The Greatest Show on Earth

That title has announced the Ringling Brothers, Barnum, and Bailey Circus for decades. It came to mind yesterday as I was watching the House Select Committee on Energy Independence and Global Warming hearing on C-SPAN. It must have been the thought of clowns and the dramatic showmanship exhibited by the politicians.

The hearing, “Drilling for Answers: Oil Company Profits, Runaway Prices and the Pursuit of Alternatives,” was intended to “probe the causes and solutions to America’s oil dependence”.

In reality it was a sample of the pandering I predicted in my previous post on March 18. The committee had 5 oil executives lined up like ducks in a shooting gallery and after 40 minutes of opening statements they started shooting—questions, that is.

Right off the bat Rep. Markey, the chairman, wanted to know how much Exxon-Mobil had allocated to “renewables” for 2008. The answer, $100 million, did not satisfy. Next, Rep. Sensenbrenner wanted to know what each executive thought was the most pressing issue between them and the government. They all mentioned access to new oil fields. That meant they wanted to be able to drill on the outer continental shelf and in the Arctic National Wildlife Refuge (ANWR).

The grilling continued with many questions on the size of the oil industry profits and trying to extract promises from the execs to do foolish things like sacrificing some of their profits to reduce oil prices “to be patriotic”.

A few interesting things were mentioned:

• There is a program popularly known as “splash and dash” where the government, i.e. taxpayers, provide a subsidy of $1 per gallon for a mixture of biofuel and petroleum fuel. This is quite a scam; I will blog about it at a later date.
• “International”, i.e. Exxon-Mobil, Shell, etc., oil companies control only about 6% of world petroleum reserves while “national”, i.e. Saudi Arabia, Iran, Venezuela, etc., oil companies control more than 80% of reserves.
• Given only “supply and demand”, the price of oil should be about $55/barrel. The other half of the price is due to investor speculation, geopolitical risk, and the lower value of the U.S. dollar.
• A topic that is very important to understanding issues relating to energy and global climate change is the scale of the petroleum system (I will be blogging about that in future posts). Mr. Hofmeister of Shell pointed out that the U.S. consumes 20 million barrels per day of petroleum. That equates to 10,000 gallons per second!
• Chevron boasts that they are the world’s top producer of geothermal power. They produce over 1200 MW (enough to supply 7 million homes). Their geothermal facilities are in Indonesia and the Philippines.
• Rep. Hall (D-NY) mentioned the recently-publicized method to create fuel from the CO2 in the air. That sound like “pie in the sky” (or perhaps “gas in the sky”). I will have to investigate that and post my findings in a future blog entry.