Earlier this month, Royal Dutch Shell, coming off the most rapacious
quarter in its history with a 60% increase in earnings to $8.47 billion,
spurred on in large measure by OPEC-inflated crude oil prices,
announced that it had successfully obtained the drilling rights to 275
lease blocks in the Chukchi Sea offshore northwest Alaska. These new
lease holdings, together with Shell's lease holdings in the Beaufort Sea
moved David Lawrence, Shell's Executive Vice President Exploration to triumphantly
exclaim they have the "potential of becoming a new heartland for Shell."
And there, in a nutshell you have it. What was once the national
patrimony of all Americans is now becoming the new 'heartland' for
Royal Dutch Shell. To give you a sense of the giveaway, the Minerals
Management Service, the federal agency responsible for the auction covering
29.7 million acres has estimated that the area contains 15 billion barrels of
"conventionally recoverable" oil and 77 trillion cubic feet of conventionally
recoverable gas. Shell, as the high bidder, is proudly proclaiming it is paying $2.1 billion
for the leases. Leases that appear certain to be in the most prolific areas of the Chuckchi
Sea. That amounts to a grand cost of 14 cents a barrel permitting access to the potential
of some 15 billion barrels of a commodity now selling near $100/bbl.
Yes, there will be development and drilling costs but nothing even closely approaching
the avalanche of prospective revenues from the oil and gas when all is said and done.
By the way, if these numbers become too overwhelming for you, at today's prices the market
value of 15 billion barrels of oil is about $1.5 trillion dollars ($1,500,000,000,000). And
that's not counting the 77 trillion cubic feet of natural gas. The risk reward ratio is so
staggering, that with house odds such as these, Las Vegas would have been
out of business years ago.
Perhaps a little insight into the agency whose talents were able to
organize stripping this resource from our patrimony to the moneyed and
vested interests of a senior player of the oil patch coven, might well
be edifying. The Minerals Management Service, the federal agency
responsible for this boondoggle (over the objections of conservation groups
and the Inupiat Community of the Arctic Slope) is a division of our trusted Department of the
Interior whose reputation was cause for Earl Deveney, the Interior
Department's Inspector General to comment in exasperation at the
Agency's fostering of a culture of "management irresponsibility" that
tolerated conflicts of interest, to the point "Short of crime, anything
goes at the Department of the Interior." Not to be outdone Rep. George
Miller (D-California) felt moved to comment, "If things keep going
like this we're going to need two sets of handcuffs, one for the oil
companies and one for the bureaucrats."
But wait, it gets better. This begins to read like a 'whodunit?' Three
guesses. Who serves as General Counsel for Shell? You probably nailed
it. None other than Gale Norton, who served for five years as President
Bush's Secretary of the Department of the Interior. If only Sherlock
Holmes were around to do justice to all of this.
Cause and effect? Who knows, but given the incestuous traditions
between the oil companies, this oil addled administration and the
Department of the Interior, one can bet that we, the public, will be
getting short shrift. That the bulk of the wealth derived from the
development of these public lands will land on Royal Dutch Shells
bottom line and not in the public purse. We will be paying for the oil
twice. Once through the giveaway at the well, and again at the pump
when we buy it back through the price of gasoline.
How much better served we would be, how much more assured we would
feel, if we knew our national resources remained in the public domain
and were under the stewardship of a National Oil Trust and developed for the nation
as a whole and not the crony racket that our government has permitted to run amok
with its pittance royalties, munificent tax breaks, loopy depreciation allowances and on.
That such a trust would be empowered to manage, with particular environmental
sensitivity, the enormous and still untapped energy reserves located on
our public lands and underneath the oceans off our continental shelf.
As pointed out in a previous post ("An Energy Agenda For a New Age: Time
For a National Oil Trust" 11.20.06) the National Oil Trust could be
modeled after Norway's Petroleum Directorate whose stated objective is
to create the greatest public value for Norwegian society from
Norway's oil and gas deposits. The Norwegian government also created a
national oil company, Statoil, whose prime function was the marketing
and distribution of the Norwegian State's direct interest in each
production operation. The Norwegian State owns a 70% share interest in
Statoil, the balance owned by investors worldwide including a broad
array of global market funds. Profits from the oil and gas operations
accrue to the Norwegian Government's Pension Fund and is invested in
conservative bond and stocks. Were we to have a similar structure, the
trust could be mandated to direct investments toward developing a full range of
alternative energy sources and to expand our mass transportation. It could
well become the cornerstone of a viable program aimed at breaking our
environmentally suicidal addiction to fossil fuels.
But then again the Shells, Exxons, Chevrons and the oil patch generally
have far greater sway over our 'elected' representatives in Washington
than the rest of us. 'They' with their 'K' Street honchos and their politico money-raising talents. 'They' have exercised this mordant influence for years and it is well past
time that they be held to account!