Energy Today - May 5, 2011
Posted May 5, 2011
The Washington Times: More Oil Would Mean Smaller Deficit: With the price of oil at more than $100 per barrel, higher gasoline prices are eating into Americans' budgets. Consumers, however, are not the only ones losing out. The various taxes, lease revenues and royalty payments to federal, state and local governments for oil and gas production on public lands is a significant source of revenue - among the largest sources outside of the personal income tax. Yet, the Obama administration stubbornly clings to a "no new production in our backyard policy" - while blaming oil companies for high prices. The truth is, by the government's own estimates, due to declining production at existing wells and bureaucratic delays on new wells, the federal government is forfeiting revenues of more than millions of dollars per day. The losses will grow significantly if the federal government does not sell new drilling leases on the Outer Continental Shelf and on other public lands this year. Minneapolis Star-Tribune: Oil Companies Make an Easy Scapegoat: Last quarter, ExxonMobil made about 7 cents on each gallon of gasoline, diesel and other products sold in the United States. In contrast, consumers pay anywhere from 40 to 60 cents per gallon in gasoline taxes to federal, state, and local governments (depending on where they live). Obama and leading Democrats advocate removing what they call $4 billion per year in oil industry "subsidies." What they really mean is that they want to increase taxes on oil companies by taking away several deductions granted oil companies while leaving deductions in place for other sectors of the economy. If Obama wants to lower gasoline prices, he needs to reverse course and encourage development of vast domestic oil reserves in Alaska, the Gulf Coast, off the continental shelf, and in Western states. This will increase the overall supply of oil on the world market causing oil and gasoline prices to decline. Higher taxes on oil companies will do nothing to lower gasoline prices but will undoubtedly be passed on to the consumer.The Foundry: Deepwater Drilling Permitting Rate Still Way Below Average: As gas prices continue to climb -- reaching as high as $5.75 to $6.03 a gallon in some places -- the Department of the Interior remains stingy with deepwater drilling permits. Since February 2011, the administration has issued an average of just 1.3 deepwater permits per month -- a 78 percent monthly reduction from the historical monthly average of 5.8 permits a month, according to the latest Gulf Permit Index from Greater New Orleans Inc. The slow pace of permitting will likely eventually result in production declines -- and that decrease in supply is unlikely to mitigate high gas prices.