Cartoon 810: No One Asking?

During the last Administration the government auctioned off a new wave of offshore energy leases. There was a muted cry about this continuing practice when energy companies had hundreds of leases they had acquired and not used. If you follow the money, you find the tax payers financed those purchases under the guise of encouraging American energy independency.

For decades energy companies have opted to invest in energy overseas. There were two main reasons. First, that it was more cost effective. The domains of the energy were often in countries where the ruling elite could be bought through contractual arrangements. Second, the profits could be more easily disguised in offshore locations and shielded from American taxes. At the same time they could bolster their American domestic reserves as the ultimate hedge.

Things were finally set in 2001. Their fantasy was within reach. The Congress was controlled by their Hessians and the Administration was an effective arm of Halliburton. They pointed the American military might at the third largest oil reserves. It was just to be the start. Their next target would be another large reserve, Iran and finally pivot to Venezuela. Visions of trillions of dollars in wealth danced in their heads.

Problems occurred. First, they became bogged down in Iraq. The best the energy barons were able to do was cut an agreement with the Kurds. The agreement was clearly against American law and yet no one was ever indicted or prosecuted.

The assumption of an all powerful modern military that could move any obstacle aside was dispelled. The modern military was victimized by relatively low technology of home made mines and spontaneous opportunistic attacks. Next America became increasingly mired in Afghanistan, like many powerful nations before it. Finally, America was drawn into Pakistan. The whole middle east situation was clearly a “no win” scenario. The icing on the cake was the Arab spring. It rose people up that clearly remembered America’s support of their previous tyrants. The big question was how to extradite America from its military adventurism without appearing defeated.

The energy barons suddenly found themselves in a position to need to exploit domestic reserves to maintain Wall Street valuations. It was not an instant nor universal decision. It was more a case of breaking ranks. Once that happened, a stampede ensued. The jury is still out on a potential Arctic drilling bonanza.

That is the story of land based activities. There is still little activity with those off shore leases. But there is no rush, the tax payers are still funding them, even if they are not being used.