Energy Fads, Follies and Failures

Live long enough as an American and you can watch the energy fads, and follies, repeat themselves.

I'm of the right vintage to do this, since I've paid at least some attention to energy issues dating back to the oil embargoes and shocks of the 1970s, which put rationing in place and had gas lines snaking around stations, spurring politicians to actions (overreactions, typically) that set the herky-jerky, reactionary, crisis-to-crisis pattern that's characterized U.S. energy policy ever since. Robert Bryce does an outstanding job of walking readers back through that sad and sordid history in this NRO piece, making too much additional commentary unnecessary.

It's just amazing that no one in a position of real responsibility knows this history and refuses to repeat it, since energy is the Achilles heal of a society like ours. Getting things wrong can have serious, serious economic implications, to which most Americans seem oblivious. Some awaken momentarily when another crisis point arises (typically, when the pain at the pump becomes excruciating), usually pointing fingers in the wrong direction, unable to connect the dots between policy causes and economic effects -- then go back to sleep, as feckless leaders centrally-plan "fixes" that fix nothing and establish a predicate for the next crisis.

How long an economic superpower can get along like this, with such an amateurish energy policy, only time will tell. But a day of reckoning will arrive. Obama's stunted and stumbling economy is just disguising problems that will begin to crop-up, in spades, if the American economy ever returns to old form.

But it's Saturday. And beautiful outside. There's lawn care to be done, a ball game to catch, a dog to be walked, maybe a margarita to savor later. There's no point in worrying about this now.  

Driven Off The Deep End

Deep offshore oil drilling is far more dangerous than on-shore drilling, as has now become obvious. It's easier to contain a spill on land than to cap a blowout that takes place a mile below the ocean surface. But that's where oil companies are forced to go, given the barriers to domestic drilling that exist almost everywhere else.

Even Wyoming, which is more receptive to energy development than most states, has seen a significant recent slowdown in activity -- a slowdown not just due to the swooning economy, but due to the obstructionist tactics of federal bureaucrats and zero-drilling zealots.

Why are energy companies drilling so far offshore?

Because this is what they typically face when drilling on shore:


Backlog of protested Wyo leases persists at BLM

CHEYENNE -- Environmental protests, uncertainty over endangered species and a change in presidential administrations have bogged down oil and gas leasing in Wyoming.

The U.S. Bureau of Land Management has issued just 51 of nearly 1,200 oil and gas leases sold at its 11 lease auctions since June 2008.

The backlog prompted Gov. Dave Freudenthal to "implore" Interior Secretary Ken Salazar, a fellow Democrat, to act in a January letter. Yet the backlog is likely to grow when the BLM holds its next lease auction today.

Of the 85 leases the BLM plans to offer at the regular sale in Cheyenne, environmental groups are protesting 62. If previous auctions are any indication, that means at least 62 more leases in limbo -- none of the 51 leases recently issued was protested.

Environmental groups have protested 1,297 of 1,351, or 96 percent, of leases offered from the June 2008 sale through the upcoming sale, BLM documents show.

"No wonder companies are taking their money and investing in other states that have private land, where they don't have to deal with this bureaucracy and politics," said Bruce Hinchey, president of the Petroleum Association of Wyoming.

Oil and gas leasing in Wyoming provides a significant share of the nation's energy. The state in 2008 ranked second among states for natural gas production, providing more than 10 percent of the U.S. total, and ranked seventh for oil production, according to the U.S. Energy Information Administration.

Environmentalists defend the protests as necessary to protect Wyoming's wildlife and cherished vistas. They expressed doubt that the protests are slowing down drilling.
"The oil industry has enough leases in its pocket now to drill for decades. So the idea that somehow a scarcity of oil and gas leases is holding up energy production is laughable," said Erik Molvar, executive director of the Biodiversity Conservation Alliance.

Not only are companies unable to drill on leases they've bought, the state and federal governments haven't had access to the $50 million companies have paid.
Half of the money would go to the state and half to the federal government. Both are having budget trouble, yet the money has been piling up in an escrow account pending a BLM decision on whether to issue the leases.

"I implore your immediate attention to these unissued leases," Freudenthal wrote Salazar on Jan. 8. "Some would say that the oil and gas industry is getting what it deserves. But this is much too serious an issue for such pettiness."

A reply letter from Assistant Interior Secretary Wilma Lewis said the leasing process is "broken" and the department is working on a way to "restore needed balance."

Salazar spokeswoman Kendra Barkoff did not respond to a request for comment.

Julie Weaver, the BLM's head of oil and gas leasing in Wyoming, said she expects the backlog to end soon, especially now that the U.S. Fish and Wildlife Service announced in March that it would not list sage grouse as a threatened or endangered species. Most of Wyoming, including its best oil and gas fields, is sage grouse habitat.

Even so, Fish and Wildlife determined that protection for sage grouse is warranted, just precluded by higher priorities. That didn't exactly open the gate for leases.
"We had to go back and re-evaluate everything to make sure that we are complying with the Fish and Wildlife decision to warrant that animal," Weaver said.
The BLM auctions offer oil and gas leases every other month in Cheyenne. Environmental groups began stepping up protests against the leases a couple years ago.

Groups have protested not just leases in sage grouse habitat but leases they said could affect a wide range of wildlife -- prairie dogs, raptors, big game migration corridors and fish. Some protests have focused on climate change.

"We must address a protest before we can issue a lease," Weaver said. "And we have protests on every sale, different parcels in every sale, that we're trying to resolve."

She also said the change in presidential administrations has required the BLM state office in Cheyenne to adjust to new policies.

On Thursday, environmental groups stepped up pressure on the BLM by suing over the BLM's plan for oil and gas development in southern Wyoming. The area includes Adobe Town, a "wilderness quality" badlands where the groups say the BLM has approved five drilling permits.

The groups, represented by the Natural Resources Defense Council, include the Biodiversity Conservation Alliance, which by itself or with others has protested more than 90 percent of leases offered over the past two years. Other plaintiffs include the Wyoming Outdoor Council, which has protested leases offered at every sale over the past two years.
Wyoming Outdoor Council attorney Bruce Pendery said his group used to be one of the few that would protest oil and gas leases in Wyoming. Now, he said, a range of groups have been protesting leases.

"To me, what that speaks to is that there was this massive effort to increase oil and gas leasing during the Bush administration," Pendery said. "Because of that massive effort to increase leasing, there was an equally massive response."

Other groups that have been protesting leases include the National Audubon Society, Theodore Roosevelt Conservation Partnership, Trout Unlimited, Center for Native Ecosystems and Wyoming Wildlife Federation. Sometimes the groups object to just a handful of leases.
Other times, it's every lease offered at a sale, as the Biodiversity Conservation Alliance has done eight times in the past two years.

"Our goal here is to get results on the ground for wildlife and for special landscapes," Molvar said. "Not to prevent the oil and gas industry from gaining access to oil and gas leases."

Nuclear Retractor

President Obama was sounding bullish on nuclear energy in his State of the Union speech, but he's been sheepish on the storage of spent nuclear fuels, having driven a stake in the heart of the best option available, at Yucca Mountain, Nevada. Last week he was calling for additional power plants; a budget he released this week didn't include a dime for dealing realistically with the hazardous byproducts. The gap between rhetoric and reality is jarring, even for Obama.

It's evidently a ploy to win Republican support for a climate bill, as this Washington Post piece explains. It may also be a case of the president chasing the polls, in a bid to recapture the middle. But Obama's credibility on the issue is shaky at best.

The president made killing Yucca Mountain a campaign promise, in a bid to woo Nevada voters and curry favor with gang green. It's one campaign promise he actually kept. Now, one year later, having dealt the prospect of a nuclear energy revival a staggering blow, he comes out in the State of the Union as an advocate for new plants. He's a champion of nuclear power, rhetorically, but opposes the most logical and secure waste storage option available -- a solution he nixed after decades of study and tens of billions of dollars were spent. Will the real Barack Obama please stand up?

The president proposes "a tripling of government loan guarantees for new nuclear reactors to more than $54 billion," reports Reuters. Yet the Department Of Energy has been dragging its feet on releasing loan guarantees already available. Loan guarantees aren't enough if power providers have no assurance that the regulatory and political climate will remain as hostile as it has been. And no such assurances are possible when the president says one thing and does another.

The president also announced the "formation of a panel to consider the future of nuclear waste storage, including alternatives to a proposed site at Yucca Mountain in Nevada," Reuters reports -- which sends the country back to a drawing board it began scribbling on 30 years ago. The panel will explore every option -- except the most obvious one. It's not allowed to revisit Yucca Mountain. Dusted-off Washington retreads Lee Hamilton and Brent Scowcroft will lead the effort. I guess James Baker was unavailable. Who else would chair a blue ribbon commission that begins its work with its hands tied behind its back?

You can begin work on a new generation of nuclear power plants without resolving the waste storage problem, at least in the short-run, but that's risky, given the strength of the no-nukes lobby. Going back to the drawing board erroneously presumes that no-nukers eventually will embrace a reasonable solution, which they won't.

Republicans should insist that Obama reverse his position on Yucca Mountain before they even consider support for a climate measure. Anything less and they're being played for suckers.

Energy Obstructionists

The Associated Press notes a sudden reluctance on the part of energy companies to bid on federal oil and gas leases in the state Utah. But is it really surprising? Virtually every major auction offered in the Rocky Mountain West is fiercely contested by anti-drilling extremists. The knee-jerk obstructionism is simply wearing energy providers down. And given the obvious sway the extremists hold with this administration, and with Interior Secretary Ken Salazar (an obstructionists himself while in the Senate), it's little wonder that the Rocky Mountain energy boom went bust.

Macroeconomic forces have played a part in this, no question. But green extremism is also a significant factor, as these two news reports -- link and link -- make clear. Especially frustrating was the dishonest way that Salazar and the Obama administration unilaterally nullified dozens of legitimate energy leases in Utah shortly after coming to power. A number of those voided leases have been reinstated, thanks to the scrutiny of Utah's congressional delegation. But watching the administration attempt to justify that abuse of power proves to me that the Obamatons (much like the Clintonistas) are absolutely devoid of any principle, save for political expediency and interest group loyalty. And I'm glad to see folks aren't just laying down for it.

From Thursday Deseret News:

Utah oil and gas leases should be reinstated, report says
Analysis is latest in ongoing fight over 2008 land auction

A new analysis by an association representing oil and gas producers asserts the Department of the Interior thwarted the public process and "second-guessed" its own land managers when it yanked bids on oil and gas parcels sold at a controversial auction in Salt Lake City last December.

Despite "aggressive" environmental protections included in the Bureau of Land Management's Resource Management Plans, the Interior Department recommended eight leases for removal and 52 leases for deferral, disregarding scientific evidence and input from Utah stakeholders, according to the association.

"It's a sad day when politics trumps the expertise of professional land managers and the hard work of citizens to develop economic and resource-development plans that the community has embraced," said Kathleen Sgamma, Independent Petroleum Association of Mountain States spokeswoman. "If you're not listening to your land managers and the public, who are you listening to?"

The report, released Thursday, is the latest in a series of volleys fired back and forth among environmentalists, the oil and gas industry and the Interior Department on the heels of the auction that was marred by protests and the arrest of activist Timothy DeChristopher.

Two months after the auction, Interior Secretary Ken Salazar pulled all 77 leases, saying they had been put on the table after a rushed "midnight" decision in the waning hours of the Bush administration. He later sent a hand-picked team led by Forest Supervisor Mike Stiles to Utah to conduct a review of the appropriateness of the leases offered at auction.
As a result of that review, Salazar removed eight parcels from consideration and put 52 more under additional review.

The petroleum association's 66-page analysis of Stiles' report found "no evidence" to support the resulting Interior Department decision and said Salazar showed a "lack of regard" for the seven-year public planning process that produced the Resource Management Plans.

Specific information for each parcel, location details, wilderness status and lease stipulations contained in the management plans are contained in the report, as well as a summary of why the association believes the parcel is appropriate for leasing.

One of the parcels, for example, was described as 160 acres with a western boundary located 4.5 miles from Canyonlands National Park, with existing state and federal leases between it and the park. The environmental protections mandated in the lease stipulation include air quality, paleontological resources and mitigation of impacts to endangered or threatened species such as the Mexican spotted owl.

"Based on this analysis, (the petroleum association) believes the 60 leases were legitimately sold at the December 2008 sale and should be reinstated to the winning bidders," the report said.

And here's a report from the AP earlier in the week:

SALT LAKE CITY (AP) -- A trade group says it's getting so hard to obtain an oil-and-gas lease in the Rocky Mountains that many drillers and land agents aren't even trying to buy one.
The criticism came after the government held an auction of public lands in Utah that was remarkable for how few parcels were offered or sold.

The Independent Petroleum Association of Mountain States says drillers are scared that the administration of President Barack Obama will hold up a lease after it sells one, so they aren't bothering with the auctions.

The industry group also complains the new administration is doing little to clear a $100 million backlog of leases that were sold years ago but are being stifled by legal or bureaucratic review.

The energy crisis of a few years has abated for now, due to the global economic downturn. But it will return, and persist, in the years ahead. Spiking prices and short supplies will have Americans crying out for relief (remember the chants of "drill, baby, drill" that were heard not so long ago?) and wondering who's to blame. But energy obstructionists always can count on the amnesia of average Americans to shield them from blame when the uproar commences.

Energy Failure

All talk of a "federal energy policy" is a fiction. It implies a coherence and direction that just isn't there. An administration can lend some rhetorical and material support to certain energy policy hobby horses, as Obama is doing with so-called "green energy," but focus, discipline and direction are impossible as long as the legislative branch is pushing and pulling in other directions.

Congress is now working on its 3rd major energy bill in 4 years. Each of the previous measures, dating back to 2005, were hailed at the time of passage as a "landmark" measure, offering a comprehensive and holistic "answer" to the nation's energy quandaries. But the fact that Congress keeps writing new "landmark" bills, at a clip of one per year, betrays the terrible truth; that each of the previous measures, like the measure now in the works, brought confusion rather than coherence to the nation's energy policy.

These were essentially pork-barrel bills, larded up with federal largess for industries or niche technologies favored by members of Congress. There is no way for any administration -- even one headed by Obama the Magnificent -- to bring order out of such chaos. And that's why the country is destined to pin-ball from energy crisis to energy crisis, with Congress writing a new "landmark" energy bill in response to each of them, without ever establishing the rational and reality-based energy strategy that an economic powerhouse needs to survive.

I believe Congress pauses for six years between the writing of major highway funding bills. And although this can lead to pork-barrel pillaging on an obscene scale, when the bills periodically come up for renewal, the federal funding formulas and policies then set in place (even if they're flawed) at least bring some focus and coherence to federal highway activities in the years between bills. Perhaps we need to take a similar approach with federal energy bills, by limiting Congress to the passage of one "landmark" measure every five years or so.

A badly-written bill might set the nation on the wrong path for half a decade. But any course of action is arguably better than the paralysis, waste and chaos we see under current circumstances.

Boom to Bust: Who's to Blame?

Colorado Governor Bill Ritter's one claim to fame, as he stands at the midpoint of his term, is his over-hyping of what he calls the "new energy economy" -- and the fact that another rising politico, a guy named Barack Obama, stole the phrase from him.

It's more appropriately called the "New Energy Baloney," in my view, since it's largely based on subsidies, mandates and other government interventions in support of niche energy technologies that aren't ready for prime time -- while regulatory and rhetorical war is waged against an "old" energy economy that actually delivers the goods.

But perhaps it's time that Ritter began paying a little more attention to "old energy economy" in Colorado, since his two year effort to undermine it seems to be turning energy boom into bust. Factors beyond one governor's control are involved, no doubt, as the Durango Herald story below points out. But Ritter's anti-energy development attitudes, and the deterrent effect these might be having on the industry, can't be discounted.

The 3 most obvious moves Ritter made against the industry are:

His packing of the state's "greener" oil and gas commission with people who are either hostile or indifferent to (or ignorant about) the industry;

His championing of a ballot measure -- roundly defeated -- that would have jacked-up energy severance taxes;

His efforts to slow or block a balanced and sensible drilling plan for the Roan Plateau (the product of 7 years of careful study and public process by the BLM), and the development of oil shale in Western Colorado, in a pander to eco-extremists who reflexively oppose energy development almost everywhere it's proposed.

Ritter's touting of the "new energy economy" is widely cited as his most notable accomplishment thus-far. But his foolish assault on the "old energy economy," and the toll it is taking on Colorado, is having a much greater real impact -- only in a negative way.

Here's today's story from the Durango Herald:

Legislators get preview of gas debate

by Joe Hanel
Herald Denver Bureau

What killed the golden goose?

The gas and oil industry often bills itself as Colorado's golden goose, but in recent months, drilling rigs have started to leave Colorado. Lawmakers on Monday got a preview of the political mystery that is sure to be one of the hottest debates of the year.

The Legislature doesn't officially begin until Wednesday, but a special committee on job creation has been meeting since last fall. Gas and oil industry representatives visited the committee Monday to argue that new rules of the Colorado Oil and Gas Conservation Commission are chasing away jobs. Legislators will vote on the rules this session.

The debate has raged since Gov. Bill Ritter's administration proposed the changes two years ago. Republicans in general oppose the new regulations, while Democrats defend them.
"I wonder - I hate to say this - why some of the oil and gas companies would want to do business in Colorado," said Rep. Larry Liston, R-Colorado Springs.

Companies indeed are leaving Colorado, according to the latest counts of drilling rigs.
Colorado's rig count declined to 93, according to the latest count Jan. 2 by Baker Hughes, a company that tracks rig data. Colorado has 99 rigs in January 2009, but it had as many as 123 last spring.

However, many other major gas states declined as much or more, including Wyoming, Texas and New Mexico.

Rigs left Colorado even though the industry has unused drilling permits and the new rules haven't taken effect yet, said Harris Sherman, chairman of the Oil and Gas Conservation Commission. "If these rig declines are occurring, they're occurring under the old system, not the new system," Sherman said.

Sherman blames economic reasons for the loss of rigs, not the new regulations.

Jon Harpole or Mercator Energy, who opposes the rules, said companies have quit drilling for four reasons.

The price of gas is too low, the credit markets are frozen, shale gas has opened opportunities in other states and Colorado is about to adopt new rules. Legislators can control only the last factor, he said. Shale gas, in particular, has revolutionized the industry. Companies now have the technology to tap large deposits that they couldn't reach three or four years ago, he said.
"What's happened is phenomenal, and most Americans don't even understand what's happened here," Harpole said.

Montezuma County has a promising deposit of shale gas that could open the county to the industry. States including North Dakota, Louisiana and Arkansas also have large deposits.
"You don't want to be at a regulatory disadvantage to these states, and quite honestly that's where we are now," Harpole said.

Energy Subsidy Shell Games

Now that Congress is back in session, and working on yet another energy package, Big Wind, Big Sun, and Big Bio are lining up at the trough for more federal handouts, to be paid with higher taxes on Big Oil, according to this Associated Press report. This really means that the "renewable" subsidies come courtesy of gasoline users like you and me, since oil and gas companies don't eat these costs, but pass them on to consumers in the form of higher prices.

Some folks argue that because Big Oil benefits from subsidies of one form or another (depending on how one defines the term), it's only fair that these "cleaner" alternatives get government handouts as well. But instead of compounding our energy policy errors, I would argue that we should eliminate all energy subsidies, across the board, to "old" and "new" energy companies alike, and let the best energy options prevail, responding to market forces and consumer choice.

There's no more virtue in giving corporate welfare to Big Wind or Big Sun than in giving it to Big Oil. In either case, the "Bigs" make out like bandits while the consumers and taxpayers get screwed.

And Wearing a Cowboy Hat Never Hurts

Colorado's own Sen. Ken Salazar had an op-ed in Monday's L.A. Times -- an interesting choice of venues, given that there are plenty of Colorado papers in which it might run -- counseling his fellow Democrats on how they can win the West. And the senator, with all due modesty, offers himself up as the paradigm to follow.

One piece of advice he didn't offer up is the importance of wearing a cowboy hat, since it's worked as well for Salazar as the pony tail and Harley Davidson worked for former Sen. Ben Nighthorse Campbell. I can't recall Salazar wearing a cowboy hat when he was attorney general; then the part called for a suit and tie. Now he's never seen without the hat when he's back in the home state.

Maybe Salazar is sharing these trade secrets behind closed doors. If Barack Obama accepts the nomination in a cowboy hat, we'll have Salazar to thank.

Most of what the senator serves up is re-warmed press release, but he actually makes some interesting, if misdirected points about the strained relationship between the West and Washington. "In many Western communities, the frustration also comes from feeling like an afterthought in Washington's policies," he wrote. "The resentment toward the administration's consistent disregard for Western wisdom has reached a boiling point. From federal money grabs of state mineral revenues, to oil and gas development in valuable hunting and fishing areas, to false promises on oil shale, Washington has come to see the West as a means to an end."

Actually, Western frustration with Washington reached a boiling point years ago, with a little something called the sagebrush rebellion (which continues, albeit at a slow simmer, in some untamed corners of the mild, mild "new" West). And Salazar's attempt to pose as the sagebrush rebel is about as convincing as the cowboy hat, since his support for Western self-determination has been inconsistent and selective.

Salazar argues that Colorado should have had more say in the drilling plan for the Roan Plateau, for instance, and I, too, believe Western states should have much more control, and a true "partnership" with Washington, when it comes to federal land policies. But how much latitude Salazar would grant states on a host of other key issues, from the Endangered Species Act to the National Environmental Policy Act to the clean water and clean air acts, is negligible to nil, as far as I can tell. I've never heard Salazar argue that Colorado and other states should be able to tailor these regulatory regimes to meet their individual needs, or to opt out of them. On the contrary, he seems to embrace all of these onerous impositions from Washington, in letter and in spirit.

When President Bush tried to settle the seemingly-endless roadless areas controversy by allowing Colorado and other states to come up with their own plans -- a potential breakthrough moment in terms of forging a new Western partnership with Washington -- Salazar was quick to condemn this as a gimmick, preferring that Washington dictate terms on roadless areas.

On this issue, as on so many others, Salazar is all hat and no horse.

American Dream, RIP?

Will relentlessly high gas prices finally drive a stake in the heart of "urban sprawl," the bete noire of the better-living-through-centralized-planning crowd? Will pain at the pump finally force lethargic suburbanites out of their gas hogs and onto mass transit, where they belong? Has the long-sought Era of Lowered Expectations finally arrived?

New Urbanists, smart-growthers, "sustainability" gurus and other green-leaning "coercive Utopians" obviously hope so, as this recent story in The Washington Post makes clear. The Denver Post, covering somewhat similar territory, rather smugly reports about the sudden popularity (or is it utility?) of car pooling. Stories abound about an upsurge in the use of mass transit.

Having helped orchestrate the current energy crunch, by encouraging a U.S. regulatory climate that contributes to false scarcity, these same individuals and groups now are relishing the lifestyle revolution this scarcity will necessitate. They're reading last rites over the "old" American dream, with grand plans to replace it with something more "sustainable." Most of those plans involve more government planning by "experts," more central control, and less freedom for Americans to live as they choose. And their glee is barely concealed.

But I wouldn't so quickly count the suburbs out, given their long, stubborn association with the American dream. The Economist isn't, either, as this piece indicates. Here's another thoughtful examination of suburbia's future in Crosscut, a Seattle-area publication.

Some suburbanites will stick to their personal transport, instead of cramming into that hydrogen-powered bus, even if it means giving up two or three Starbucks a week. Transit options are limited in many parts of the country. Technology and changing work patterns mean more Americans are telecommuting, or spend their workdays in a home office (or have no office at all). The mass retirement of baby-boomers will free millions of Americans from the need to commute; and those retirees, though some may choose to live in city centers, will continue to prefer the suburbs.

High gas prices seem secondary to the mortgage meltdown and tighter lending practices as factors in the purported "death" of urban sprawl. When the housing market turns around, people will begin buying in the burbs again. And many urban areas will just never have much appeal to some segment of the American public, no matter how good the museums, the mass transit and the coffee shops are.

No, I think rumors of the American dream's death have been greatly exaggerated. But the delight with which some people are reading it last rites might serve as a warning to those of us who want to choose for ourselves what the dream means -- rather than have some self-annointed, environmentally-correct social engineers deciding it for us.

Addendum: A related story appeared in the August 24 Seattle Times

Big oil may not be big enough -- and bad enough -- to compete in the era of "resource nationalism"

Imagine a world in which those greedy, evil, profiteering "big oil" companies have been brought to their knees or gone out of business. To some Americans, who really seem to hate these companies, this would be a dream come true. But it would be an economic and national security nightmare if the world's privately-owned oil companies fail, leaving America at the mercy of the foreign-owned oil "companies" that have locked-up the lion's share of oil and gas fields.

If Americans don't like having to buy gas from ExxonMobile or Chevron, paying market prices, perhaps they’d prefer depending for their fuel supply on Russian-owned Gazprom (which is the third largest holder of oil and gas reserves in the world), or Petroleos of Venezuela (which ranks 6th in oil and gas reserves), or the Nigerian National Oil Company (which ranks 9th in the world), or the National Iranian Oil Company (which ranks first in oil and gas reserves, just ahead of Saudi Arabia's Aramco) -- with the price dictated by the political whims of the people who run these countries.

Think that’s far-fetched? Then read this sobering article in today's New York Times, which not only explains some of the major challenges facing the world's privately-held oil companies but warns of the ominous rise of “resource nationalism.” Here's an excerpt:

“Oil production has begun falling at all of the major Western oil companies, and they are finding it harder than ever to find new prospects even though they are awash in profits and eager to expand.

Part of the reason is political. From the Caspian Sea to South America, Western oil companies are being squeezed out of resource-rich provinces. They are being forced to renegotiate contracts on less-favorable terms and are fighting losing battles with assertive state-owned oil companies. And much of their production is in mature regions that are declining, like the North Sea.

The reality, experts say, is that the oil giants that once dominated the global market have lost much of their influence — and with it, their ability to increase supplies."

ExxonMobile, America’s largest oil company, doesn't even crack the world's top twelve, in terms of oil and gas reserves. And all the "supermajors" higher on the roster are owned by governments, not all of which are friendly to the United States -- and some of which are potentially hostile.

Most Americans seem blithely ignorant of these facts. A recent survey by the American Petroleum Institute found that only 6 percent of Americans knew that the world’s 10 largest oil companies are owned by foreign governments. Only 16 percent understand that U.S. companies control less than 10 percent of the world’s proven oil reserves. It's fair to say, based on these results, that a tiny fraction of Americans have thought through the implications of this.

The Times points out that the private energy companies America relies on for much of its oil and gas are better at finding it and extracting it than the "supermajors." But that’s where our advantages end.

National oil companies don't have to turn a profit to stay in business. National energy companies don’t have the whims of shareholders to satisfy, or have environmental extremists obstructing and criticizing everything they do. National oil companies operate in a regulatory environment established by the owner. National oil companies don’t have public relations worries. They don’t have to be wary of cuddling up with despots, or operating in world "hot spots," as the Chinese are doing in Sudan and Nigeria.

These aren’t just national energy companies: they are instruments of national power, which will be used as such by those in charge of the country that controls them. America represents a huge energy market, which it would he hard for "supermajors" not to sell to. But Russia has shown a willingness to sacrifice energy revenues to advance geopolitical ends. And profits may take a back seat to exercising raw power for many of the nations with their hands on the tap.

This doesn't argue for nationalizing private energy companies. It doesn't mean Americans should give them special treatment, or a free pass on meeting reasonable environmental standards. But it might make Americans a little less prone to waging rhetorical and regulatory warfare on these companies if they realize that “big oil” is just a bit player in the new era of “resource nationalism” – and that Americans would be in an even bigger energy predicament without it.

Cheney's Energy Task Force: a nostalgic look back

I hate to repeat myself, but in this case I can't resist reaching into the wayback file for a column I wrote for The Colorado Springs Gazette in September 2005. It still stands as a potent critique of the politicians and interest groups that peremptorily (and gleefully) hammered nails in the coffin of Vice President Dick Cheney's Energy Task Force recommendations back in 2001. Politics, and nothing but politics, prevented these remarkably sensible proposals from seeing the light of day. Had Cheney been granted a fair hearing, and had his quite balanced and forward-thinking recommendations been implemented then, we might be in far less trouble today.

But will there be a public reckoning for, or apology from, the short-sighted obstructionists who, by summarily trashing the task force's work, helped create the crisis we're in today? Not as long as we remain The United States of Amnesia.

Here's the 2005 column.