Federal government can’t solve alone

CASE

Sovlency

1NC – Solvency

No investment- oil companies cant make a profit post plan

Natural Resources Committee Democratic Staff, 9-8-11, “PROFITS AND PINK SLIPS,” http://democrats.naturalresources.house.gov/sites/democrats.naturalresources.house.gov/files/2011-09-08_RPT_OilProfitsPinkSlips.pdf

The oil and gas industry argues that the tax breaks they enjoy encourage them to develop more oil and gas deposits, which lead to increased oil and gas supplies and lower energy prices.¶ 14¶ The ¶ Natural Resources Committee Democratic Staff’s analysis suggests otherwise for two primary ¶ reasons: ¶ 1. Depending on the reservoir and the physical characteristics of the hydrocarbon, the cost ¶ of producing oil can range from as little as $2 per barrel in the Middle East to more than ¶ $15 per barrel in some fields in the United States, according to the Energy Information ¶ Administration. Bringing once-expensive deepwater Gulf of Mexico oil into production ¶ can now be done for less than $10 per barrel.¶ 15¶ The profit incentive to explore and ¶ produce new supplies for this lucrative market dwarfs any marginal benefit that existing ¶ federal tax breaks for oil exploration or production could provide. As President George ¶ W. Bush said in 2005, “With oil at more than $50 a barrel, by the way, energy companies ¶ do not need taxpayers'-funded incentives to explore for oil and gas." ¶ 2. In recent years, higher oil company profits have increasingly been redirected into ¶ dividends and stock purchases, not exploration. Among the Big 5 oil companies, less than¶ 10 percent of profits are reinvested into exploration of new oil deposits.¶ 16¶ Net profits ¶ directed towards dividends and stock repurchases for the Big 5 oil companies were 58 ¶ percent in 2005, 73 percent in 2006, and 72 percent in 2007, 71 percent in 2008, and 89 ¶ percent in 2009. Dumping profits into stock buybacks drives up share prices for ¶ remaining shareholders by concentrating ownership, and, in the process, acts to increase ¶ the values of stock options for executives. It also reduces the amount of capital available ¶ for new exploration, improvements in drilling safety, and for other purposes (see below). ¶ Current tax treatment does not incentivize oil and gas companies to diversify into clean energy ¶ alternatives. While some oil companies tout their commitment to research into alternative energy ¶ resources, a review of actual corporate investments in research and development (R&D) reveal a ¶ business model which appears wildly averseto innovation. While companies in high-tech sectors ¶ like pharmaceuticals and semiconductors regularly invest 15-18 percent of their revenues in ¶ R&D, U.S. energy companies invest less than one quarter of one percent of revenues in R&D.17¶ Viable new substitutes for oil are a clear threat to the industry, as they would act to reduce the ¶ value of the oil industry's reserves, refineries, pipelines, and other infrastructure. ¶ Repealing the oil industry’s tax subsidies will not impact gas prices for American consumers. ¶ Oil, the main input and primary cost driver for gasoline, is traded in a global market and oil ¶ companies get paid the going market price for the oil they produce. On the oil market, there is no ¶ difference between an unsubsidized barrel of oil that costs $10 to produce and a subsidized barrel ¶ that costs $9.50 to produce. Each barrel will sell for the same price, currently more than $90 on ¶ the oil market. Oil companies that receive tax subsidies pass on that benefit to their shareholders, ¶ not to consumers.

And, Confusion and uncertainty over environmental restrictions prevent drilling

Lauren Hunt Brogdon 2012 (J.D. 2012, Columbia Law School, “A New Horizon?: The Need for Improved¶ Regulation of Deepwater Drilling” 37 Colum. J. Envtl. L. 291 2012)

Confusion and uncertainty created by the complexity of the¶ NEPA process on the Outer Continental Shelf may have¶ contributed to the lack of preparedness for the spill. Prior to the¶ accident, MMS employed a "tiering" process, encouraged by NEPA¶ regulations, under which it covered "general matters in broader¶ environmental impact statements ... with subsequent narrower¶ statements or environmental analyses ... incorporating by¶ reference the general discussions and concentrating solely on the¶ issues specific to the statement subsequently prepared."¶ 135 ¶ When¶ tiering occurs, "it is important that decisionmakers are made aware¶ of the relevant portions of the previous NEPA environmental¶ analysis to inform their subsequent decisions," but MMS's tiered¶ analysis was not sufficiently specific to the "particular activity,¶ geography, and impacts" of the Outer Continental Shelf, as¶ required by the tiering process. 1" Reforms to this process on the Outer Continental Shelf would undoubtedly reduce the level of¶ complexity and ambiguity that characterized NEPA review for the¶ Macondo well.

States block any potential investors

Romm ’08 (Dr. Joseph Romm, a Senior Fellow at the Center for American Progress, where he oversees the blog ClimateProgress.org, 8-6-08, “We Tried Offshore Drilling and Oil Prices Doubled,” http://www.huffingtonpost.com/joseph-romm/we-tried-offshore-drillin_b_117263.html)

The federal moratorium only blocks another 18 billion barrels of oil from being developed. But, as you can see, most of that is off of California, which has bipartisan opposition to drilling from Republican Governor Schwarzenegger -- who, unlike McCain, seems serious about his commitment to greenhouse gas reduction -- and the Democratic legislature, which remembers all too well the devastating 1969 oil spill off the coast of Santa Barbara. Indeed, Karen Bass, the newly appointed speaker of the State Assembly, said, "The idea of increasing offshore drilling off the coast of California I think is absurd, and I can't even imagine we would entertain that." Why would they, given the risk to their beautiful coasts and their commitment to reduce statewide greenhouse gas emissions 80% by midcentury?¶ So that only leaves about 8 billion barrels, which is about what the world uses in three months. Not bloody much. And that assumes every other state, including Florida, goes aggressively with offshore drilling, which is exceedingly unlikely. Indeed, the military is unlikely to let Virginia drill offshore because they use that area for Naval training. Most other Atlantic Coast states don't have a pipeline delivery infrastructure, which makes them far less attractive to the oil industry. Why would you drill off the coast of Maine when you would have to get that oil to a distant refinery? And Senator Martinez (R-FL) is dead set against drilling off Florida's coast.¶ So in the real world, ending the federal moratorium on coastal drilling might add 50,000 barrels of oil a day some time after 2020. That is so tiny that it certainly can't have any impact on oil prices ever, psychological or not. That is so tiny that I agree with Sen. Obama that we should be open to a compromise in which progressives give up that nothing in return for a genuine effort to jumpstart the transition to a clean energy economy.

Drilling fails –delays and localities

CBO, Congressional Budget Office, internally cites Energy Information Administration studies, “Potential Budgetary Effects of Immediately Opening Most Federal Lands to

Oil and Gas Leasing”, CBO, August 2012, http://www.cbo.gov/sites/default/files/cbofiles/attachments/08-09-12_Oil-and-Gas_Leasing.pdf/ //RX

For this analysis, CBO used EIA’s estimates of the poten- tial for new areas to produce oil or gas after 2022. EIA expects that any initial production from newly opened areas in the Atlantic, Pacific, and eastern Gulf of Mexico would be far less than is produced by current operations in the Gulf of Mexico (see Figure 2). In its Annual Energy Outlook 2011, EIA estimated that if leasing commenced in those OCS regions by 2023, production through 2035 would amount to around 0.35 billion BOE—or about 3 percent of the 13.5 billion BOE that the agency pro- jected would be produced from federal leases in the Gulf of Mexico over that 13-year period.17 EIA’s estimates reflect its assumption that “local infrastructure issues and other potential nonfederal impediments are resolved.”18 In CBO’s view, such factors probably would slow or limit production, as they sometimes have in the past. The federal government has spent about $1.5 billion to compensate firms for leases that were canceled or relinquished because of state or local concerns about oil and gas development off the coasts of California, North Carolina, and Florida and in Bristol Bay in Alaska.19 According to DOI, 24 localities in California have “enacted ordinances that either bar the construction of onshore support facilities for offshore oil and gas development or subject the approval of such facil- ities to a vote by local citizens.”20 Any development in the Atlantic OCS would involve siting and building new pipelines and related onshore facilities, which would require approval by state and local authorities. Other technical complications and economic factors add to the uncertainty surrounding forecasts of production in new areas of the OCS. DOI’s resource assessments sug- gest that much of the undiscovered oil in the eastern Gulf of Mexico is located in ultradeep water—water that is more than 2,400 meters (about 7,900 feet) deep—where few leases can be brought into production in any year because of the cost and complexity of their develop- ment.21 Other factors could slow production in new areas, including the need for exploratory drilling and the expectation that most of the fields will be relatively small.22 Historically, production facilities have been installed at a slower pace in the California OCS than in the Gulf of Mexico.23

US already increasing Oil Production

Floyd Norris, 1-25-2014, chief financial correspondent for NYT, 1/25/2014, “U.S. Oil Production Keeps Rising Beyond the Forecasts,” New York Times, http://www.nytimes.com/2014/01/25/business/us-oil-production-keeps-rising-beyond-the-forecasts.html?_r=0

OIL production in the United States rose by a record 992,000 barrels a day in 2013, the International Energy Agency estimated this week. “We keep raising our forecasts, and we keep underestimating production,” said Lejla Alic, a Paris-based analyst with the agency. The increase left United States production at 7.5 million barrels a day, with both November and December production estimated to have been over eight million barrels a day. American consumption of oil also rose last year, by 390,000 barrels a day, or 2.1 percent, to 18.9 million barrels a day. The agency increased its estimate of American oil use in the final quarter of the year, although it lowered its estimate of the increase in some other countries, including China. Over all, world consumption rose 1.4 percent, making 2013 the first year since 1999 that the use of oil in the United States rose more rapidly than in the rest of the world. The agency said that demand was strong in the petrochemical industry in the United States, which has benefited from the fact that rising supply has left American crude oil prices lower than those in many other countries. The agency estimated that demand for gasoline in the United States rose as a result of increasing consumer confidence and more sales of sport utility vehicles. Despite the 2013 increases, oil use in most developed countries remains well below the levels of 2007, the last pre-recession year. The United States is estimated to have used 8.5 percent less oil in 2013 than it did in 2007, while demand is down by about 25 percent in Italy and Spain, European countries that were hard hit by the euro area’s problems. Germany stands out, with 2013 usage equal to that of 2007.

Restrictions aren’t the issue --- companies have open federal leases now

Steven Mufson, 10/22/12, Washington Post Staff Writer, “Study: 20 million acres of federal oil, gas leases in Gulf of Mexico idle”,

Oil and natural gas companies are not exploring, developing or producing on more than 20 million acres of federal leases in the Gulf of Mexico, 40 percent of them owned by the five biggest private oil giants, according to a study by the office of Rep. Edward J. Markey (D-Mass.), the ranking member of the House Natural Resources Committee. The study is the latest salvo in a politicized election year battle over whether the Obama administration should be blamed for what Republican presidential nominee Mitt Romney has called a slow pace of leasing or whether the oil industry owns more drilling leases than it can handle. The study found that 131 oil and gas companies hold about 3,700 leases in the Gulf of Mexico that are not undergoing exploration, development or production. BP has 2.5 million acres of idle leases in the Gulf of Mexico, the report said. BP is followed by Chevron, Exxon Mobil and Shell, each of which own 1.4 million to 1.5 million acres of idle leases. Markey’s study added that about half of the leases have been idle for at least five years and that 80 percent of the idle leases were purchased for less than $300 an acre.