October 5, 2008

Billions of Barrels Could Mean Trillions of Government Dollars; Media AWOL

Filed under: Business Moves,Economy,Environment,Taxes & Government — Tom @ 8:57 am

OffshoreOilRigOld Media’s coverage of the recently-lifted executive and congressional bans on offshore exploration and drilling for oil and natural gas largely overlooked an important element that should have been very relevant to the discussion.

Supporters of lifting the bans surely share much of the blame for only rarely citing it. Though they have frequently noted the hundreds of billions of dollars a years annually sent overseas to pay for oil that could have been extracted here, they have mostly missed a golden opportunity to tell the American people what over a quarter-century of drilling bans has cost the government and taxpayers. They also generally failed to tell us about the windfall that awaits if the end of the offshore and other bans finally leads to appropriately aggressive use of this country’s God-given resources.

But if we had inquisitive financial reporters in the business press who were interested in information relevant to the “Drill Baby Drill” debate instead of merely repackaging the press releases they received from those on both sides (the sole exception I found was this Wall Street Journal editorial), many more Americans would have long ago learned about what follows.

Congressman John Peterson (R-PA) has assembled information about this. The numbers are stunning.

In a PDF available at the congressman’s home page (at “Charts and Other Useful Information”), he tells us that “the United States is the only industrialized nation in the world which prohibits offshore exploration and production of domestic energy.” In other words, everyone else is talking the talk, while we’re the only ones walking the walk. Translation: We’ve been suckered by environmentalists and the “not in my back yard” crowd into doing something no one else in the rest of the world will do.

The government collects royalties on oil and natural gas when it is extracted. Peterson’s office obtained information from the Minerals Management Service and the Energy Information Agency showing that the average offshore royalty rate, which is based on market prices of the resources when extracted, is 15.17%.

Earlier this summer, the Congressman’s office prepared this summary (available in HTML format here) of how much royalty money is just sitting there offshore:

ReservesAndRoyalty0708

Even if you adjust Peterson’s calculations to reflect current prices of roughly $100 a barrel for oil and $8/mcf for natural gas, the royalties locked up still amount to over $1.8 trillion (about $500 billion from natural gas, and $1.3 trillion from oil).

But that’s only the beginning.

Estimates of known reserves have almost always been low. There is no reason to believe that things are any different now. For example, over twice as much oil has come out of Prudhoe Bay than was initially predicted. A repeat of that result with offshore reserves would not be at all surprising, especially because Congress has prohibited even exploring the areas involved for years. Using $100 a barrel as the current price of oil, that’s at least another $1.3 trillion in royalties.

Then there’s shale oil. This Wikipedia entry shows over two trillion barrels in estimated U.S. reserves.  Assuming that only 10% is recoverable, that’s another $3 trillion in potential royalties.

If you’re keeping score, we’re at about $6.1 trillion. That’s more than 60% of the current national debt of $9.8 trillion, which is set to shoot up to a frightening degree in the coming years thanks to Uncle Sam’s bailout binge.

The real number for potential royalties is much higher. I ignored additional royalties from offshore natural gas. I also didn’t look at royalites that might come from oil obtained from sands, oil and gas in North Dakota’s Bakken Formation, oil and gas in the Great Lakes, or future oil and gas discoveries.

On top of all that, according to a spokesman for Congressman Peterson, the federal royalty rate for land-based extraction is typically much higher than the 15%-plus off shore rate. States also collect substantial land-based extraction royalties on top of Uncle Sam’s take. The total can be as high as 50% of the market price at time of extraction, with 25% going to the Feds and 25% to the states involved.

Even beyond the royalties involved, Uncle Sam, state governments, and local governments would collect additional billions in corporate and individual income and payroll taxes because of increased business activity.

For decades, both the executive and legislative branches of our supposedly “by the people, for the people” government have mostly done all they can to keep us from using and benefiting from our own resources. By doing so, even at the much lower prices in previous years, they have caused the government to lose out on tens of billions of dollars a year. At today’s prices, if we capitalize on the recently-lifted offshore bans, annual amounts coming into the Treasury could easily run into the hundreds of billions.

Our representatives should be embarrassed by their past quarter-century of energy negligence. The American people should be infuriated, and would be demanding a full-speed-ahead on domestic exploration and drilling — if they only knew.

Cross-posted at NewsBusters.org.

Positivity: ‘Miracle’ saves woman from deadly heart ailment

Filed under: Positivity — Tom @ 6:58 am

From Charleston, West Virginia:

Tuesday September 23, 2008

No one can really explain how 33-year-old Marianne Cook survived all she did – a fist-sized tumor on her heart and blood clots that were as long as pencils.

The fact that she’s still alive represents such long odds that she was featured recently on an ABC News series on medical miracles. The headline at the ABC site still trumpets: “Woman Survives Killer Blood Clots; Recovery Baffles Doctors.”

It all started when Cook, a single mother, went to take a hot bath before planning to spend time with a friend last November. After inserting the plug, she suddenly became dizzy and passed out in the tub.

The phone rang in her Beckley apartment but no one picked up.

It was her friend, who even came over to check on her but the door was locked.

“A few hours later, I woke up and my baby was crying,” Cook somberly recalls. “The water was so cold. God gave me the strength to get out of the bathtub and make it to the bedroom floor.”

She passed out again.

No one found her and her son, Jalen, who was 2 at the time, until 20 hours later. A maintenance man was following up on a call from Cook’s downstairs neighbor, who complained that water was leaking from her apartment.

Cook was found drenched in cold water and with scratches on her legs, apparently from Jalen trying to awaken her.

Family, friends and church members in Cook’s former hometown of Arnett, Boone County, are calling her recovery a medical miracle.

She was transported to Raleigh General Hospital and placed on life support.

Her mother, Wilma, was putting on mascara and getting ready to take her granddaughter shopping when she received the phone call.

Wilma immediately rushed to the hospital and called her church friends for prayers.

“All I could see was purple,” the mother said. “Her legs were purple. It made me sick to my stomach to see her on life support, bloated and a terrible color.”

Doctors at Raleigh General weren’t holding hope for Marianne. They believed her chances were so slim that they repeatedly asked her parents to sign a ‘Do Not Resuscitate’ order to take her off life support.

Her parents were told she’d be a “vegetable” for the rest of her life, if she woke up at all, and compared her brain to cottage cheese.

“I told them ‘No,’ ” Wilma recounted. “‘She’s only 32 years old and has two little boys. I’m not going to do it.’ ”

Marianne’s other son, Levi, is 11.

Marianne was then airlifted to Cabell Huntington Hospital, the only hospital out of 10 contacted that agreed to take her.

Tests there revealed she suffered a massive stroke, and that a fist-sized tumor inside her heart was causing clots throughout her body.

But doctors there could not perform surgery, so the hunt for another hospital commenced.

Three days had passed since her stroke, and the Cleveland Clinic braced to help her.

She desperately needed open-heart surgery, though doctors admitted her chances of survival were slim.

“I went in to kiss her before surgery,” Wilma said. “I literally felt that the ordeal was lifted off my shoulders. I knew everything was going to be OK.”

Go here for the rest of the story.