A little over a month ago, Republicans were shouting drill, baby drill, and pleading with Democrats to come back to Congress to pass legislation giving big oil everything they wanted to make America more energy independent.
As unbelievable as it may seem, the lower gas prices have stopped new exploration and drilling, with big oil basically saying the hell with energy independence until we can take advantage of another moment of “disaster capitalism.” We’ve got the leases now, see ya later.
I’m not making this up. Here are the details as reported in the N.Y. Times:
From the plains of North Dakota to the deep waters of Brazil, dozens of major oil and gas projects have been suspended or canceled in recent weeks as companies scramble to adjust to the collapse in energy markets. The project delays are likely to reduce future energy supplies — and analysts believe they may set the stage for another surge in oil prices once the global economy recovers.
Exploration spending, which had risen to a record this year, is being slashed.
Wells are being shut down across the United States … Investment in alternative energy sources like biofuels could dry up … analysts said … Banks have become reluctant lenders, especially to renewable energy projects that may prove unprofitable.
In North Dakota, oil drillers are scaling back exploration of the Bakken Shale, a geological formation recently seen as promising, where production is more expensive than in conventional fields. Another domestic producer, Callon Petroleum, suspended a major deepwater project in the Gulf of Mexico, called Entrada, weeks before completion because of what it described as a “serious decline in project economics.”
According to research analysts at the brokerage firm Raymond James, domestic drilling could drop by 41 percent next year as companies scale back.
Analysts at Bernstein Research have calculated that oil production in North America could decline by 1.3 million barrels a day through 2010, or 17 percent, to 6.14 million barrels a day. This decline, “will be the catalyst needed for oil prices to rebound.”
According to the International Energy Agency, “If we cut back dramatically on investments, we could end up in a situation where supply growth goes flat when the economy starts to recover. The steeper the decline, the steeper the response.”
Let me get this right: We’ll start drilling when we’re hit with another energy crisis, and not before, to prevent a reoccurrence.
Now that’s capitalism.