DC on jobs, gas, and aircraft carriers
By JR Hoeft | Friday, May 6th, 2011 | PolicyJust some quick bullets this morning on what has happened this past week in DC, and how our Virginia delegation has responded.
The national employment report was released this morning. While payrolls increased 244k last month (up from the 185k forecast) – the best gain since May 2010 – our unemployment rate remains at 9%.
House Majority Leader Eric Cantor (R-VA01) responded to today’s news:
“With our unemployment rate still at 9%, it is clear that far too many people remain out of work, which is why House Republicans are squarely focused on making Washington a partner to job creators rather than a barrier by pursuing pro-growth measures such as comprehensive reform of our tax code, reducing trade barriers, and increasing domestic energy production.”
Keying in on that last point about increasing domestic energy production, yesterday, the entire Republican delegation and Virginia’s governor Bob McDonnell pleaded Virginia’s case to allow oil and natural gas exploration and drilling go forward off of Virginia’s coastline.
McDonnell penned an op-ed in the Richmond Times-Dispatch and also said in a statement:
“Today, Virginia businesses and families are paying, on average, $3.88 per gallon for gasoline. That’s up $1.00 from a year ago. The Energy Information Administration estimates that gasoline will cost the average U.S. household $1,210 more this year than in 2009. That is money that could be spent by families on education, groceries and vacations. Instead it is money being spent at the pump. The pain at the pump is the result of many factors, one of which is the result of our ongoing dependence on foreign sources of oil. That is why I strongly support increasing domestic energy production from every possible source, including wind, solar, biomass, nuclear, oil and natural gas. A key part of that effort should be the environmentally responsible development and production of oil and natural gas off of Virginia’s shores.”
The Restarting American Offshore Energy Act (HR 1230) passed the House yesterday 266-149, which included votes from Democrats such as Rep. Shelia Jackson-Lee of Houston. Apparently Virginia’s Democratic Reps. Bobby Scott and Gerry Connolly could not see the benefit.
“Energy production offshore of the Commonwealth would create thousands of jobs while at the same time providing more supply to combat rising energy prices,” said Congressman Rob Wittman (R-VA01). Wittman represents most of Virginia’s Chesapeake Bay shoreline and also announced the formation of the Congressional Chesapeake Bay Watershed Caucus yesterday.
Additionally, Congressman Scott Rigell (R-VA02) said: “I hear about gas prices and the job market everywhere I go. This bill moves the needle on both of those.” Rigell’s District consists of Virginia’s Atlantic coast, which would be most affected.
Finally, Rep. Randy Forbes (R-VA04) exerted some influence over the federal budget to take dollars away from funding improvements to the port facility at Mayport, Fla., which is designed to keep the Navy from homeporting an aircraft carrier there.
Forbes, Chairman of the House Armed Services Readiness Subcommittee, worked to strike the $30 million for Florida and said:
“The portion of the annual national defense policy bill approved today after an extraordinarily cooperative, bipartisan effort by the Readiness Subcommittee will make significant improvements to the war fighting capabilities of the Armed Forces. In addition, it will make important investments in Virginia, particularly throughout the Fourth District, to ensure that our troops, weapons systems, equipment, naval bases, and military facilities are not only maintained, but more importantly are enhanced,” said Forbes.
The subcommittee also fully funds shipbuilding construction plans, increases funding for Navy ship and aircraft depot maintenance. and authorizes nearly $75 million for modernization and improvements to Norfolk Naval Shipyard.
Speaking of the budget, U.S. Sen. Jeff Sessions (R-AL), ranking member of the budget committee is waiting for something tangible from POTUS.
“As it stands now, we have no plan to have any real reduction of the deficit we’re facing from this Administration, or the Democratic Senate, let alone a ‘framework’ to reduce it by $4 trillion. But they pretend it’s so, and that’s offensive, and the American people are not happy about it. They know that this Senate and this Congress has a responsibility under the law and under any morality and decency to produce a budget that says what we’re going to do with their money.”
Don’t waste your breath, Senator. They took three days to debate amongst themselves whether we should release a photo, what makes you think they were working on a real public policy issue?
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About the author
Conservative to the core; liberal with his opinion! J.R. has been involved in politics for over a decade and has worked on several campaigns in Hampton Roads. He has served on the Executive Committee of the Republican Party of Chesapeake and the Central Committee of the Republican Party of Virginia. He is also the director of “Blogs United” in Virginia. E-mail J.R.. Follow J.R. on Twitter.
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23 Responses to "DC on jobs, gas, and aircraft carriers"
Question: I understand how domestic drilling impacts jobs; I understand ‘reducing foreign dependence’; but I haven’t seen any data showing domestic drilling = lower pump prices. Can someone enlighten?
Jay D,
OK, let me attempt. Market forces.
Demand for crude oil occasionally strips out demand. Prices go up. If everybody stops exploring for and exploiting new crude oil sources when demand is high, prices will go even higher.
Every drop of crude oil produced domestically means less dollars going overseas to pay for the imports.
Is the short explanation sufficient? If not please ask the questions so I know where I need to further explain.
Connolly’s concern was that there was no provision to ensure that the off-shore drilling wouldn’t interfere with the Navy down in Norfolk. He had an amendment to the bill that would have required certification by the Navy that the leases wouldn’t impact their operation before the leases that could be sold – it was defeated on party lines.
That’s probably why he voted against it. Well, that and being a Democrat.
McDonnell’s linkage of drilling off shore and current gas prices is as much of a stretch as his pledges during the campaign to fix transportation without a tax increase. Both are simply fairytales, and show an inclination on his part to think about his political future instead of actually governing effectively. The oil offshore will provide little to no benefit to us, yet it puts our visitor and fishing industries at great risk so some international oil company can make more profit. Frankly, no thanks.
LD – appreciate the response and the attempt. However I’m looking for real mathematical data, not economic theory. [BTW, market forces/ supply & demand price theory can’t be applied if an unregulated, cartel-like oligopoly controls a disproportionately high percentage of supply.] McDonnel and Rigell clearly infer that domestic drilling = lower pump prices. I trust their policy positions are based upon study and risk management assessment … using quantitative values. That’s what I’m looking for – studies and data that supports: “domestic drilling = lower pump prices.”
Jay D,
OK, real mathematics?
I have 2 apples and 3 people who want to buy them. I get a high price.
I have 4 apples and 3 people who want to buy and the price goes down.
You can not get caught up in the arguments of those against domestic drilling. They will point that each specific increase will yield very little in price variation. That is true as long as you do not look at group effort. If every occupant of the leaky life boat pitches in, then we might keep the boat afloat. If every member thinks their effort does not really matter much, nobody bails and we are sunk.
Besides, there is no reasonable argument that if we can pump even 1 barrel of oil at $100 a barrel domestically that is not $100 that does not contribute to the trade deficit.
LD, I said quantitative data … not math.
#1 – It doesn’t work that way in oligopolistic industries – particularly in homogeneous oligopolies.
#2 ~ See: http://www.enotes.com/biz-encyclopedia/oligopoly
#3 ~ If there is no supporting data; fine. “No data” … IS a data point.
Okay, here goes. The last time I weighed in for the DoD against the parochial interests of Virginia (closing JiffyCOM) I got flamed and got verbally smacked on the back of the head by BD contributors who shall remain nameless. (Hint: it had something to do with the expression, “squealing like a stuck pig.”)
I know that an aircraft carrier group is a really, really big deal to Hampton Roads. (I was born and raised there, after all.) But I find it highly ironic that the Congress would withhold authority to drill off-shore until the Navy signs off that it won’t interfere with their operations and then turn around and dictate to the Navy where they can home port their carriers. Am I the only one who thinks that this is more than just a little hypocritical?
NB: I am calling out the integrity of members of Congress, not BD or its contributors, okay?
I thought it was kind of odd too, HisRoc.
Q: How can you tell if a politician is lying?
A: When his lips are moving.
The data found (in under 10 min) CLEARLY asserts increased domestic production will have zip, zero, nil, nada … not even diddly squat! impact on gas pump prices. I expect this from Rigell, he’s a novice and not all that bright to begin with. But the Governor??? One would think – before we fast forward on something w/ the potential to f-up the entire eastern seaboard region – the very LEAST Virginians should hear from our leadership is … the truth.
“It’s not going to change the price of oil overnight, and it’s probably not going to have a huge impact on the price of oil ever,” ~ Mike Lynch of Strategic Energy and Economic Research, Inc. referring to the 4 leases in HR1230 and expanding all U.S. drilling.
“While domestic oil production plays an important role in ensuring the energy security of the country, its contribution to the world oil balance is just not sufficient to bring global oil prices down. It is therefore not a complete answer to the high oil and gasoline prices that tax our consumers and that threaten our country’s economic health.” ~ Senator Bingaman / Chair US Senate Committee on Energy and Natural Resources. http://energy.senate.gov/public/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=262810b2-adf1-4929-9d3c-1376fa7f26f5&Month=3&Year=2011&Party=0
“Even if legislation were enacted soon to approve leasing in the Arctic National Wildlife Refuge (ANWR), peak oil production wouldn’t come until 2030 and even then, it would only affect oil prices by 1 percent.” ~ EIA administrator Richard Newell to House Natural Resources Committee (March 2011) http://www.nationaljournal.com/energy/gas-prices-what-moves-the-needle–20110504
[The Energy Information Administration (EIA) is the statistical and analytical agency within the U.S. Department of Energy. EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding regarding energy and its interaction with the economy and the environment. EIA is the Nation’s premier source of energy information and, by law, its data, analyses, and forecasts are independent of approval by any other officer or employee of the United States Government. The views expressed in our reports, therefore, should not be construed as representing those of the Department of Energy or other Federal agencies. My testimony today focuses on several aspects of the hearing topic, including EIA’s near-term outlook for energy prices; EIA’s evaluation of U.S. resources, reserves, and production of oil and natural gas; and ways in which domestic supply levels of oil and natural gas may influence energy markets and prices over different time horizons.] ~ Richard Newells opening statement.
HisRoc, me 3.
LD- what you fail to take into account in your analysis is that the cost of pumping a barrel oil isn’t the same everywhere.
For instance, it’s cheaper for the oil companies to import from the Middle East and Canada and Mexico than it is to work some of the domestic fields they are already allowed to. In some instances it’s only worth their while to exploit the domestic recources IF there are high per barrel prices to justify it. So they want these leases because the prices is high. A field that’s economically vialbe for the company at $100 a barrel, might not be viable at $80 per barrel.
Oil is a commodity, just like corn, wheat, and pork bellies. The price is determined not by the current supply and demand but by the anticipated future availability. In commodities trading, demand is considered to be constant; supply is the variable.
When future oil sources are identified, then speculators lower their future value estimates. When oil sources are restricted, such as during the First Gulf War or during the Libyan civil war, then speculators bid up their future estimates. Since futures trading is a short-term transaction, then supply changes that are months or years in the future effect the price today.
Our refining capacity in the United States is close to 100% of demand, thanks to the birkenstock-wearing tree-huggers who oppose any new refinery construction. So what effects the price at the pump is not the supply of refined product but the speculated future price of crude oil. When the speculators lower their future valuations, then the price at the pump goes down. Ipso facto.
Jay D,
Even if we only were to increase our domestic production by a mere 1 million barrels per year, that would amount to a $100 million dollar improvement in the trade deficit while oil is trading at $100 a barrel. It is not too hard to take whatever data you can come up with on google and do the math on how much the trade imbalance will improve with increased domestic production.
Steve Vaughn,
It is my understanding that if oil prices remain at or near $100 per barrel, it will become profitable to exploit the vast reserves of shale oil we have out west. It is also my understanding it is always more profitable to pump actual crude out of the ground then it is to process the shale to get the oil out of it. We are approaching peak oil. While we might see some temporary dips in prices, the trend is going to be ever upwards.
LD, The US trade deficit – for 2011 – is already over $177,000,000,000.00 ~ that’s $177 BILLION.
1 billion = 1000 million
700 billion = 700,000 x 1 million.
Your 100 million “improvement” … infinitesimal.
Unless you’re an energy expert, you might want to R-E-A-D the information I spoon-fed you? Link will take you to a transcript of the INFORMATION DELIVERED TO THE HOUSE COMMITTEE CHARGED WITH DETERMINING ENERGY POLICY. Ya think …maybe … it might be a little helpful to know/hear what your legislators know/hear?!
HisRoc: Oil isn’t exactly ‘just like’ other commodities. For every barrel we pump, OPEC can simply NOT pump … and world supply remains the same. Not true for corn and bellies.
PS: EIA report also addresses actual status of US refining capacity.
Jay D,
OK, if we are flooding under the trade deficit, your answer is to turn the spigot up further.
I’ll open my mouth up to what you are spoon feeding me when the spoon isn’t full of excrement.
JayD,
Oil IS just like every other commodity. If we didn’t have farm subsidiaries in this country, then I would agree with you. But the USDA controls agricultural commodities just as tightly as OPEC controls oil production. When corn prices get too low (not lately thanks to ethanol) the USDA raises subsidiaries on soy beans and wheat to discourage corn production.
HisRoc, OK, let’s go with corn (and ’09 stats):
- US grew 39 percent of the world’s corn during fiscal year 2009.
- US produced: 307.4 million metric tons (12.1 billion bushels).
- US exported: only about 20% of total US production ~ 61.48 million metric tons (2.42 billion bushels).
Other major corn producing countries in 2008/2009 included:
- China -165.9 million metric tons (6.5 billion bushels)
- Brazil – 51 million metric tons (2 billion bushels)
- European Union – 62.7 million metric tons (2.5 billion bushels)
- Mexico – 25 million metric tons (984 million bushels)
- Argentina – 12.6 million metric tons (496 million bushels)
- India – 18.5 million metric tons (728.3 million bushels
IF US halted 100% of US exports (2.4 billion bushels):
a) Other major producers could (and would) produce more.
b) Other countries ~ ANY country w/ land and corn-crop growing conditions ~ could (and would) switch other crops to corn, if needed.
The difference:
#1 -There isn’t a corn cartel between US, China, Brazil, etc.
#2 -Oil resources are limited to a few geographic regions.
#3- Cost to enter the oil industry is a heck of a lot higher than cost to plant/harvest corn
Again, because of #1 – #3 … oil is not a commodity ‘just like’ corn.
Just a slightly different take: shouldn’t the military decide where they want to station a carrier group, not an elected official?
LD, if you consider the US Department of Energy’s statistical and analytical agency director’s work product to be excrement … perhaps you should send him an email with your corrections?
And, if you equate questioning the impact of a 0.000564971751 % change as ‘turning up the spigot further’ … what can I say to that?! Reminds me of the Ron White punch line, “You can’t fix stupid … cause stupid is <b<forever”.
BTW – US trade deficit grew by ANOTHER $200 million between my posts.
ToR – likely yes. But since cash generally trumps security, don’t hold your breath on that one.
One last comment of the night and I’ll stop bogarting this thread.
I find it somewhat disheartening; while integrity is fiercely protected on a Cooch joke thread, few BD readers or bloggers appear disturbed (or care) our governor and 2 congressmen released intentionally misleading public statements. Not one peep out of you guys (other than MB)?
In my house we call them lies and, IMO,if you choose to ignore a lie because it came out of republican lips … you can’t honestly claim to value or ‘have’ integrity.
in·teg·ri·ty (n-tgr-t) ~ n.
1. Steadfast adherence to a strict moral or ethical code.
2. Adherence to moral principles; honesty.
Wiki: “Integrity is a concept of consistency of actions, values, methods, measures, principles, expectations, and outcomes. In ethics, integrity is regarded as the honesty and truthfulness or accuracy of one’s actions. Integrity can be regarded as the opposite of hypocrisy,[1] in that it regards internal consistency as a virtue, and suggests that parties holding apparently conflicting values should account for the discrepancy or alter their beliefs….”
In fairness, jay D., and your numbers aside, the news that Virginia will be drilling for oil, the national position on tapping domestic supplies has opened up, and it would probably have speculators moving in the opposite direction.
Combine that with a more sensible fiscal policy and that affect would be even greater. Add that to the reaction of speculators turning away from oil, and it adds to downward pressure.
The death of Bin Laden and action in Libya can have an effect on oil prices. Additional domestic supply plus added Brazilian, Columbian etc. (Obama may have helped to increase total world supply with Brazil) and it adds more. Additionally the price of oil will go down simply because gains can offset small shutdowns. It would limit the effect of turmoil induced oil spikes.
Britt – #1 Not “my” numbers; rather US government data and primary sources (used by our government).
#2 I read the ICF report (link to it is on the Hurd thread), which is ostensibly a foundational source for Governor’s statements regarding offshore jobs and extent of offshore reserves ~ he’s lying. Flat, bold-, bald-face liar.
#3 The potential amount – PLUS the many, many years it will take to find and tap the resource – can, no-way no-how, have ANY impact on oil speculation prices today OR in the short-term future.
Interesting that while NJ’s oil/gas potential is much greater, Governor Cristie’s position is directly opposite of McDonnels: “I oppose the idea of drilling off the coast of New Jersey, …New Jersey’s coastline is one of our economic engines and I would have to be really convinced of both the economic viability and environmental safety of oil and gas exploration off our coast. At this point, I’m not convinced of either.” I’m with Chris Christie on this one. Sadly, our governor) appears all to eager to sell off Virginia’s greatest asset, without much thought, study, or risk assessment.
Please, prove me wrong ~ nothing I would welcome more.
If every occupant of the leaky life boat pitches in, then we might keep the boat afloat
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