Wednesday, May 7, 2008

Mark Udall's Energy Plan Lacks Sense

Mark Udall is really good at proposing political solutions that don't work in the real world. Case in point: In an attempt to avoid the real issue of increasing domestic oil production and updating refining capacity, Udall has made diverting oil supply from the Strategic Petroleum Reserve the centerpiece of a new energy plan, according to today's Grand Junction Sentinel:
Udall, who unveiled his proposal Tuesday, said gasoline prices could fall by 25 cents a gallon by not storing away millions of barrels of oil every month.

“We know from history that it’s worked when you suspend filling the (Strategic Petroleum Reserve),” Udall said.
Which history is that? Certainly nothing cited in this article. It would be good for journalists to follow up with Mark Udall on this point. Meanwhile, Udall received reinforcements from one of his Democrat colleagues:
Congressman John Salazar, D-Colo., said he likes Udall’s plan to stop storing oil away in the Strategic Petroleum Reserve.

“I would support putting a moratorium on that, so that we can actually make more available on the marketplace,” Salazar said. “That always seems to have an immediate impact.”
It does? Here are a few inconvenient facts and bits of expert analysis:
The Energy Department, Mr. Cusimano points out, is not actually buying the oil. But, he says, a DOE examination has found that holding the oil has been a positive investment. Currently, the average "acquisition" cost is $27.73 a barrel.

In recent times, the SPR has been tapped twice. After hurricane Katrina, which destroyed pipelines, the government released 11 million barrels of oil [about 2 days supply]. In 1991, during the Gulf War, it released 17.3 million barrels [about 3 days supply].

Energy experts are divided over whether it would make any difference to release oil today. "It's a tight market, an incredibly tight market when every drop matters," says Tim Considine, who has done a study on the SPR and is a professor at Pennsylvania State University. "But looking at the SPR to alleviate market pressure is only a short-term fix."

Phil Flynn, an oil trader at Alaron Trading in Chicago, doubts it would have any impact. "It is such a small amount of oil," he says. [emphases added]
The Sentinel reports the rest of Udall's plan:
Udall said he hopes to combine his plan for the Strategic Petroleum Reserve with eliminating tax breaks for oil companies, increasing drilling in the Gulf of Mexico and removing barriers to ethanol imports, which should lower gas prices over the long term.

“We’re not going to drill our way out of this,” Udall said.
Removing trade barriers to ethanol is a good idea. Credit the Boulder Congressman for that one. But if he's serious, Mark Udall would end the ethanol subsidies, too.

And how in the world is eliminating tax breaks for oil companies going to bring down gasoline prices? (Does Udall really want gas prices to come down?) Will it increase supply? No. Will it cut back demand? No. But it sure makes somebody feel warm and fuzzy inside.

The final question for Mark Udall's incoherent plan: Can we really take his idea to drill in the Gulf of Mexico seriously when he has worked to kill a modest plan to drill on Colorado's Roan Plateau? Or is he only opposed to energy production that would enrich Colorado communities in the form of jobs, economic growth, and funding for public colleges and universities?

1 comment:

Allen said...

How is it okay to increase drilling in the Gulf of Mexico but not Colorado?