Will The Free Market Kill Deep Water Drilling?
Mowbray's article points out what should be obvious to all, particularly to market-lovers: the Deepwater Horizon disaster is going to kill jobs in the drilling sector even if the president lifts the moratorium tomorrow, because the effects of this hell are already being factored into the cost of doing business.
DRILLING INSURANCE COSTS SET TO SKYROCKET
Impact could dwarf moratorium's
Insurance costs for deepwater drilling are poised to rise by as much as 50 percent after the Deepwater Horizon disaster, and the increases are sharp enough that it could make some exploration and production projects too expensive no matter what happens with new regulations in Washington.
. . .
The impact is particularly potent in deepwater, meaning depths of greater than 1,000 feet, the areas of the Gulf of Mexico that hold the most remaining oil reserves.
Drilling in deepwater is more price-sensitive than other types of oil exploration, because it requires expensive state-of-the-art equipment, detailed analysis of hard-to-reach geology and long planning horizons for projects. Many deepwater exploration and production projects are viable only when oil prices are expected to remain high, so increases in the costs of drilling could render some projects unfeasible.
Currently, many oil companies self-insure their wells, or use "captive" insurers, ostensively independent companies whose sole raison d'etre is to act as underwriters for particular companies. With the economic hit of the Deepwater Horizon disaster sure to top even the $10 billion cap that business-friendly Republicans like David Vitter are willing to set for oil hell liability, this in-house insurance will have to be augmented with real coverage from real insurers, kicking the cost of covering wells up by half or more.
IOW: Obama - if he actually wanted to, and I doubt it - and the left may have to do little to nothing to stop deep water drilling. And the economy and lost jobs that the right wing wants to blame the left for spiking because of our view of the inherent dangers of this industry and the ecocausts that result? Well?
The invisible hand may already doing that all on its own.
And there is nothing the left nor the right can do about that. Except for, maybe, concentrating on cleaner and less dangerous energy policies for the future.
Judy Woodruff on PBS' Newshour discusses the need for government investment in clean energy research and development with energy industry leaders:
JUDY WOODRUFF: Well, joining us now are two business executives who met with the president this afternoon, John Doerr, a venture capitalist known for his investments in Silicon Valley and companies like Google, Amazon and Sun Microsystems. He's a partner with the firm of Kleiner Perkins Caufield & Byers. And Chad Holliday, former chair and CEO of DuPont, he is now chairman of the board of directors of Bank of America.
And, for the record, the bank is an underwriter of the "NewsHour."
Both guests are members of the American Energy Innovation Council.
Transcripts available here and are worth paying attention to if you can't see the video:
JUDY WOODRUFF: Research and development.
CHAD HOLLIDAY: Research and development just is -- is -- John and I have talked and all of our members have. We're used to using innovation in our research and development to make a difference in our businesses.
We are investing in a very, very low rate, almost nothing, in the energy industry, compared to what we see in other industries, as our report describes, and we're simply saying, we need to increase that significantly, from about $5 billion today to about $16 billion per year, and then use it very smartly. And that's what we described for the president.
JUDY WOODRUFF: And, John Doerr, why is this a responsibility of the government, and not the private sector?
JOHN DOERR, venture capitalist: Well, government historically has funded the basic research that have made the country, America, a leader, a worldwide leader, in, for example, the biotechnology industry or the Internet industry.
The government today funds $30 billion a year of health care research through the National Institutes of Health. By contrast, we're only funding $5 billion a year in energy research. And -- and we're, sadly, buying more potato chips per year, as a country, than we are investing in our energy future.