How America Can Escape From Oil’s Stranglehold
by David Fessler, Energy and Infrastructure Expert
Friday, June 18, 2010: Issue #1284
You see that enormous cloud of dust on the horizon?
It’s Exxon Mobil (NYSE: XOM), Chevron Corp. (NYSE: CVX), Shell Oil (NYSE: RDS:A) and ConocoPhillips (NYSE: COP) all sprinting as fast as they can to distance themselves from BP (NYSE: BP).
On Tuesday, fat cats from the oil industry’s top five companies descended on Washington, D.C. to discuss the Gulf of Mexico oil disaster, deepwater drilling safety standards and emergency response plans.
And they were quick to pile on BP…
- Take Exxon Mobil CEO, Rex Tillerson, for example. He chastised BP for negligence: “It appears clear to me that a number of design standards that I would consider to be the industry norm were not followed.”
- John Watson, Chevron’s CEO, chimed in, too: “It appears that not all the standards that we would recommend – or that we would employ – were in place.”
- And Marvin Odum, President of the Houston arm of Royal Dutch Shell, weighed in by saying: “It’s not a well that we would have drilled.”
Ah, hindsight – what a wonderful thing.
But if those BP-bashing comments made the CEOs feel better, consider this: If you own shares in any of the above companies, all five of them have nearly identical spill response plans.
Plans that we now know are woefully inadequate to deal with the continuing disaster in the Gulf or another one like it.
BP = Big Payments
On Tuesday evening, President Obama made it clear that “we will make BP pay for the damage their company has caused.”
That’s the right thing, of course. But I’m not so sure whether his speech made much difference to the folks who make their living off the Gulf of Mexico. Damages to the fishing, shrimp and tourist industries are incalculable at this point.
Nevertheless, BP officials met with Obama and his staff at The White House on Wednesday morning, with BP agreeing to set up a $20 billion escrow fund to pay for the cost of the spill.
BP also said it will cancel its $10 billion quarterly dividend for the next three quarters and dispose of some assets quicker than planned in order to raise additional cash. Cash it will clearly need to manage the aftermath of a spill that’s still largely out of control.
The interesting thing about Obama’s speech wasn’t that he gave it, or even its content. It was the reaction to it – or rather, the lack of reaction…
While Congress Sleeps, States Get Moving
With 60,000 barrels a day still spewing into the Gulf, there’s little political opposition – by either party – to clean energy policy wonks or the ideas they’re proffering.
But we need firm action. Silence and dithering from Congress won’t get us off of our oil dependence. It will take a courageous, bipartisan effort.
However, unless I’m missing something, that just isn’t in the cards anytime soon.
So what’s the solution? Well, for some time now, individual state and local governments have quietly enacted legislation that nudges the United States in a different direction.
And that direction is toward natural gas…
A Gas-Filled Future
It’s becoming clearer by the day that America’s energy problems aren’t going to be solved by Congress.
States and local municipalities know it, too…
Earlier this week, the seventy-eighth annual meeting of the U.S. Conference of Mayors was held in Oklahoma City. This 1,200-member non-partisan group represents cities with populations over 30,000.
And the slumbering, inactive Congress got a sharp call to action from Conference President and Mayor of Burnsville, Minnesota, Elizabeth Kautz: “It’s time for federal action and we urgently call on both parties to lay down their political swords and work together for the common good of American families who are struggling to make ends meet.”
One of the more interesting actions at the Mayors’ meeting was to adopt a resolution calling on Congress to get its act together with respect to energy. Specifically, to accelerate three natural gas-related policy issues:
- Enact a new bill – the “New Alternative to Give Americans Solutions”(NATGAS).
- Enact “The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users Act.” This provides a tax credit of $0.50 per gasoline-gallon-equivalent of Compressed Natural Gas (or liquid gallon of Liquefied Natural Gas) for the sale of CNG and LNG in motor vehicle fuel.
- Expand federally funded Research, Development and Demonstration (RD&D) programs to expand natural gas engine usage in the transportation sector.
The energy problem isn’t lost on states and municipalities. Quite the opposite, actually: They’re tired of hanging around for the Feds.
So even with the situation struggling to pick up momentum at federal level, states are doing it for themselves…
36 Down… 14 to Go
On June 1, Oklahoma became the thirty-sixth state to pass clean energy laws. How popular was it? The vote was 91-2 in favor.
After signing the bill, Oklahoma Governor Brad Henry said, “This legislation advances our nation’s energy security, improves the environment and enhances Oklahoma’s economic development potential.”
Oklahoma gets the natural-gas-as-a-transition-fuel thing, too. Its legislation states that by 2015, it must have at least one CNG fueling station for every 100-mile stretch of Interstate Highway within the state’s borders. And by 2025, that mandate is raised to one filling station every 50 miles.
As for the remaining 14 states that haven’t passed a similar bill yet, it’s hopefully only a matter of time before they realize that it means more jobs and higher tax revenue.
Natural gas is quietly creeping up into the limelight as a mainstream fuel. Before it turns into a groundswell, it’s worth considering adding a few natural gas-related stocks to your portfolio.
Good investing,
David Fessler
Related Investment U Articles:
- Investors Should Take Note of U.S. Oil and Gas “Boom”
- Note to Congress: America’s Energy Solution Is Right Here
- Tired Of Waiting on Keystone XL? Here Comes Wrangler
- The BP Oil Spill… One Year Later
- Since Last Year, It’s Been Nothing But “Drill, Baby, Drill”
8 Responses to “How America Can Escape From Oil’s Stranglehold”
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David Fessler is the energy and infrastructure expert for Investment U.
I don’t understand Fessler’s conclusion that we need to reduce oil’s stranglehold. With over 6000 products that use oil as a feedstock, oil will never be replaced; and I theorize, as do the Russians,that we will NEVER run out of oil-period.
Having said that, NG will replace some oil,as will methyl calthrates. They will fill in the supply gaps as new oil deposits are discovered and the new oil finds are being developed.
Read John Chen, PhD, Lehigh U.’s website where he calculates our energy requirements thru 2050. Oil and other hydrocarbons play a major role.
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Is Illinois one of the states that has yet to pass such a clean energy bill? There is a session with our state and federal reps scheduled for July 7 and I would like to bring this up if we are one of the 14 states.
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It is not just the spill response measures that are common for the Oil Majors. They all use the same major contractors, the same approach to drilling procedures and the same safety standards which are based on the Drilling Contractors view of the High Hazard risks involved. If drilling is stopped the oil price will go through the roof and everyone will pay. All of this indicates a massive crisis for all developed nations which will not go away anytime soon.
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Natural gas fuel for the commercial fleet makes sense. Natural gas for the passenger fleet requires a whole new distribution system. We already have that with the electric grid. Electric/hybrid cars are the real solution. Use more natural gas to fuel power plants for elecric generation.
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It aint gonna happen, at least not during this Administration or the next. The problem is that Chu and Obama are still talking about pie in the sky (clean coal technology) and Secretary chu is “agnotic” about natural gas. NG is at all-time low prices so buying COP or other NG oriented companies may be a good investment since NG prices can’t get much lower but the US is a long way from investing the money needed for the infrastructure needed for NG to be available for transportation. A combination of Nuclear and NG would get the US off the foreign oil addiction but as long as the coal companies have the clout they have in Congress and with the Administration I am afriad we are stuck with the status quo.
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Nasa was offered my Patented Technology of the Flying Saucer in 1980. The Propulsion Experts at the Glenn Research site in Cleveland, Ohio, rejected it till the Space Disasters occurred. Then they decided to experiment with it, did not contact me for advice like I had written and caused another disaster, the Big BlackOut of 2004.
A Flying Saucer does not use oil or nuclear power. It “taps” energy right out of the aether, like Tesla (I suspect) did in 1931 for his Pierce Arrow car.
While the application of gravity Control was evaluated by the Hudson Institute at $600 Billion when I invented it, the little Spinoff of energy tapping would be worth a few trillions. Enough to pay the Canada and USA national debt.
I wanted a fee of $50 million only, peanuts to Nasa. Every Shuttle Flight costs $ 1 Billion!
No word from Nasa or the new Manager, who might be kept in the dark by loyal Propulsion Fans in the Headquarters (Billion Dollar Rockets, OINK).
I found over 1000 spin-off applications for the basic patent, it was like inventing the wheel. The industrial revolution would create millions of jobs and many new industries.
The Shuttles could have flown for another ten years, new Shuttles could have been built and real Space flights would have taken place.
Oil still would be used for industrial and chemical purposes, ecxcept we would have enough.
Now that Nasa awaits execution, I am looking for getting paid for the E-Bomb too, after I suggested it to the group, headed by Dr. Teller, even though someone sold it to a “Friendly Country” that used it to zap a brand-new Japanese Spy Satellite.
Maybe Russia or India will see the light.
The 182 Wannabee Astronauts may only fly to the ISS while the Cosmonauts will be whooping it up all over our outer Space.
Nasa should have hired some Business Brains of Investment U.
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I am very tired of having to constantly sign up for some newsletter just to get a few gas picks……..[stocks] i am deleting everything
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My concern with the electric car solution is how long the batteries will last and how much it would cost to replace them and we also seem to want to buy these from overseas? How does that help our economy? Wind energy is fine for some states but not all, what we need is individual home energy. Nat gas is the way to go to immediately eliminate out dependence on oil and to reduce the deficit.
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