13 October 2009

Does This Make Sense?

In E&E News today Senator Lindsey Graham (R-SC) is profiled, and he says this:
"What if I took something you agree with, that this country had a lot of resources that need to be explored and extracted, and every barrel of oil that we can find off South Carolina with South Carolina’s permission, and natural gas deposits, make us more energy independent?” he added. “What if you married those two things up? And took some of the revenue from oil and gas exploration and put it toward reducing our carbon dependency? I think that’s a deal that a lot of people would go for. You don’t have to be a true believer of drilling offshore or that climate change is real. You’ve just got to be willing to give and take."
Can we "reduce our carbon dependency" via extracting "every barrel of oil that we can find"? Does this make sense?


  1. Roger,

    I believe he is talking about taxing short term revenue from oil and gas and using it to invest in cleaner energy (e.g. nuclear and "green" nuclear like LFTR).

    This makes a lot of sense to me.

  2. Roger, while doubtless many would agree that Graham is a moderate, he is not a D-he is an R.

  3. "Can we "reduce our carbon dependency" via extracting "every barrel of oil that we can find"? Does this make sense?"

    If we burned oil and natural gas for electricity, rather than coal, that would reduce carbon emissions.

    Another thing that most people don't think about is that oil and natural gas are much easier to use for co-generation than coal. Co-generation is good, because the heat that would normally be wasted is utilized.

    As Charles points out, I think Graham is talking about using the revenue from increased oil and gas production to fund low-carbon energy technologies (e.g., nuclear, off-shore wind).

  4. That makes perfect sense to me.
    This country will continue using oil for decades however the AGW debate turns out. Our choice is whether to drill for our own oil, or buy imported oil. Importing oil transfers wealth from us to other countries. Drilling for our own oil leaves the wealth here to use as we as a nation decide.

  5. This website has a discussion of cogeneration (aka, combined heat and power, or CHP):


  6. Yes, what Graham says absolutely makes sense.

    Environmental extremists currently have a strangle hold on the world economy by depriving it of the energy required to run it.

    If we continue to crush the hydrocarbon based economy, then we will fail to generate the capital required to move beyond petroleum and we will NEVER GET THERE!

    But, we should have thought about that BEFORE electing a President who promised to bankrupt the coal industry.

    Face it! The world economy is powered by hydrocarbons and even NPR knows that the best candidate currently available to replace hydrocarbons is what NPR called “Wishful Thinking” (as reported near the end of that segment).

    Shiver and die in the dark and wait for National Socialism to come to the rescue. That’s what Obama fans voted for -- not that a Cap and Trade loving McCain would have been much better.

  7. I would agree that Senator Lindsey Graham misspoke. He probably meant to refer to foreign oil dependency and conflated it with carbon dependency.

    Clear obtaining oil domestically will not reduce our carbon dependency, as oil is carbon based whether it is foreign or domestic.

  8. Click here for a post I created last year describing the additional tax revenues which could be generated by drilling here.

  9. Roger, Graham definitely seems to be alluding to provisions in the Republican's "All of the Above" energy bill "alternative" that would dedicate 90% of the federal share of new oil royalties from leases in the OCS to a clean energy trust fund. See more here. Not a terrible idea. If we're going to drill up that oil, and if Dems are going to serve it up for Republicans to secure 60 votes, we should at least utilize the revenues to fund clean energy RD&D.

    Back when Congress was debating OCS drilling in 2008, I calculated the potential scale of this revenue stream. Back of the envelope: assuming 2008 EIA mean estimates for recoverable OCS yields in the lower 48 of 18.17 billion barrels (likely recovered over about 20 years), a royalty of $10 per barrel could yield $180 billion in government revenues. About 50% would go to the feds (the other half to states) and if 90% went to clean energy RD&D, that'd be about $80b in new funding over roughly 20 years - or about $4b per year. That's enough to fund a good chunk of our proposed National Institutes of Energy for example.

    If we're going to make a deal...

  10. Just for the record…
    I favor Graham’s proposal as a means of getting the Capitalist engine running better so that more capital is created and put to work on next generation energy solutions in the PRIVATE SECTOR.

    Putting more money in the hands of moronic and corrupt government bureaucrats so they can dole it out to those who push the most money back under the table will ONLY give us an endless stream of utterly counter productive debacles such as Ethanol!

  11. It's realistic at least. At some point somebody in government surely will realize that all this monetized debt is backed by little more than blind optimism. Using the abundant resources that are in your own territory is just one of the necessary steps back towards fiscal sanity. If that resource is natural gas rather than coal or nuclear then there is an opportunity for compromise between the greens, the government, the engineers and the economists.

    SBVOR: I see your Ethanol and I raise you an Enron. Private energy funding is great until you get crony capitalism, mafias or monopolism and then it's bad. At that point you'd probably wish there was more government oversight. The trouble with utopian economics is that crooked people are assumed not to exist.

  12. jgdes,

    I’ll see your Enron and raise you a Medicare/Medicaid/Social Security/Fannie/Freddie/FHA/HUD/USPS.

    Nobody does waste, fraud and corruption better than the Federal government.

    Furthermore, when private companies engage in bad behavior, I have the FREEDOM to CHOOSE not to patronize that company.

    Agents of the government hold a gun to my head and demand that I fund their corrupt behaviors. Lately they do so while bailing out private companies with incestuous relationships to politicians which should be allowed to fail.

    Government regulation never works. The SEC had Madoff handed to them on a silver platter and still did not stop him. Buyer beware is the ONLY sort of regulation that EVER works. It’s called due diligence.

    The AIG bailout amounted to $170 billion whereas the Fannie and Freddie bailout amounted to $400 billion.

  13. Roger, if the concern is about carbon, does it make sense to shift consumption from coal to oil and gas? Of course, and that would be one of the chief consequences of pricing carbon.

    And behind this of course Graham is also aware that alot of royalty revenue would flow to South Carolina.

  14. -14-TokyoTom

    Oil is not a substitute for coal in the US. And reliance on gas increases emissions as energy consumption increases. Expanding reliance on oil and gas is not consistent with the emissions reductions targets in current US legislative proposals much less more aggressive targets. Consider that substituting all US coal with gas gets you a 12% reduction by 2020. And of course, see Steven Chu's comments earlier this week, coal ain't going anywhere.

  15. sbvor
    While I totally agree about government corruption and waste, I see it as human nature which will appear in either the private or public sphere given the opportunity.

    But your freedom to choose often doesn't exist in the real world. With one set of water pipes, electricity cables and telephone lines coming in your house you only have the freedom to either do without, pay up, or pay much more for a more exotic alternative. And if you've had a major operation you'll find it nigh impossible to get health cover - so you then have the freedom to do without, get treatment abroad, or just die. And if you do have an incapacitating illness or accident or just get too old then you'll probably notice that it's not that easy to find or even do any work so you'd appreciate why that social safety net exists, corrupt or not. The free market alternatives mainly consist of burdening your family, becoming a criminal or begging.

    Were the failures of the financial system and it's regulators largely reflecting the influence of the private sector on the politicians? If so, then who is more to blame?

  16. -16-jgdes sez:

    “With one set of water pipes, electricity cables and telephone lines coming in your house you only have the freedom to either do without, pay up, or pay much more for a more exotic alternative.”

    The extent to which Leftists willfully blind themselves and gleefully enslave themselves never ceases to amaze me.

    By simply opting to live in an unincorporated part of the county, any American can get their water from a private well (which they own), their electricity from any number of sources -- including a generator burning hydrocarbons (at least for now), their telephone via cell phone and even their TV from a variety of satellite providers.

    Of course, depending on the extent of the value placed upon freedom, any number of those items can be dropped from the priority list.

    I am on the verge of dropping my health insurance and going entirely off the medical grid. I will probably do so because government regulations already dictate that I get gouged through my insurance (and my medical bills) in order to pay for those whom the government deems more “needy” than me.

    First and foremost among those more “needy” than me are the filthy, stinking trial lawyers who pay the bills for the filthy, stinking Dims.

    Ever heard the phrase “give me liberty or give me death”?

    I would rather die free than live as a slave!