Mailbag June 24, 2010

Hi Tony, There’s a fresh stiff breeze from a different compass point at MAREX! I agree with much of what you write, and share what I think is your dismay over the Senate’s refusal to end tax breaks for the oil industry. However, I’m not sure what you mean by “Federalizing energy”. The Government will continue to manage these offshore “commons“ as they have for some time; the hope is that it will do so in accordance with the laws and as strict stewards of the environment and the public interest – not as industry hacks and shills. DOI has since the 1800s been known for its conflict-of-interest shenanigans and it became an absolute cesspool in the last 10 years. Obama in my opinion should fire Salazar and bring in a new New Sheriff to really clean house. In any case, the Government will not itself be drilling wells and extracting oil; even liberals like me understand that it is not good at such things. What it should get good at is development and enforcement of strict standards. It should especially require real plans for capping blowouts, because – rare though they may be – the consequences are simply unacceptable. Your thoughts? Mike Dyer Mike, Thanks for the feedback—The winds of change are upon us and the GOM spill is a game changer for the American people and the maritime industry. In terms of the people; they cannot have it both ways. Screaming “get this socialistic government out of our lives,” but then demanding that the Pres does something in the Gulf or calling him out for not doing something sooner is ludicrous. Meanwhile, watching a muted Senate not have the courage to repeal tax breaks for oil companies is another reason lobbyists need to be removed from Capitol Hill. They have lobbied away manufacturing, the deepwater Merchant Marine, the flat tax, and a lack of courage on the Hill to rein in Big Oil. What I mean by Federalizing Energy is a little forward thinking into the future where drilling in the OCS will have regulators crawling all over the rigs and inspecting them and pipelines and mandating emergency response. The days of record fat profits for Big Oil are over, and they only have themselves to blame. Government is now a major player in energy whether anyone likes it or not. And, I don’t think BP will be around to end the GOM spill and that will put government even deeper in industry. Regards, Tony ********* Tony The fact overlooked is that the federal government cannot manage anything effectively. Exclude this casualty, and the oil industry has a safe drilling record overall considering the nature of the business. No government run agency has demonstrated the ability to manage anything safely or efficiently. The railroads, regulation of the airlines, regulation of coal mines, regulation of securities, bankruptcy of the social security system, ruination of the postal service, operating of Medicare at any reasonable cost, procurement contracts for the military, the mess that the interference by Congress made of the banking industry by forcing loans to those that could not afford homes, protection of our borders (exclusively a federal responsibility), deporting illegal immigrants, operation of the MMS, building the levees in Louisiana, constructing the Mr. Go in Louisiana, and so on. Private companies may err, but they know when they need to correct the problems, including safety, or they will not make a profit. With this disaster, all oil companies will crack down on human error more than any government agency can possibly do so. What has elevated the United States above all countries is our freedom and limited government. We are in danger as a nation, our rich and poor, if we allow the federal government to take over through the guise of safety or medicine and eliminate one by one our freedoms. Mat M. Gray, III Mat, While I agree that the oil industry has a fairly good record—it is far from being admired. In fact, it is an industry with some real nasty blemishes and the Macondo spill is another eye-opener. There was not one single emergency response plan in place for drilling at 5,000 feet 140 miles from shore. BP announced $14 billion, Exxonmobil had 45.22 billion, and Chevron had $23.93 billion in 09”……….all deepwater drillers and none of them with a deepwater emergency response plan in place. And, if they did, this well would have been capped weeks ago! The railroads, airlines, securities, and trucking were deregulated many years ago. Sure the consumer has benefitted from lower cost, but what we have alos done is lower the standard of living in this country. All the workers in these industries make a lot less money, and the equipment used to operate within these industries are planes and trucks that are patched up and sent out to do more business. The fact is government is not a good manager of anything important –but nieither are many of the companies that put profits before safety, and that’s what we speak to here. BP thought more of profits than it did of the environment. There are oil spills all over over the world (Africa, the Baltics and Eastern Europe) that rival the GOM spill, and many major oil companies are to blame. No government oversight means the enviornment is carelessly ravaged by polluters whose sole mindedness is profits. Corporations cannot regulate themselves, sorry. The fact is, people cannot scream out of one side their mouth, “keep government out of my life,” and “we want our country back.” Then turn around and call Obama a slacker for not immediately jumping into the emergency response mode…….and wonder why it took him 50+days to make it a priority……………Private industry (BP) could not manage this oil spill and now the GOM is a dead sea. We have heard that dead creatures from the Gulf are disposed of at night by the truck loads so that media cannot play the scenes on TV. Can you imagine the furor? More importantly, even while the spill makes us sick to our stomachs to watch, industries in the GOM are saying, “Hey, you’re messing with my rice bowl.” While I sit on the middle of the road with politics, I seen what corporate lobbyists have done to this country………we no longer manufacture in the US, we not longer have a deepwater Merchant Marine, and tax breaks for the weathies companies is ridculous. Oil is a product that ciiviliazation cannot do without, and if oil companies cannot manage it properly, we may in fact someday see a real “federalizion of energy.” Regards, Tony ******** Good morning Mr Munoz, It is shocking to read that 22 Democrats in the Senate join Republicans to block efforts to repeal billions of tax breaks for the oil companies. In an era were the government faces huge deficits, and oil companies huge profits, this would be a correct measure, even without an oil spill. This shows how deep the oil companies have penetrated in the political system. The oil companies have spend milions to support political candidates of both sides during the election campaigns. Now it's pay back time for them. The policies and lobby systems of BP and other oil companies are not only a threat to the environment. They are a also threat to the democratic system. Hans Heynen editor Weekblad Schuttevaer Dutch nautical Weekly Hans, Many thanks for the note—as an FYI, last year the oil companies spent $154 million on Lobbyists on Capitol Hill (2009), which was a 16% increase over 2008’s $132 million. With that kind of cash flowing I am not surprised to see the 22 Democrats race across the isle and vote to squash the repeal of the oil tax breaks. While the tax breaks might appear to help Big Oil, they are really meant to help independent producers, especially the small ones. It is estimated that by repealing the tax breaks for oil companies about half of the tax savings would come from the smaller companies, which would end a lot of jobs and end drilling. So, there is a bit of regard about the smaller companies, but Big Oil absolutely has a voice on the Hill. And, let’s look at what the “Six-Month Moratorium” is looking like: Anadarko is planning to relocate its activities overseas and has invoked “force majeure” on three deepwater contracts. Their relocation will impact the GOM by $5.5 billion (2010 budget). Additionally, Halliburton, Baker Hughes, and Schlumberger are all considering moving workers out of the GOM because of the 6-month “dead period.” To watch these companies begin to plan pulling out will create a financial crisis and shut off a lot of oil in the GOM, and it will not be easy to start up production again. It is a nightmare here in the states, Regards, Tony ******** Hello Tony: Home run article Tony. Puts things into perspective. Alaska, nobody was willing to shut the line down to run a pig through it to check it's thickness(corrosion loss). Lines must be shut down for inspection. Texas City, lack of maintenance and poor quality operator over filled the tower to allow hydrocarbons to escape and find an ignition source. G Good result, safer site offices, trailers and storage units---relocated out of the potential blast areas. Move nonessential personnel out during start up. Macondo, so far appears to be ignoring the signs of problems for the objective. In all cases you could have heard..."Do you know how much it costs to shut this...xyz...down per hour/day/week? Trying to do more with less over the last 20 years! Could the oil/gas business be the next General Motors because they cannot manage safely? RSA Ltd. P F Rogers GM Hello Pete, Thanks for the great comments. It’s hard to say what will become of Big Oil and the US OCS. But, as we watch the devastation in the Gulf with all the dead animals and soiled beaches, I mean it’s heart wrenching to see the ecosystems being assaulted, all we hear now is how the Gulf Coast economies are taking major hits and lots of people are now unemployed…..what are we to do? While the fishermen and resort communities are broke now because no one can ply their trade—the offshore energy support industry and the oil companies want (need) access to the production fields. It’s a “catch 22” dilemma. In terms of “federalizing energy,” the administration is already challenging a judge’s ruling to lift the 6-month moratorium, and they are not about to allow drilling out in the OCS until a emergency response system is in place to deal with future blow-outs. And, that’s just the beginning of the government taking control of energy, Best, Tony