by Thomas provided 95% of the tax breaks to polluting industries (coal, nuclear, oil and gas), with only 5% targeted at renewables and energy efficiency.

Now it isn't clear that things got better on the Committee as Jim McCrery from Louisiana is one of three people that could get the spot, but given Thomas' record they couldn't get much worse.

I meant to post this earlier today: Bob Semple, an Associate Editor at the NY Times, pulled together a solid piece summarizing the case for reducing our dependence oil.

While acknowledging the two most current reasons for ending our dependence on oil—national security and global warming—Semple's article focuses on the most obvious one: oil will soon run out, and the sooner we get off it the less we'll suffer in the out years.

You'll need a subscription to read it, so I thought I would pull out a few paragraphs below the fold. (Nod to Oil Drum)

Peter Arkle

Oil is a finite commodity. At some point even the vast reservoirs of Saudi Arabia will run dry. But before that happens there will come a day when oil production "peaks," when demand overtakes supply (and never looks back), resulting in large and possibly catastrophic price increases that could make today's $60-a-barrel oil look like chump change. Unless, of course, we begin to develop substitutes for oil. Or begin to live more abstemiously. Or both. The concept of peak oil has not been widely written about. But people are talking about it now. It deserves a careful look — largely because it is almost certainly correct.

When will oil peak? At least one maverick geologist says it already has. Others say 10 years from now. A few actually say never. The latest official projections from the Energy Information Administration put the peak at 2037, or 2047 — depending, of course, on how much of the stuff is out there and how fast we intend to use it up. But even that relatively late date does not give us much time to adjust to a world without cheap, abundant oil.

There is no shortage of ideas about what to do to reduce the demand for oil. In the last two years, there have been three major reports remarkable for their clarity and for their convergence on near-term strategies — from the Energy Future Coalition, consisting of officials from the Clinton and first Bush administrations; from the Rocky Mountain Institute in Aspen, which concerns itself with energy efficiency; and from the above-mentioned National Commission on Energy Policy, a collection of experts from academia, business and labor. All three groups call for much stronger fuel economy standards, beginning very soon. All three call for major tax subsidies and loan guarantees to help the carmakers develop and market these more efficient cars on a massive scale without going bankrupt. And all three call for an aggressive program to develop gasoline substitutes from starch and sugars, known loosely as cellulosic fuels. These strategies would not only help reduce oil dependency but, in the bargain, greatly reduce greenhouse gas emissions, 40 percent of which come from vehicles. They would not threaten economic growth, especially if Washington stood ready to ease Detroit's transition from the S.U.V.'s and light trucks they depend on for their profits (such as they are) to a new generation of cars and trucks. And they are not pie-in-the sky. Off-the-shelf technology can boost our average fuel economy from 26 to 45 miles a gallon in a decade. Brazil already has its cars running on cellulosic fuels. What these groups are talking about — and what distinguishes them from the administration's rather more passive approach — is not more research but getting good ideas into commercial production in a hurry. This is going to take serious investment. It will also take real leadership, which may be the biggest missing ingredient of all.

"When someone says it's not about the money, it's about the money."

Ted Koppel has an honest and provocative oped in today's NY Times summarizing how U.S. actions in the Middle East over the past fifty years have centered on oil.

From British and U.S. efforts to install and support the Shah in Iran, to the 1990 Iraq War, to today's on-going war, Koppel traces a steady line demarking the clear role that oil has played in U.S. involvement in the Middle East.

Koppel debunks Bush's efforts to dismiss America's dependence on oil as an underlying reason for the war.

If those considerations did not enter into the Bush administration's calculations when the president ordered the invasion of Iraq in 2003, it would have been the first time in more than 50 years that the uninterrupted flow of Persian Gulf oil was not a central element of American foreign policy.

That is not to say that the United States invaded Iraq to take over its oil supply. But the construction of American military bases inside Iraq, bases that can be maintained long after the bulk of our military forces are ultimately withdrawn, will serve to replace the bases that the United States has lost in Saudi Arabia. There may be other national security reasons that the United States cannot now precipitously withdraw its forces from Iraq, including the danger that the country would become a regional terrorist base; but none is greater than forestalling the ensuing power vacuum and regional instability, and the impact this would have on oil production.

Grist and Oil Drum have already initiated discussions on this one.

This is heartwarming stuff. Late January, five big oil companies announce that they've earned more than $100 billion in profit in 2005. Two weeks later, we learn that the industry is poised to reap a $7 billion handout over the next five years. Wait, maybe I'm missplacing the sensation. It's not so much in my heart as in my stomach.

As the NY Times reports today:

The federal government is on the verge of one of the biggest giveaways of oil and gas in American history, worth an estimated $7 billion over five years. New projections, buried in the Interior Department's just-published budget plan, anticipate that the government will let companies pump about $65 billion worth of oil and natural gas from federal territory over the next five years without paying any royalties to the government.

Of course everyone and their mother is trying to distance themselves from a handout this obscene, including big oil boosters like Pombo and the Bush administration.

While the giveaway is partly in place because of provisions passed nearly a decade earlier (when oil prices were markedly lower), the NY Times rightly points out that one way to solve this problem is to impose a new tax on the industry.

Now this will really test the Administration and Congresses' rhetoric. If they are seriously bothered by this giveaway they can easily impose a new tax on the industry of equal proportion. But the Bush administration is already fighting tooth and nail against a proposed one-year tax on the oil industry, worth $5 billion, that is included in the Senate tax reconciliation bill.

Yet this $7 billion giveaway could be just the tip of the proverbial iceberg:

Moreover, the projected largess could be just the start. Last week, Kerr-McGee Exploration and Development, a major industry player, began a brash but utterly serious court challenge that could, if it succeeds, cost the government another $28 billion in royalties over the next five years.

In what administration officials and industry executives alike view as a major test case, Kerr-McGee told the Interior Department last week that it planned to challenge one of the government's biggest limitations on royalty relief if it could not work out an acceptable deal in its favor. If Kerr-McGee is successful, administration projections indicate that about 80 percent of all oil and gas from federal waters in the Gulf of Mexico would be royalty-free.

A new poll by the Pew Research Center found that 85% of Americans surveyed agreed that we are addicted to oil. Fifty percent thought that we could end our dependence on foreign oil within 20 years.

But I still don't get the jump from thinking we are "addicted" to oil to only eschewing a particular kind of oil (i.e. the "foreign" variety). If we're addicted, we are addicted. Period. And the solutions we need to be working toward should be ending our dependence on oil--not just the amount that comes from overseas.

As long as we are still using oil in significant amounts we are going to continue importing it from somewhere. And, as far as I know, global warming doesn't discern but Middle Eastern oil and American oil. Though I do suspect the Bush administration has its "researchers" hard at work trying to make this case.

Turns out that Bush's signature goal (as weak as it was) of reducing America's dependence on Mideast oil by 75% in 20 years was actually his best punch line. According to the Secretary of Energy, Samuel Bodman, it was just a figure of speech. The President has no intention of reducing our actual imports from the Middle East, instead his Cabinet members are saying that the goal is to displace the equivalent amount with biofuels.

The reference to the Middle East was "purely an example," said Bodman. The Middle East was just a convenient reference point. In the end, their plan has nothing to do with reducing Middle East imports.

Granted, oil is a globally traded commodity so there will always be a challenge in ending imports from a specific place. But the President's language was intentionally misleading.

Now let's revisit what Bush actually said:

"Breakthrough on this and other new technologies will help us reach another great goal: to replace more than 75 percent of our oil imports from the Middle East by 2025."

You can't fault 30+million viewers with assuming that Bush meant what he said. (Although you do think we'd have learned by now).

Instead what the President meant to say was:

"Breakthrough on this and other new technologies will help us reach another great goal: to replace the equivalent of more than 75 percent of our oil imports from the Middle East by 2025."

or "an amount equal to" or so on and so forth.

Why mislead the public (other than habit of course)?

According to one official:

"Bush wanted to dramatize the issue in a way that every American sitting out there listening to the speech understands"

Let's see what the mainstream media does with this after so many led with this goal in the stories this morning.

Just a few days after Exxon reported that its mattress was $36 billion thicker, Sen. Specter is saying it's time to do something. It's still unclear what that something will be and whether he's got the will to sustain it.

Remember when Exxon announced their 3rd quarter profits a few months ago, Senators were falling over themselves trying to be the new Sheriff in town. But once the cameras turned away all we were left with was a bunch of Deputy Dogs.

It's hard to imagine a windfall profit tax making it through this Congress but maybe just maybe, we can start cutting the billions of dollars in tax breaks tailored to the oil industry. Obviously that wouldn't make much of a difference but remember this is just for show--it is an election year after all.

The rhetoric last night was grand, even bold at times. How it must have rustled the feathers of his oil buddies to have heard the President declare that "America is addicted to oil." And you do have to wonder how many times the President had to practice that before he could get it out clean. Of course Bush knew it all stopped at the rhetoric so that must have made it easier to swallow.

There were two goals set out on energy:

1) Cut our imports of Middle East oil by 75% by 2025
2) Make ethanol practical and competitive in six years

Why bother with the timelines? Both of those goals are worthy on their own. But within that timeframe they are bad jokes. Really bad jokes.

You can't time this stuff any better if you were writing it yourself: today Exxon reports it earned $10 billion in three months; three days ago they were in court refusing to pay $5 billion owed to Alaskan fisherman for the infamous Exxon Valdez disaster.

How much is Exxon willing to pay for the lives it has destroyed: $25 million. If I'm doing the math right, Exxon made that much every six hours in the fourth quarter alone! I suppose they figure ruining the lives of 34,000 fisherman is worth about a day's work for them...and not a penny more.

We'll not "we" exactly--more like Exxon. Three more months, another $10 billion in the bank. Here's the kicker: Exxon's annual profit of $36 billion makes them bigger than the economies of 124 countries, including every Central American country.

Make that two records: highest annual profits and highest 4th quater profits. The story reports that Exxon is set to announce on Monday that they may have shattered their record of $10 billion set in the fall. By the way, that's $10 billion in three months.

Again, I'm not sure what it is like in papers across the country but DC has already been flooded with the industry's slick spin.

"Please, Mr. Politician, it's really not that much. We only made 8 cents on every dollar. We're just your average industry. The pharmaceuticals and the banks are really raking it in."

Friedman continues to forge ahead. Today's column is his wistful attempt at a meaningful State of the Union speech, including the resignation of Veep Cheney. Here are some of snippets:

But to lead, we must impose the highest energy-efficiency standards on our own automakers and other industries so we force them to be the most innovative. I want to inspire girls and boys across America to study math, science and engineering to help our nation achieve green energy independence. President Kennedy said, Let's put a man on the Moon. I say, Let's make oil obsolete.

With all of this in mind, I am sending Congress the Bush Energy Freedom Act. It is based on ideas first offered by the energy expert Philip Verleger and it argues the following:

Transportation accounts for most of our oil consumption. And many Americans have purchased big cars and S.U.V.'s, expecting gasoline to remain cheap. That is no longer the case. Therefore, I propose creating a government agency that will buy up any gas-guzzling car or truck in America at the original new or used price, and crush it. This national buy-back program will be financed by a $2-a-gallon gasoline tax that will be phased in by 10 cents a month beginning in 2008 — so people know what is coming and start buying fuel-efficient cars right now.

and now for the funniest part:

One last thing: I have accepted the resignation of Vice President Dick Cheney, who felt he could not be a salesman for the Energy Freedom Act. I am nominating Jeffrey Immelt — the C.E.O. of General Electric, who has focused G.E.'s innovation around "eco-imagination" — as Mr. Cheney's replacement.

Yesterday, Senator Jeff Bingaman (D-NM) sent a letter to the Government Accountability Office to inquire about reports that gas companies are underpaying royalties for drilling on public lands. 21 Senators signed the letter requesting more info. To read more about the story go here.

While it is good that the public will be getting more info. about this I remain skeptical of the outcome. As the NY Times story reported, there has been a long-standing problem with royalty payments. And part of the story that won't be talked about are the legal loopholes that allow companies to avoid royalty payments.

Don't forget: many of the Senators undertaking this investigation are the same ones that voted for billions of dollars in tax breaks and royalty relief for these same oil companies as a part of the Bush energy bill.

Between wiretaps and oil scams, its all a sober reminder of the importance of the media. Though it always makes me wonder how much we really don't know!

File this under shock and surprise: the gas industry isn't paying its fair share again. Even though gas prices have nearly doubled since 2001, the industry paid less in royalties in 2005 than they did in 2001. The real question is who is fit to investigate this abuse?

A follow-up story in the NY Times today shows that lawmakers on both sides of the aisle are falling over each other to "demand" answers. Pardon the cynicism but with these foxes we might be lucky if there's a feather or two left when it's all over.

The instability in Iran and Nigeria has already sent oil prices to a four-month high of $69. Now this: Kuwait's oil reserves are only half those officially stated. Markets may be closed by the time this news really trickles in. But if this is true--that Kuwait, which holds 10% of the remaining oil in the world, has half as much as they've long stated--then watch out. Effectively, this would mean that there is 5% less oil in the world then we believed. $70/barrel may soon feel like a comfortable memory.

I'm not sure what it is like in newspapers across the country, but in Washington there's been an almost constant barrage of oil industry ads for the past four months.

I've been particularly annoyed by Chevron's condescending ad that states "The average American consumes 25 barrels of oil each year. What are you prepared to do about it?"

It's as if Chevron is unhappy with the $13.6 billion it made in 2004 or the $3.6 billion it made in just three months after the Gulf Coast hurricanes.

I suspect that we'll be getting another spike in ads over the next month as the industry announces its annual profits.

The warnings of hitting peak oil are escalating. The latest story has the Venezuelan Energy Minister warning that U.S. will use up its oil reserves in 10 years. We'll examine the details of the peak oil argument later but I just wanted to throw out this latest warning.

We're going to hit the wall. The only question is: what speed will we be travelling?

Another piece of Alaska is soon to be excavated in the century long pursuit of oil. The latest Bush government announcement opens another 400,000 acres in the National Petroleum Reserve-Alaska to oil and gas drilling even though most of the 23.5 million-acre reserve is already used for oil and gas drilling.

Two things are worth mentioning:

1) Like every other refuge or reserve under threat, this place would do virtually nothing to reduce the price of oil or reduce American's dependence on foreign oil--as much as the President and his supporters would like to argue otherwise. This latest piece of land contains an estimated 2 billion barrels of oil. Sounds like a heck of a lot, right? Except that the U.S. currently uses 7 billion barrels a day! This latest reserve wouldn't even last us half a year.

2) While the environmental community has enjoyed an impressive victory protecting the Arctic Refuge (ANWR) for more than twenty years--often against impossible odds--it simply isn't feasible for us to do so for every remaining wild place. It just goes to show you that until we can change this absurd policy of drilling to delay the inevitable, we may only have ANWR left to protect.

Death by a thousand rigs.

I was at ExxonMobil's website trying to see whether they had released news of their annual profits for 2005 (projected to exceed $30 billion!) only to find this farcical bit of greenwashing. ExxonMobil boasts that it won an environmental award for wildlife habitat conservation. The award was presented by the Wildlife Habitat Council. A quick look at their Board Members displays a roll call of the worst actors in the business: Dow Chemical Company, Monsanto, Ford and, of course, none other than ExxonMobil. I suspect that each of these companies just takes a turn awarding themselves each year.

In that vein, I'm thinking that we'll be winning the best new blog award any moment now...