The recent debt ceiling debate has prompted increased focus on deficit reduction, with President Obama and congressional leaders proposing various cuts and tax increases aimed at moving the budget towards balance.  As has become typical, for President Obama and his friends in Congress, this means targeting the oil and gas industry with proposals to nix tax credits and deductions that are broadly available across industries well beyond oil and gas.

Ironically, however, two new studies indicate that if Obama wanted to boost revenues from the oil and gas industry, he would not need to do it via pursuing tax hikes.  Rather, according to a new study commissioned by the Gulf Economic Survival Team (GEST), an organization dedicated to helping rebuild the Gulf Coast’s flagging economy, returning to normal drilling levels in Gulf waters would boost revenues demonstrably.

Since the BP Gulf Oil spill – which happened over one year ago – the Administration has been dragging its feet in allowing American companies to drill in American waters. Approvals for shallow- and deep-water exploration permits are down by over 50 percent and 80 percent respectively.  But a resumption of drilling would pour $44 billion into the American economy, create 230,000 jobs and, what’s more, increase tax revenues from American oil and natural gas companies by $12 billion, according to GEST.

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech and Francis Cianfrocca are joined by ExxonMobil VP Ken Cohen to discuss the ExxonMobil’s earnings, the need for more drilling and why gas prices are so high.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Where do your gasoline dollars go?
CNBC: Light sweet crude price history
ExxonMobil’s earnings: The real story you won’t hear in Washington
CNN Poll: Support for increased offshore oil drilling on rise
Ken Cohen at ExxonMobil Perspectives

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On Tuesday, President Obama urged Congress to raise taxes on energy firms by ditching the ability of oil companies to take advantage of certain tax provisions– a move he no doubt expected to be greeted with enthusiasm by members of his party and the liberal base, but which earned him a slap from Rep. Dan Boren (D-Okla.).

Via the Tulsa World:

Democratic U.S. Rep. Dan Boren said Obama just needs to be quiet.

“Americans are tired of empty rhetoric on both sides and want a real plan,” Boren said. “If the president doesn’t want to stand up and be a leader, then his silence would be appreciated from people who are trying to find solutions.”

Boren described Obama as completely uninformed about the oil and gas industry.

“The industry is not made up of just major companies,” he said. “It is made up of small independent firms like those in Oklahoma that produce a vast majority of our domestic production.”

For every CEO of a major company, Boren said, there are thousands of blue-collar jobs that are affected by the Obama administration’s energy policy.

“It is a policy that is very inadequate and has left so many on the Gulf Coast unemployed.” Boren said.

Yesterday marked the first anniversary of the disastrous BP oil spill. Remembrance of the fateful months after the spill was followed by strict criticism from several politicians across the country. Gov. Bobby Jindal appeared on television this morning offering praise towards the residents of Louisiana and neighboring states for a resilient and speedy recovery. While the speed of the recovery is reason enough to celebrate, Jindal’s message took a more somber tone, focusing on the “one-size-fits-all moratorium” that was placed on the Gulf States following the spill.

With the stigma of the spill remaining clear in the minds of many Americans, tourism in the Gulf has taken a significant hit. Several Governors are attempting to reel visitors back into their states, but the policies introduced following the spill are only further crippling economic recovery in the Gulf. It is no secret that the price of oil continues to rise at an out-of-control pace. The average price of gas has risen by nearly a dollar since the spill and production has been stunted by nearly a third. Gov. Jindal, and others, argues that increasing offshore drilling would only alleviate some of the economic burden that all Americans face.

As this infographic demonstrates, the administration’s disastrous energy policies have had a hand in nearly all of the deleterious long-term effects of the Gulf spill crisis (click to enlarge).

Safe drilling remains at the forefront of the administrations mind, but the continuation of this moratorium has only hurt small business and added to the already high unemployment rate. The rising price at the pump has spurred increase support for off-shore drilling. A recent CNN poll shows that Americans are beginning to learn towards increased drilling. The survey showed that 69 percent of Americans favor increased offshore drilling, with just over three in ten opposed. That 69 percent is up 20 points from last June, while the oil spill was still in progress, and is back to the level of support seen in the summer of 2008.

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In advance of President Barack Obama’s energy speech at Georgetown University, a top oil and natural gas industry leader called on the Obama Administration to abandon its policies “to defer, delay and deny access to domestic resources of oil and natural gas.”

In a statement to reporters during a media conference call this morning, American Petroleum Institute Upstream Director Erik Milito refuted a report by the Interior Department that U.S. oil and natural gas companies are sitting on oil leases granted by the government, refusing to turn them into producing leases.

“The report completely whitewashes the fact that in many cases, the reason these leases have no exploration plans is that BOEMRE is sitting on those plans,” Milito said. “This is like leasing an apartment from the government for $20 million dollars and the government refuses to give you the keys to the apartment – then the government proceeds to complain because you are not occupying the premises.”

Below, I share an excerpt from the full text of Milito’s statement as prepared for delivery by API:

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American Solutions is re-launching Drill Here, Drill Now, Pay Less for one big reason:  President Obama’s continuing war on American energy is dramatically increasing the price of gas and diesel.

To be fair, President Obama is in favor of drilling…but just not in the United States.

His numerous bans, restrictions, and proposed taxes are hamstringing America’s ability to produce more oil and gas and are thereby increasing gas and diesel prices.  In fact, even the federal government projects that domestic oil production will drop by 220,000 barrels per day in 2011 due to the President’s anti-drilling agenda.  Production in 2012 will drop even more.

If we produce less oil, we will produce less gasoline, which means higher prices at the pump.

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Criticism continues to amass on the heels of the blog posted by the Whitehouse Wednesday boasting ‘Expanding Safe and Responsible Energy Production.” Attempting to drive home the point that, long before this current spike, their main concern rested in “increasing responsible domestic energy production – including oil and gas,” the Obama Administration engaged in a bit of revisionist history. In reality, actions taken by President Obama and his staff indicate that despite the rising cost of oil, there is little sense of immediacy to get one of our most profitable industries back to work.

The main argument behind the stagnant permitting, the Obama Administration maintains, is BP’s disasterous blowout in the Gulf, “protecting” Americans from the horrors that would no doubt ensue should deepwater drilling restart at a pre-Gulf oil spill clip. Forbes reporter Christopher Helman makes a valid point in exposing the disingenuous nature of the Obama administration’s willingness to issue permits: while the industry was not adequately prepared to clean up the spill, reports have shown that the main problem was in BP’s implementation of the well, not the overall industry’s handling of the disaster – nor the industry’s chances of a second failure. In fact, the chances of another spill have gone down significantly with the most recent set of safety procedures established by the Department of the Interior. Companies now have the technology to drill safely in deep water, and new measures are in place to contain and control a BP-sized blowout, in the (very) off chance such an incident should happen again. It was BP’s haste in building the well, not the industry’s haste in correcting the problem.

William Reilly, co-chair of the presidential panel tasked with investigating causes of the oil spill, remains impressed with the industry’s ability to respond to the disaster, The Hill reports.

“William Reilly, co-chair of the presidential panel tasked with investigating causes of the BP PLC (BP, BP.LN) oil spill, on Tuesday called the oil and gas industry’s response to the disaster ‘remarkable and reassuring,’” Dow Jones reports.

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Nick Loris of the Heritage Foundation to discuss smart policy solutions to address high oil and gas prices. Then Pejman Yousefzadeh talks about Barack Obama’s recent decision on Gitmo detainees.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

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In a new Fortune piece, former Rep. Harold Ford, Jr., Chairman of the moderate Democratic Leadership Council, hits out at President Obama saying he needs to make some “halftime adjustments” including “order[ing] his department heads and agency chiefs to declare a moratorium on new regulations until further notice.”

The critique is timely, given news that Federal Communications Commission (FCC) Chairman Julius Genachowski is engaged in a less-than-stealthy, renewed effort to ram through net neutrality regulations in advance of a Republican takeover of the House that will see one of several opponents of net neutrality assume chairmanship of the House Energy and Commerce Committee.

Rep. Fred Upton (R-Mich.), a leading contender for the job, recently wrote in a policy memo that “The FCC’s regulatory compass is broken as it continues in its unrelenting pursuit to impose so-called network neutrality regulations, regardless of whether the agency has the legal authority for such a blind power grab.”

In addition, Ford’s urging of a regulatory moratorium will no doubt hearten Gulf state residents concerned about an ongoing, de facto “permitorium” preventing the resumption of drilling operations in the region in the wake of the BP disaster, and subsequent drilling moratorium, earlier this year.

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The President of the United States was swept into office two years ago promising to bring change to Washington, starting with a more transparent and ethical government. In fact, Obama declared, “transparency and the rule of law would be the touchstones of this presidency.” Apparently, not everybody in the White House read the interoffice memorandum.

Following the BP tragedy, the White House commissioned the Secretary of the Interior to provide a safety report on offshore drilling. Secretary Salazar pulled in a panel of seven outside advisors to assist in his analysis of the safety of offshore drilling, and provide recommendations for going forward. A final draft of this report was sent to White House Climate Czar Carol Browner’s office before being forwarded to the president. Last week, it was reported that Browner’s staff edited the document to imply that the outside advisors recommended a drilling moratorium, when in fact this was not true. The tailored draft was given to the president, and the policy was made.

Whether or not the recommendation of outside advisors would have changed minds regarding the drilling ban is debatable. What isn’t debatable is the resulting economic destruction in the Gulf from President Obama’s decision based – in part – on information from a falsified document.

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There is a brief story by Jim Carlton in the weekend edition of The Wall Street Journal entitled “Fiorina Stays Away from Middle Road,” and in the cover story for the latest issue of The Weekly Standard, Fred Barnes describes Carly Fiorina’s campaign against Barbara Boxer as “the most important race of 2010.”

I am not sure that I agree with the extravagant claim advanced by Barnes. But if Fiorina does, in fact, put an end to Boxer’s career, his assertion might well prove to be right – for, as Barnes shows in detail, the title of Carlton’s story is apt.

Carly Fiorina is not a squish. She is anti-abortion, and she makes no bones about the fact that she thinks Roe v. Wade a travesty. She is hostile to Obamacare, and she wants it repealed. She thinks that a tax increase at this time would be counter-productive, and she means to stop it. She thinks the deficit a threat to American prosperity and power, and she intends to see to its reduction. She favors offshore drilling, and she supports Arizona’s attempt to stop illegal immigration. She does not pander; she does not retreat. She makes her case. And if she wins – and she may well win –  in California of all places, it really will be the occasion of a political earthquake. More important, from my perspective, even if she loses, we win.

If our aim were a mere partisan victory, my claim would be ridiculous. A vote in the Senate is, after all, a vote in the Senate. But if there is something more at stake – if a partisan victory predicated on an abandonment of principle is a devastating, demoralizing defeat – then it is far, far better to lose a close race while making a principled argument, as Abraham Lincoln did in his senatorial campaign against Stephen Douglas in Illinois in 1858, than it is to win by way of cowardice, collapse, and compromise.

To grasp what I mean one must look beyond November.

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Obama administration policies have caused “irreperable harm” to the Gulf Coast economy, stifling the energy sector and culling employment within it to a degree previously underestimated by the administration itself.

That is the conclusion drawn by Louisiana State University economics professor, Dr. Joseph Mason, author of a new critique of the Obama administration’s Inter-Agency Economic Report released last week estimating losses due to the deepwater drilling moratorium currently in effect.  According to Dr. Mason, that report understated the ban’s impact on job losses by as much as 60 percent.

During a conference call Tuesday, Mason criticized the administration’s methodology for calculating the economic effects of the ban, and said the administration used inflated, flawed logic to calculate its valuation of economic offsets—such as unemployment wages—and their counter effects on the economic downturn. He said the report was inaccurately rosy in describing the Gulf States’ economic recoveries following the BP spill.

“Those states have been irreparably harmed,” Mason said. “Essentially all of these economies have taken the summer off and are trying to get back to the baseline.”

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During a 45-minute conference call with journalists from 40 major media outlets this morning, Jack Gerard shared some startling predictions about the future health of the nation’s oil and natural gas industry if the Obama Administration gets its way in adding more regulation and increasing taxes on offshore drilling in the Gulf of Mexico. The biggest one of all is enough to cause anyone to take pause:

“The administration’s moratorium, if continued indefinitely — or similar legislative proposals which would make the deep water unavailable or uneconomic — would cost this country 175,000 jobs every year between now and 2035, according to our latest analysis,” said Gerard, president of the American Petroleum Institute, a group representing some 400 oil and natural gas companies.

And that’s not all!

“The Gulf of Mexico accounts for 30 percent of our domestic oil production and 13 percent of natural gas,” Gerard explained. “The deepwater areas account for 80 percent of the Gulf’s oil production and 45 percent of its natural gas production. Twenty of the highest-producing leases are in the deep water.”

When one considers that the oil and natural gas industry, according to Gerard, supports 9.2 million workers and 7.5 percent of all U.S. gross domestic product, even a small percent of decline can have a tremendous impact on the economy.

According to an API-produced report released today, the economic impact of a complete shutdown of deepwater drilling would yield some awful results. For instance:

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Although President Obama’s executive order imposing a six-month moratorium on drilling for crude oil and natural gas in ultra-deep waters within the 200-mile territorial limit recognized by international law has at least temporarily been suspended by a federal district judge, offshore drilling will not come to a screeching halt even if that precipitous action ultimately is determined to be within his constitutional powers.

As reported in the Wall Street Journal on Friday. July 2, Respol YPF SA, a Spanish company, has announced that next year it will begin drilling exploratory wells off the northern coast of Cuba, just 60 miles south of Key West. Industry experts as well as the U.S. Geological Survey seem confident that substantial deposits of crude oil and natural gas are there for the taking.

America’s oil companies cannot participate in exploiting those deposits because of our long-standing and counterproductive trade embargo against Cuba. (Can anyone identify a benefit flowing from that embargo offsetting the heavy costs imposed on me and other smokers of cigars? I doubt it.)

The point is that if the United States commits to bypassing offshore drilling at depths greater than 500 feet, we will be cutting off our collective noses to spite our collective face. Spain, China, Venezuela and other nations will continue to exploit potential reserves of fossil fuels, wherever they may be found. As a result, more of the world’s supply of crude oil and natural gas will fall into the hands of unfriendly nations.

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If President Obama’s Oval Office speech made one thing clear, it is that his administration and the activists who back it view the Gulf oil spill as simply an opportunity to advance their pre-existing agenda—which has nothing to do with cleaning up the Gulf, protecting the fragile coastal environment or fostering the region’s economy.

Although now overruled for the time being by a federal judge, the Obama administration’s May 27 order to stop all deep-water exploratory drilling in U.S. waters of the Gulf of Mexico for six months, pending the report of a commission investigating the causes of BP’s Deepwater Horizon accident, is a case in point.

Public and political reaction to the devastating oil release in the Gulf has revitalized a coalition of environmental and anti-energy lobbies that oppose not only deep-water drilling, but all offshore oil production and, in some cases, all use of fossil fuels. As usual, political opportunists have been quick to seize the moment.

“You don’t want to let a good crisis get away,” declares Athan Manuel, director of lands protection in the Sierra Club’s legislative office. The organization is urging a permanent moratorium on new offshore drilling.

Kieran Suckling, executive director of the Center for Biological Diversity, disputes industry claims that shallow-water drilling is much safer than deep-water drilling. The center wants the existing six-month moratorium extended to all offshore drilling.

Such lobbying already has born fruit. On June 8, the administration issued new safety standards for shallow-water drilling. According to Bloomberg Businessweek, “as many as 50 shallow-water drilling rigs that employ about 5,000 workers may need new permits in the next six weeks under the administration’s new review.”

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In this week’s edition of Coffee and Markets, featuring The New Ledger’s Francis Cianfrocca, we’re talking about how financial regulations will rob you of your free checking accounts, how the government is discouraging investment, and why Obama’s response to the BP spill is such a monumental failure. We’re brought to you as always by Andrew Breitbart’s BigGovernment.com and LibertyPundits.com.

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Domenech and Cianfrocca: A Presidency on the Brink

President Barack Obama made news on The Today Show when he talked about kicking some ass over the BP oil spill in the Gulf of Mexico.

If he is interested in punishing those responsible for what is shaping up as one of the worst environmental disasters in U.S. history, he should think about giving himself a boot.

While BP is ultimately responsible for the spill (and for cleaning it up), the federal government is a major player in the problem for at least three reasons:

1. It owns the property on which the oil well is located.

2. It regulates offshore drilling. And

3. In order to protect small players in the drilling industry, it capped economic damages from this sort of spill at just $75 million, a way-too-low cap that encourages risky behavior.

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We are almost seven weeks and counting into the massive oil spill wreaking havoc in the Gulf of Mexico and causing an unprecedented ecological disaster along the Louisiana coast.  Neither the owners of the well, BP America, or their contractual partners, rig owner, Transocean LTD or oil servicer, Halliburton Co., have yet been able to stop the flow, and so the duration and total damages, measured either in economic or environmental terms are yet to be known.

It should be obvious by now that getting control of the leak and, even after six weeks, limiting the disaster should be the only short-term objective of the President of the United States, federal regulators and Congress.  Finding the root cause to prevent a reoccurrence, assigning blame and allocating liability for damages can wait until all the facts are in.  As might be expected, however, all of the responsible parties have a different focus.

As far as the oil company executives are concerned, they feed us a daily dose of technological drivel, public relations statements and finger pointing.  At Congressional hearings each of the three companies blamed one another.  The truth is, since the accident occurred at a depth of almost one mile below the ocean’s surface, none of them know for sure what went wrong.  And how could they?  In an aviation disaster weeks and months go by before there is something akin to a conclusive finding, even though investigators from the airline involved and air traffic regulators are usually aided by either one or more of a black box (which offers a treasure trove of information), survivor accounts, witnesses, or air traffic recordings.  Moreover, with the nation’s contingency fee trial lawyers on the sidelines taking in every word of testimony for the soon to come class-action lawsuits and with the president publicly demanding, ex post facto, to raise the legal liability limit for the well’s owners and operators, it is a wonder they “voluntarily” testified at all.

With regard to the gulf oil spill we have no physical proof yet of what caused a cascade of problems, so why are almost all our elected officials focused on allocating blame.  Clearly, it is not for the purpose of learning from this disaster to prevent a reoccurrence.  Instead, as is almost invariably the case in Washington, a huge and important fact finding investigation is hijacked to score political points.

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Yesterday’s announcements of slitting our own throat of domestic energy production gives cause to revisit who the man is and where he wants to take us.

Rahm Emanuel among others in the Obama administration are on record asserting their philosophy that no “crisis” should ever go to waste. This mentality, of course, carries the moral hazard of promoting “crises” in the news cycle, and as an operating mentality. We have seen this among green activists (including Obama appointees) for decades.

With crises being your strategic plan for hooks to impose an unpopular and radical agenda, you might even allow crises to develop where they could have been nipped into mere incidents. Who knows.

We do know that Obama has a record of words and now deeds declaring war on all sources of energy that work, including their domestic production: shale gas, coal, oil shale, and petroleum.

Barack Obama and his gloomy band seek to force you out of your lifestyle, meaning your freedoms, all of which they find intolerable and that you cannot be trusted with. Obama even noted in a speech that, in a world where he is president, we can’t eat what we want, drive what we want, or put our thermostat where we want (other than that, you are perfectly free to do what you wish…until further notice).

His “energy czar” later added policy meat to these very strange rhetorical bones when she told U.S. News that you shouldn’t even have the right to control your own energy use. But changing that, she comforted readers, will be a savings to you. They’re saving a fortune in India and other poor countries right now, for example.

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One week ago, I shared the text of a message Interior Secretary Ken Salazar sent to all employees of his department two weeks after the BP Deepwater Horizon disaster began in the Gulf of Mexico. It was provided to me by a friend who works for DOI.

Today, I share the text of his most-recent “Secretary’s Priority Message” about the ongoing disaster which includes some decidedly anti-Big Oil rhetoric. See if you can spot it below:

From: Secretary_of_the_Interior@ios.doi.gov [mailto:Secretary_of_the_Interior@ios.doi.gov]
Sent: Tuesday, May 11, 2010 2:16 PM
Subject: Secretary’s Priority Message – Deepwater Horizon

( NOTE TO SUPERVISORS: Please ensure that all employees without e-mail access receive a paper copy of this distribution.)

Dear Team,

I write to thank you for your hard work and service to our Country. Over the last 21 days, many of you have put in long hours, with little sleep, as you help our Nation respond to the Deepwater Horizon tragedy and spill. I extend my heartfelt appreciation.

As we continue to work hard to address and resolve the oil spill in the Gulf, we must not hesitate from making changes and reforms we know are needed. This incident has made it clear that the public servants of the Minerals Management Service deserve more tools at their disposal, more resources, and an organizational structure that fits the missions that you are being asked to carry out. I am proud of the reforms we have already made together – from broadening MMS’s portfolio to include offshore renewable energy production to simplifying royalty collections – but the time has come to make even more fundamental reforms.

Earlier today, I announced to our colleagues in the MMS a set of changes that we as a Department must undertake to strengthen our oversight of the companies that develop energy in our Nation’s waters.

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