Editorial: A Jobs Plan that Really Works

- Editorial: A Jobs Plan that Really Works

Friday, September 09, 2011
Louisiana Oil & Gas Association

Last night, President Obama addressed a joint session of Congress to discuss his plan to generate jobs, instill some sense of confidence in the market, and give a greatly needed jolt to the U.S. economy. What was meant to be the "speech of all speeches" turned out to be politically charged campaign rhetoric designed to place the deteriorating economic situation on a do-nothing Congress.

For the first time, the President acknowledged the fact that our nation's economy has stalled. And in an effort to get it going again, President Obama will propose his "American Jobs Act" as the solution to our stagnant economy.

From what was relayed in his speech, the "American Jobs Act" calls for approximately $450 billion to be spent over the next year on a number of initiatives that include infrastructure projects, tax credits for employee raises, an extension of jobless insurance, and money for the hiring of teachers nationwide.

First, let's discuss the positives. To the President's credit, he showed a willingness to work side by side with American businesses and acknowledged that there are many over-burdensome regulations that hinder business growth. His jobs plan calls for tax credits for business owners that hire unemployed workers and a 50% payroll tax cut for small businesses. These are certainly positive solutions that will support our business community and stimulate the economy.

Now, let's talk about the bad news. What was missing from the speech was an explanation as to how he will find the money to pay for these initiatives. How do we generate nearly one-and-a-half trillion dollars at the same time the Congressional "Super Committee" searches for over $1.5 trillion in cuts? Have we forgotten that our nation is bankrupt? Have we also forgotten that nearly 42% of Americans aren’t paying any taxes?

Let's take a look at some numbers. Currently, there are 14 million Americans that are unemployed. Approximately, 7.17 million of those potential workers are collecting unemployment insurance. Nearly 2.4 million jobs have been lost since President Obama took the oval office. The jobless rate in the U.S. has hovered around 9.0% or higher for 26 of the past 28 months. A good sign of how bad things are is the fact that long-term unemployment is at its highest levels since the Great Depression of the 1930s.
So, for the sake of the argument, let's assume that President Obama’s re-election depends on gaining back those jobs that have been lost. Let’s also assume that raising taxes in an economic depression is political suicide. With that said, what if an industry could offer cutting those unemployment numbers in half?

Releasing the stranglehold on America's oil and gas industry can generate those jobs and ensure sound economic growth without one tax increase.

In its recent study, the American Petroleum Institute found that U.S. policies which encourage the development and exploration of natural resources could, by 2030, increase domestic oil and natural gas production by over 10 million boed, generate 1.4 million jobs, and raise over $800 billion in government revenue.

In his speech, President Obama called for more products sold around the world stamped with the slogan, "Made in America." While our manufacturing sector has a long way to go, let's start simple by ensuring that the energy we consume here at home has the stamp, "Produced in America."

West Wing Week: 9/9/11 or "American Jobs Act"


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BP Appeals Russian Court Ruling That Permitted Office Search

- BP Appeals Russian Court Ruling That Permitted Office Search

Wednesday, September 07, 2011
Dow Jones Newswires
ABERDEEN
by Alexis Flynn

BP said Wednesday its subsidiary BP Exploration Operating Company Ltd. is appealing a Russian court order that allowed bailiffs to search the company's Moscow office last week.

BP said the raid by authorities, to seize documents related to a lawsuit filed by a minority shareholder in BP's Russian joint venture TNK-BP, was unlawful as BP EOC had no connection with TNK-BP.

The minority shareholder is seeking compensation for losses following the failure of BP's Arctic exploration agreement with Rosneft.

"BP EOC believes that the court decision contradicts the applicable Russian legislation and is misconceived," said the U.K. energy giant.

"The request to BP EOC to hand over documents is based on an inaccurate and false premise and should not be allowed to stand," BP said in a statement. "The ruling authorizes a search for documents which would allow the plaintiff's representatives to gain access to almost all corporate documentation of BP EOC, which cannot be lawful or reasonable."

Copyright (c) 2011 Dow Jones & Company, Inc.

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Infamous Oil Forecasts that Failed & What Makes a More Solid Forecast

- Infamous Oil Forecasts that Failed & What Makes a More Solid Forecast

Tuesday, July 19, 2011
Rigzone Staff
by Barbara Saunders

Even before Colonel Edwin Drake confirmed a way to drill for crude oil in 1859, pundits were already active in predicting the future of oil. Some called it "Drake's Folly" and forecast that drilling was not the way to reach oh well.

Skeptics called America's first drilled oil well "Drake's Folly" and insisted that drilling was no way to reach . . . Oh well.

But oil prices are what draw the primary predictions nowadays, even though $100 per barrel oil is really nothing new. During the Civil War, for instance, the price of oil soared to about $115 per barrel when adjusted for inflation in 2010 dollars. In fact, until an extended period after World War II through about 1970, oil prices were anything but stable and were often above levels seen in the 1980s and 1990's even without inflation taken into account.

In real terms, or adjusted for inflation, oil prices hit the equivalent of $100 per barrel or more in 1861 and again in 1980.

This underscores how poorly oil prices tracked inflation in modern history and the importance of technology in keeping pace with supply, regardless of price. In fact, according to the Society of Petroleum Engineers (SPE,) during the extended periods of low prices after the price crash of 1986, a number of technological advances occurred that lowered finding and lifting costs. These included the polycrystalline carbon drill bit and the expanded use of horizontal drilling.

In terms of price predictions, one of the biggest boners occurred only a few years ago, when forecasters during the summer of 2008 were predicting that oil prices would remain at levels of $150 or higher for the foreseeable future. Then came the global financial meltdown and took oil prices along with it, with an oil price plunge to the $30's by the following winter ooops!

A similar prediction occurred during the 1980's. Following the supply panics of the late 1970's, many were predicting that oil would reach $100 per barrel in nominal, or pre-inflation terms, by or before mid-decade. However, no such thing happened. Consumers, in part, had responded by purchasing much smaller cars than in the past and prices ultimately cratered by mid-decade, into the single digits for some crude grades.

"Beware all forecasts that do not have a strong basis in quantifiable supply/demand trends.

The problem with these particular forecasts was that some were predicated on wishful thinking, primarily by traders, not sound market fundamentals. Beware all forecasts that do not have a strong basis in quantifiable supply/demand trends. Just because renewed tensions have erupted in the Middle East, for instance, does not mean that oil prices are destined to fly up. Some of what is touted as "forecasts" in news bulletins is really the hype of traders hoping to make headlines that will push prices up on the commodity futures markets. Such hype may work briefly, but invariably, when there's nothing backing a prediction, prices will drop back in short order.

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