- Jun 6, 2007
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With the massive invasion of the Russian army into Ukraine whereby Russia is turning back the "acceptable behavior in the world" clock seventy-five years where it is now okay for one European country to invade a neighbor to put is under its control, President Joseph Biden has a big test in front of him! Does he let the European Union and the United Kingdom greatly suffer and bear the brunt of the non-military consequences (sanctions) against Russia that they absolutely deserve or does he have America rise to the occasion, fulfill the role God expects for us as he has so richly blessed our country, and be the Free World's champion in this matter and supply the world with oil and natural gas at reasonable prices. Countless people are now calling on the White House to show standout leadership on the energy issue which has now become a catastrophic crisis with Russia's invasion of Ukraine.
How does America produce more oil and natural gas to address this crisis. One must understand a fundamental dynamic in America's domestic oil and natural gas industry to responsible address this problem. Specifically, America produces the majority of her energy from "shale" production which is in a nutshell an energy company drills a well deep into the ground and using machines that can create high pressure on the pipe going in to the ground shoots "sand" under high pressure into the well creating long branch like cavities from which the oil and natural gas in the ground can drain through these branches to the well head and be extracted. This is the key point that the American people must know these shale production fields don't last long, most of America's shale producers in the fields they are drilling now only have about ten to fifteen years of production. If America moves these shale production companies to up their annual production by like forty to fifty percent which the world needs to replace Russian energy and have stable prices in the energy markets these U.S. shale fields will be depleted in four to seven years to the extent that America will have an energy crisis on its hands. Wisdom calls for acknowledging that America has to do substantially more "off-shore" oil and natural gas production if it is going to get the world out of this crisis, turning to shale production to solve this problem is a strategy for failure!
The Biden White House should acknowledge the truths and wisdom here. That America and the world is still going to be dependent on oil and natural gas for the next twenty-to-thirty years that this Russian invasion crisis has caused an oil and natural gas supply crisis for America and the world that can only be solved by dramatically increasing domestic production of these commodities in America and the only clear path to achieving this necessary goal is "off-shore" production. These "off-shore" production fields in the Gulf of Mexico already produce enormous amounts of energy and they don't deplete nearly as quickly as the on-shore "shale" production fields.
The Biden Administration should come out with a plan that for those states that don't object and where there is energy company interest his administration will auction offshore energy drilling leases and also offer additional offshore leases for the Gulf of Mexico; however, the companies must agree to commence production drilling with in ten years or the leases expire (we want no Energy company gaming the crisis here). Further, for any energy company that either owns off-shore energy leases where there currently is no drilling or buys off shore energy leases in the next three years if they commence "production" drilling within five years and it is certified as such by the Energy Department they can turn all their lease payments for the prior four years into tax credits and saleable tax credits if they so choose and for those who haven't owned the leases for four years for however long they have owned it plus for future lease payments for the difference in time period they can likewise turn their lease payments into tax credits.
To incentivize domestic production to get us out of this crisis, the White House should get Congress to pass legislation that has the Federal Reserve Bank open a loan window where it makes loans to domestic energy companies for new production as long as the energy company provides legitimate collateral and have the interest rates be really low like two percent annual rate and the term of loan be generous like ten years. Further, the legislation should for the next "seven" years, give a great tax break for "new" domestic energy production like for the earnings that comes from this new production that is the sales revenue minus the cost of production the respective energy company only has to declare half of that revenue as taxable income. Unless the world produces close to replacement levels of oil and natural gas for the Russian percentages taken off the European Energy markets, economies throughout the world will feel the negative reverberations and a lot of ordinary people will experience significant hardship over this!
How does America produce more oil and natural gas to address this crisis. One must understand a fundamental dynamic in America's domestic oil and natural gas industry to responsible address this problem. Specifically, America produces the majority of her energy from "shale" production which is in a nutshell an energy company drills a well deep into the ground and using machines that can create high pressure on the pipe going in to the ground shoots "sand" under high pressure into the well creating long branch like cavities from which the oil and natural gas in the ground can drain through these branches to the well head and be extracted. This is the key point that the American people must know these shale production fields don't last long, most of America's shale producers in the fields they are drilling now only have about ten to fifteen years of production. If America moves these shale production companies to up their annual production by like forty to fifty percent which the world needs to replace Russian energy and have stable prices in the energy markets these U.S. shale fields will be depleted in four to seven years to the extent that America will have an energy crisis on its hands. Wisdom calls for acknowledging that America has to do substantially more "off-shore" oil and natural gas production if it is going to get the world out of this crisis, turning to shale production to solve this problem is a strategy for failure!
The Biden White House should acknowledge the truths and wisdom here. That America and the world is still going to be dependent on oil and natural gas for the next twenty-to-thirty years that this Russian invasion crisis has caused an oil and natural gas supply crisis for America and the world that can only be solved by dramatically increasing domestic production of these commodities in America and the only clear path to achieving this necessary goal is "off-shore" production. These "off-shore" production fields in the Gulf of Mexico already produce enormous amounts of energy and they don't deplete nearly as quickly as the on-shore "shale" production fields.
The Biden Administration should come out with a plan that for those states that don't object and where there is energy company interest his administration will auction offshore energy drilling leases and also offer additional offshore leases for the Gulf of Mexico; however, the companies must agree to commence production drilling with in ten years or the leases expire (we want no Energy company gaming the crisis here). Further, for any energy company that either owns off-shore energy leases where there currently is no drilling or buys off shore energy leases in the next three years if they commence "production" drilling within five years and it is certified as such by the Energy Department they can turn all their lease payments for the prior four years into tax credits and saleable tax credits if they so choose and for those who haven't owned the leases for four years for however long they have owned it plus for future lease payments for the difference in time period they can likewise turn their lease payments into tax credits.
To incentivize domestic production to get us out of this crisis, the White House should get Congress to pass legislation that has the Federal Reserve Bank open a loan window where it makes loans to domestic energy companies for new production as long as the energy company provides legitimate collateral and have the interest rates be really low like two percent annual rate and the term of loan be generous like ten years. Further, the legislation should for the next "seven" years, give a great tax break for "new" domestic energy production like for the earnings that comes from this new production that is the sales revenue minus the cost of production the respective energy company only has to declare half of that revenue as taxable income. Unless the world produces close to replacement levels of oil and natural gas for the Russian percentages taken off the European Energy markets, economies throughout the world will feel the negative reverberations and a lot of ordinary people will experience significant hardship over this!
