My rebuttal to a rebuttal on energy plans

From my co-worker who says he's a "moderate" in response to my energy policy comparison:

"The good news is at least this topic is getting some serious attention. Our lack of a robust energy policy is not only short sighted it is a huge national security issue.

"Some rebuttals:

"Gov. Palin calls oil company “windfall profits” tax a “clear and equitable share” tax. Last year she gave Alaskans an extra $1200 due to increased oil revenues. I guess McCain will put a stop to this?"

My reply:
Actually, the extra $1200 was to offset higher oil prices. Alaskans have received money from the state’s oil royalties since oil was discovered in 1976 on the North Slope. McCain can’t put a stop to this, since it’s a state decision, not a federal one (and sharing mineral revenue with the population is in the Alaskan Constitution). I’m okay if Obama wants to give me $1000. I’m not sending it back, but I think this move on the federal level is pandering for votes. At least in Alaska, where it’s cold and home heating oil is expensive, they can make a rational argument for giving the people more, in a one-time payment. Plus, what Palin did really isn’t the same as what Obama is proposing, as the source of the money is not a “windfall profits tax.” My understanding of ACES is that the money is coming in anyway, due to a restructuring of the tax, and this $1200 is just going to the people of Alaska, vice the state treasury. My reading of the facts could be wrong, but I think this article gives some explanation. Also, you can look at the actual description of the "Alaska Clear and Equitable Share" tax program on the State of Alaska’s web site.

He goes on:
"Higher MPG standards will improve our national security by reducing our dependence on foreign oil and will reduce emissions"

My reply:
I think I agreed with that statement. I also posited that an unintended consequence of higher fuel mileage standards might be to cause the prices of smaller vehicles to increase and lead people to hold on to their less efficient cars longer. McCain says he wants to more effectively penalize automakers for failing to comply with existing CAFÉ standards. Sort of like immigration, what’s the point of new laws if we don’t enforce the existing ones?

He continues:
"McCain’s $300m prize is just a gimmick since many companies are already working on better batteries and they will make a bunch of money on a market hungry for this technology. But hey, go for it dude."

My reply:
And an extra incentive might not be enough to spur development by some new entrepreneur? This has worked in the past in the aviation industry, why not try it with battery technology? Sure, it’s a gimmick, but $300M is small gimmick.

He says:
"The issue with oil company land leases is why do you want more when you aren’t using the ones you have?"

I say:
Oil companies pay for these leases, if they can’t get oil out economically, or they find that the reserves on the leased land are not worth the effort, they don’t drill. Plus, the bigger problem is that much of the known oil reserves are not on those leased lands, and many of the leases are in deep water areas, while the oil companies would prefer to drill in shallower-water areas that are not available to them now (these are parts of the acreage being held back by Congress). 97% of offshore areas are not leased, and 94% of onshore areas. How much oil do those contain, and when can we tap it? The clock won’t start at all if the Feds don’t move on leases.

Congress is welcome to say “Hey, Big Oil, you have leases that may be potentially valuable, but they will cost you more money than drilling in the other areas we’re holding back, but, hey, at $135/bbl, you can make it profitable, so go do it, pretend these other areas don’t exist.”

Congress can say that, and they’re welcome to, but I don’t think it’s a politically sound judgement for them. But, hey, they’re democrats, they can do what they want.

He says:
"The whole “drill here, drill now” thing is another gimmick since: 1) It will be years before any new oil sources hit the market,"

I say:
The clock ticks with every passing day….but, if you believe that oil speculators have anything to do with the run-up in prices, then signaling an intent to drill , without even taking one bbl of oil out of the ground, would have an impact on speculators(and, indeed, it has). The fact that something takes time used as a reason NOT to act? Is this conversation at your house, Mama: “Honey, I want to have a baby.” Daddy: “Oh, honey, I’m sorry, but it takes 9 months, when they have the technology to deliver that baby tomorrow, then we’ll do it.”

He says:
"2) All the best estimates are the US has only a small fraction of the reserves compared to our demand"
I reply:
We don’t have to satisfy all our oil needs to have a measurable impact on the market. Granted, we have to add to the world market a significant amount of oil to move the price meter, but we don’t have to be self-sufficient, though it would be nice to be able to theoretically say we could supply all of our energy needs, which is what we’re shooting for anyway Why not get the oil that is recoverable out as soon as possible, while we pursue other avenues – cellulosic ethanol, natural gas, biodiesel? What’s the harm in that? Those technologies will not be widely exploited overnight, either.

He says:
"3) New US oil supplies will go on the open market to the highest bidder so US oil will not necessarily go into US cars."

I say:
The highest bid will be less with more supply. But, I agree (I think) with your point, the thought that we’re going to close the walls and be self-sufficient and charge $0.25/gal is idiocy. But, we can affect the price of oil by adding to the supply.