CBO report finds 'drill baby drill' in practice produces little revenue or oil (barf alert)

examiner ^ | august 18, 2012 | Lou Colagiovanni

[lowbridge]

It has been confirmed in a new report by the non-partisan Congressional Budget Office that the benefits of opening up and leasing protected federal landsforthe development of oil and natural gas are next to nothing. The estimated profit would be as little as $500 million a year which is only 0.7% of the total gross take of revenue of $150 billion that is expected to be generated over the next decade from leases already in place.

A favorite cheer of the Republican party has been "drill baby drill." Some would now say that talking point has been proven impotent.

The analyzed issue was the opening of ANWR, The Arctic National Wildlife Refuge, and off-shore drilling sites between 5 and 200 miles away from both coasts. Certain parts of the Outer Continental Shelf were also included in the analysis.

The United States allows individual corporations and private businesses to bid on leases for resource development already, with 70% of these areas already in use.

Once operational, which in some areas may take as long as 25 years, the report finds a revenue of $2 billion a year may be possible but not sustainable.

[gov_bean_ counter]

The only thing one needs to know about CBO studies is that they are done based on the assumptions given them by the requester, making most studies worthless political propaganda.

[Ben Ficklin]

In ND the drilling is on private land so neither the feds or the state earn a royalty.

OTOH, that is economic activity that generates income and the feds levy an income tax on that.

[Mmogamer]

And one reason gas is so prices are so high? not enough refineries. all the oil in the world won’t do you any good if you can’t process it.

[Mmogamer]

And one reason gas prices are so high? Not enough refineries. All the oil in the world won’t do you any good if you can’t process it.

[Ben Ficklin]

As you may or may not know, the oil companies/refiners are exporting record amounts of gasoline and diesel. The most since WW 2.

[Dusty Road]

Royalty no but the state does get a severance tax per barrel of oil and unit of gas produced on private land.

[vbmoneyspender]

Good. I don’t want drilling done to benefit the gov’t. I want it done to benefit our economy.

[Georgia Girl 2]

Tell that to N Dakota.

[null and void]

CBO says pregnancy unproductive, cites hundreds of examples of women who have been pregnant for half a year with no babies to show for it...

[smartyaz]

Directly from the Mineral Management Service(MMS)

Revenues collected from onshore and offshore Federal lands by MMS are one of the largest sources of non-tax revenue to the Federal government. In 2009, MMS disbursed $10.7 billion in mineral revenues to States; the Office of the Special Trustee for American Indians
for distribution to Indian Tribes and individual owners; other Federal agencies; and U.S. Treasury accounts.

• $2.0 billion directly to states and eligible political subdivisions, such as counties and parishes
• $6.05 billion to the U.S. Treasury
• $538 million to 34 American Indian Tribes and 30,000 individual American Indian mineral owners
• $1.53 billion to the Reclamation Fund for water projects
• $892 million to the Land & Water Conservation Fund
• $150 million to the Historic Preservation Fund

[WOSG]

Same old stupid argument: “Once operational, which in some areas may take as long as 25 years,...”

So its not worth it because it take a long time to make money on this. What about caring where we are in 10 years?

So it cant solve the whole problem, so lets not even try to make it part of a biger solution?

Its funny, but we heard these lame arguments back in 1990s over ANWR. The naysayers said it would take 10 years so it wasnt worth it; it would only be 1/2 million barrels a day and that’s just 3% of our energy use ... that was 15 years ago. We could use that oil right about now.

I do hope we get smarter about this so in 2024 we are energy independent instead of having dumb arguments that stop us from doing the obvious right thing. Drill here, drill now!

[philman_36]

What is this guy's deal?

Production from newly opened areas over the 2023–2035 period would be far less than the amounts produced by current operations in the Gulf of Mexico.

That's what is on the CBO website, that's not in the report...
Potential Budgetary Effects of Immediately Opening Most Federal Lands to Oil and Gas Leasing

Here is the only instance of "newly" in the pdf...

For this analysis, CBO used EIA’s estimates of the potential for new areas to produce oil or gas after 2022. EIA expects that any initial production from newly opened areas in the Atlantic, Pacific, and eastern Gulf of Mexico would be far less than is produced by current operations in the Gulf of Mexico (see Figure 2).

And the report also says this about "after 2022"...

CBO does not have enough information to predict with specificity what would occur after 2022 either under current law or under the proposal. Under the proposal, income from royalties might be greater over the 2023–2035 period and smaller in subsequent years than under current law. But the proposal also might reduce the amount of bonus payments received between 2023 and 2035 because some of them would be collected sooner. Such long-term predictions are clouded by the inherent uncertainty surrounding market prices for oil and natural gas, state and local policies regarding resource development, and the potential impact of changes in technology.

One should really read the actual report before writing about it instead of reading a website about the report and writing about that.

Drill, baby, drill!

[philman_36]

BTW, regarding that one particular sentence in the actual report...
For this analysis, CBO used EIA’s estimates of the potential for new areas to produce oil or gas after 2022.
Remember this... According to estimates of potential resources by the Department of Energy’s Energy Information Administration (EIA) and taking into account a range of probable oil prices, gross royalties from leasing in ANWR would probably total between $25 billion and $50 billion (in 2010 dollars) during the 2023–2035 period, or roughly $2 billion to $4 billion a year. (By comparison, CBO estimates that under current law, gross receipts from all federal oil and gas leasing activities in 2022 will be about $12 billion, in 2010 dollars.) The projected royalties from leasing in ANWR are very uncertain, however, as they depend both on the amount of oil that might be produced and on future oil prices. Any royalties collected from development in ANWR would be divided between Alaska and the federal government according to a formula that would be set by the authorizing legislation.

This article sounds to me like somebody is "putting a thumb on the scale".

[kcvl]

BS!!!

Lou Colagiovanni, Detroit Liberal Examiner

Lou Colagiovanni is an activist, journalist, and political consultant from the motor city Detroit, Michigan. He is also the founder of the popular political discussion group, “We Survived Bush. You Will Survive Obama.” You may contact Lou at lcolagiovanni@consultant.com or wsbyso@activist.com.

[kcvl]

Garbage in, garbage out from pencil pushers and a liar who wrote this crap.

[kcvl]

Garbage in, garbage out from pencil pushers and a liar who wrote this crap.

first of all...Lou is talking about income to the GOVERNMENT not anyone else. and the 70% already leased doesn’t mean anything If the other 30% is where the oil is. Idiots...or think we are.

[SaraJohnson]

I’ve been saying this inconvienent truth. Drilling for oil benefits the oil company doing the drilling (not necessarily an American oil company) and does not make sure the US is oil independent because the oil is sold on the global market; not to the US. With China’s growing need for oil, it will probably be gobbled up by our enslaved friends who recieved our industry, jobs and economy. The lease charge is not worth giving up the oil.

Globalism needs to go. It’s humanity rush down the toilet to enslavement.

[SaraJohnson]

Why do you say this oil supply is “domestic” when oil is sold on the global market-not in America. Also, the competition to drill our oil would be international - not necessarily American.

The way our politicans, government and elite operate and think within the framework of globalism, is not the way you assume it to be. We get the lease and the mess. We lose our resources. The “global” thing gets the profit and the oil.

[Titus-Maximus]

That is correct. This story is nonsensical. There are about 5000 wells in the Bakken and they cost 6 to 12 millions a pop. They are doing 240 wells a month - will do 40,000. Do the math.

[jmaroneps37]

This just in from the King, this month is not August but actually December.