The Truth About Leasing on the Outer Continental Shelf

Capitol Hill’s opponents of domestic energy production took to the stage yesterday to decry “Big Oil” again, not for its profits, but for “stockpiling” energy leases instead of producing them. In reality, it’s the government that is stockpiling leases.

This group of politicians stated that oil companies hold the rights to millions of acres of federal leases that are not currently producing energy. This is certainly true, but not because of the sinister reasons they would have you believe. The following may help provide the insights the Members of Congress neglected to provide yesterday.


The Claim: “Increased domestic drilling activity has not led to lower gasoline costs”

This may sound compelling at first, but “drilling activity” has nothing to do with the price at the pump. Supply - or actual energy production - is what influences the price at the pump. While it’s true that exploratory and development drilling has increased across the board since 2000, the important fact is that actual domestic energy production has fallen to levels not seen since 1947 during the same period.

The Claim: “Energy companies are not using federal lands already open to energy development”

Some lawmakers state that oil companies currently hold millions of acres of leases that are not producing. This is true, but not for the reasons politicians would have you believe. It seems the lawmakers would have us believe that oil and gas exist beneath every acre of every lease the government issues; that obtaining a lease was a virtual guarantee that the lease holder would strike oil and gas, or both.

Obviously, that’s absurd. If it weren’t, I’d be on line at the Department of Interior trying to buy an acre or two for myself.

Unfortunately, there are no guarantees. Oil and gas might be found during the exploration phase of the lease, or it might not. This process, and those that involve satisfying all of the government requirements, defending against frivolous environmental lawsuits, and preparing to drill if energy is found can take a long as a decade.


The Truth & The Laws

Energy companies cannot “stockpile” leases (even the ones that are found to contain no oil or gas) in order to drive up prices:

• The Mineral Leasing Act (for onshore production): Section 17(e) stipulates that an oil company must have a producing well within 10 years or surrender the leases. Source: 30 U.S.C. 226(e)
• The Outer Continental Shelf Lands Act: (for offshore production): Stipulates that an oil company must produce energy between 5 to 10 years (in the government’s discretion) or surrender the lease. Source: 43 U.S.C. 1337(b)


The Hard Facts:

• 97 percent of Federal offshore areas are not leased.
• 94 percent of Federal onshore areas are not leased.


Getting Blood From a Turnip

After the offshore drilling moratorium was implemented in 1982 the Department of Interior could only issue leases for areas that had already been offered/leased before, or those areas with little or no economic energy potential. The exception was when Congress provided incentives to invest in Ultra Deep Waters in 1995 to stimulate production in areas that were previously too deep for our technology to reach.

Interest in American energy leasing declined after the moratorium. It remains low for the same reasons. If Congress were to open new areas to production, leasing would increase and so would domestic supplies of energy. Until then, the U.S. will simply be continuing its attempt to squeeze blood from a turnip.

Transportation Taxes Are Up, but Traffic Congestion is Worse

by Michael Ennis, Director, Center for Transportation Policy and Justin Bryant, Research Intern

In Washington, we pay about 50 different state taxes and fees into the State Transportation Budget each year.

In the 1999-2001 budget, Washington residents paid $2.65 billion in state taxes and fees to fund transportation. In the current biennium, residents are paying about $4.18 billion in transportation tax revenue, a 51.2% increase over the last nine years. That means the buying power of Washington State Department of Transportation (WSDOT) has grown significantly in nine years. To put this in perspective, inflation over the same time period rose only 20%.


Tax Burden per Family

There were about 2,271,398 families living in Washington State in 2000. This means each family paid an average of $1,217 in state transportation taxes and fees during the 1999-2001 biennium. Today, Washington family’s shoulder an average transportation tax burden of $1,630. That is a 34% increase in nine years.

These figures do not include local or special district transportation related taxes or fees. For example, families in the Sound Transit district in Pierce, King and Snohomish County pay approximately $200 more in transportation taxes each year.

More spending has not meant congestion relief

Washington officials have nearly doubled the burden of state transportation taxes and fees in the last nine years. On a per capita basis, families are paying a third more in these taxes than they did in 1999. But with all this new spending, are Washingtonians better off?

Despite a 51.2% increase in state transportation taxes and fees, and a huge rise in WSDOT’s buying power, traffic congestion continues to worsen. According to the Washington State Department of Transportation, the daily average of vehicle hours of delay on all state highways in 2003 was 82,200 hours. In 2006, the average rose to 103,700 hours, a 26% increase in just four years.

Traffic congestion in the central Puget Sound has also increased. In 2003, the average weekday vehicle hours of delay on the five major commute corridors (I-5, I-90, SR 167, I-405 & SR 520) was 13,250 hours. In 2006, delay in the same five corridors jumped to 23,330 hours, an increase of 76%.


Conclusion

Since 1999, state transportation taxes, not counting Sound Transit or local transportation agencies, have risen sharply, more than double inflation, yet traffic congestion has continued to get worse. Washington Policy Center has recommended five practical transportation principles for improving traffic flow in communities across the state. Our state’s leaders should return transportation policy to a focus on traffic congestion relief, and use their increased buying power to get Washington drivers moving again.

Michael Ennis is the Director of the Center for Transportation at Washington Policy Center. Justin Bryant is a student at the University of Washington and served as an intern at WPC. WPC is a non‐partisan public policy research organization in Seattle and Olympia.

Democratic National Convention Stumbles into Parody of Food Sustainability

The National Restaurant Association has taken note of the green guidelines put out for food service for the Democratic National Convention in Denver this summer. They are so restrictive that it is not clear food companies can even bid, for example, asking that wait staff not drive to the events; nothing fried, and 70% of each meal locally sourced.

I don't think these guidelines will actually impact the amount of shrimp eaten in Denver this year -- but someone has clearly lost their way and stumbled into a parody of food sustainability.

Washington State Attorney General Rob McKenna's June "Must Read"

Greetings,



Hopefully, you had the opportunity to spend time with family and friends over the Memorial Day weekend. In case you hadn’t heard, the extreme heat wave that hit the West Coast just before the holiday wasn’t the only big recorder-breaker for our state. Here at the AGO, we reached a record-breaking settlement with a drug maker that brings $1.6 million to our state as part of the largest multistate consumer protection settlement involving the drug industry in U.S. history!



Other consumer protection highlights at the AGO over the past month were free shredding in Bellingham, outreach to Eastern Washington manufactured homeowners and landlords, a multi-state $9.5 million settlement with one of the nation’s largest pharmacy benefits management companies, and another spyware victory.



And, while it is typical that much of our work here is focused on protecting children, this past month we’ve been exceptionally busy on that front.



Supporting national safe child product standards

I recently urged members of Congress to adopt legislation that would strengthen the ability of state attorneys general to protect consumers from lead-tainted products. Moreover, the Vermont Attorney General and I teamed up to recruit attorneys general representing the other 48 states, the District of Columbia and Guam in submitting this letter to Congress requesting changes to the Consumer Product Safety Act that would enhance our ability to protect consumers from hazardous materials.



Partnering to prevent child abductions

Two weeks ago, I joined Washington’s Communities Against Predators in sharing tips for parents to improve child safety and prevent child abductions. The Attorney General’s Office partnered with Communities Against Predators as part national Safe Child Week, providing a “Tip of the Day” for each day leading up to Missing Children’s Day on May 25. Our goal was to raise awareness about missing children and provide parents with practical information on some basic precautions we can all take to help keep our children safe.


Washington State PTA’s “Friend of Children” Award

During the Washington State PTA’s 95th Annual Convention in SeaTac in May, I was honored with the PTA’s “Friend of Children” Award. It is the highest award bestowed by the PTA, and it is presented to a group or individual performing outstanding work on behalf of children throughout the year. To be recognized by an organization as outstanding and dedicated as the Washington State PTA, for my work and the AGO’s work on behalf of our state’s children, is a great honor. The award will always be among the most meaningful recognitions I have received as Attorney General.



Raising awareness about the importance of video game ratings

After receiving complaints from consumers concerned about violent and sexually explicit content in popular video games, we reminded parents about the importance of reading video game ratings. Washington state law requires retailers to inform consumers about video game ratings, which are designed to provide parents with the information needed to decide which games are suitable for their children. Our goal is to raise awareness among parents that some of the most popular video games on the market today are rated “Mature” and may contain extreme violence, graphic sexual scenes and other content not appropriate for children.



Teaming with attorneys general nationwide to improve protection of children online

Also in May, we announced that Facebook has agreed to take significant steps to better protect children on its Web site. I joined attorneys general nationwide in signing an agreement with Facebook, in which they emphasize their shared goal of protecting children from inappropriate content and unwanted contact by adults. The agreement is similar to one that MySpace reached in January with 49 states and the District of Columbia, and demonstrates that Facebook shares our concerns about the safety of children and teens online. My Consumer Protection team has been heavily involved in negotiating and drafting these agreements, and they have done an outstanding job.



Educating LaConner students about the dangers of meth

LaConner Middle and High Schools were the latest stop on our “Operation: Allied Against Meth” education tour. Teaming again with Lead On America’s Travis Talbott and Jamie, a young recovering meth addict, we presented 300 more students with information and warnings about the dangers of meth, and the damage it can do, not only to their bodies, but to their lives, families and communities. To date, we’ve reached nearly 30,000 students across Washington at over 50 high schools.



Looking ahead

We’re continuing to vigorously defend Washington’s top-two primary system against yet another round of legal challenges. Although the U.S. Supreme Court, in its 7-2 decision, restored the top-two primary system in March, the political parties are now asking the federal courts to invalidate the new system. Meanwhile the Secretary of State is moving forward with plans to implement the top-two primary, which was approved in 2004 by nearly 60% of the voters. We remain confident that we will successfully defend the will of the voters against these latest legal challenges, just as we did when I personally argued the case before the Supreme Court on October 1st.



Sincerely,

Rob McKenna

Attorney General

University of Washington Climate Impacts Group and NRDC Set Aside Science in Favor of Misleading Statistic

Claim

“Pacific Northwest temperatures are rising faster than the global average.” Snover, A. K., P. W. Mote, L. Whitely Binder, A.F. Hamlet, and N. J. Mantua. 2005. Uncertain Future: Climate Change and its Effects on Puget Sound, http://www.cses.washington.edu/db/pdf/snoveretalpsat461.pdf (Ac¬cessed May 24, 2008) p. 6

“The American West has heated up even more than the world as a whole. For the last five years (2003 through 2007), the global climate has averaged 1.0 degree Fahrenheit warmer than its 20th century aver¬age. RMCO found that during the 2003 through 2007 period, the 11 western states averaged 1.7 degrees Fahrenheit warmer than the region’s 20th century average—which represents 70 percent more warming than for the world as a whole.” Rocky Mountain Climate Organization and the NRDC, “Hotter and Drier: The West’s Changed Climate,” March 2008, http://www.rockymountainclimate.org/website%20pictures/Hotter%20and%20Drier.pdf (Ac¬cessed May 24, 2008), p. iv

Facts

The statistic is meant to sound ominous. Temperatures in the American West and the Pacific Northwest are rising faster than the world as a whole. Readers are led to believe that the impacts of climate change will be worse here than almost anywhere else and that we need to be leaders in efforts to reduce greenhouse gas emissions.

It is a statistic cited by both the University of Washington Climate Impacts Group and now the Rocky Mountain Climate Organization (RCMO) and Natural Resources Defense Council (NRDC) in reports advocating strong political steps to combat climate change.

Both groups should know, however, that the statistic is totally meaningless when assessing the local impacts of climate change. Land warms more quickly than water and since the world is mostly water and the Pacific Northwest and the American West are mostly land, temperatures will always increase more quickly there than the world as a whole. In fact, when world tempera¬tures are decreasing, temperatures over land fall more quickly too.

The fact that both groups would use a statistic they know is misleading shows either that they know little about world temperatures and climatology or that they are willing to set aside science for the sake of politics.

Comparing Ocean and Land Temperature Trends

To understand the trends in world temperature, the National Climatic Data Center tracks the average “temperature anomaly” for each month. The temperature in any month is compared to the “Global Mean Monthly Surface Temperature” calculated from the 20th century. Differences between a month’s temperature and that average are identified as the “anomaly” to determine whether a month was hotter or colder than the 20th century average.

Calculating this involves combining the data for ocean temperatures and land temperatures. Ocean temperatures range from an anomaly of 0.09 degrees to 0.56 degrees Celsius. The standard deviation of ocean temperatures is 0.11. Land temperatures range from -0.52 degrees up to 1.84 degrees Celsius. The standard deviation of land temperature is 0.41.

This means that during any warming period, land temperatures will always warm more quickly than the world at large because 70 percent of the Earth is water. Thus, saying that any area of land is warming more quickly than the world in general is something that is always true.

In fact, the data from the RCMO and NRDC show this. In their chart showing the temperature increases for various states it be¬comes clear that the farther from water a state is, the greater the warming.

Ignoring Cooling Trends

This also works in the other direction as well. From 1990 through 1993, the world temperature anomaly for the year fell by 0.14 de¬grees. By comparison, the land temperature anomaly fell by 0.32 degrees Celsius, more than twice the rate of the worldwide temperature decline.

If the UW Climate Impacts Group or the NRDC had chosen that time span, they would have found that temperatures in the Pacific Northwest and the American West were declining faster than the worldwide average. In that case, would they have argued that climate change is less a problem here than elsewhere?

Further, by ending their research in 2007, the NRDC missed some of the largest downward trends in temperature anomaly. For instance, January 2007 had a temperature anomaly of 1.84 degrees Celsius. January 2008, on the other hand, was near zero, at 0.05 degrees.

The NRDC and UW may argue that while land temperatures are more variable, this still means that climate change is a greater threat than worldwide temperature averages make it seem be¬cause they would understate the risk on land. First, if that is what they meant, that is what they should have said. It isn’t, however.

Second, while climate alarmists note that temperatures over land are increasing faster than the average, they don’t mention that ocean temperatures are rising more slowly. In an effort to raise the spectre of sea level rise, they don’t want to note that ocean temperatures have increased only slightly. If they are going to claim that risk on land is higher, they are also obliged to say that the risk to the ocean is smaller. That isn’t correct, however, just as the risk on land isn’t higher because temperatures there have higher variability.

Finally, both organizations should know the truth behind this statistical manipulation. They understand that it is misleading. Yet, both organizations decided to include the claim, and the NRDC made it the highlight of their report. Their willingness to publicize a political statistic demonstrates that their position on climate change is not based in science.

Costs

Decision makers need correct data to design strategies that address environmental challenges without creating unintended consequences and others costs that outweigh the benefits of the strategies. Misleading statistics designed to exaggerate the threat of climate change are intended to over-allocate resources to that problem, by spending too much money and receiving too little benefit. Some scientists and activists, reflecting their own values, manipulate statistics to mask the true costs of the problem.

This has another dangerous consequence: reducing the reliability of scientific judgment. As the science of climate change is increasingly politicized by scientists and activists, the ability to know what data are reliable becomes increasingly difficult. The blurring of fact and opinion increases the unreliability of policies, increasing the risk that they will have high costs and few benefits.

The fact that the same statistical sleight-of-hand is being used by the UW Climate Impacts Group and a highly political activist group like the Natural Resources Defense Council should serve as a warning about how politicized the science of climate change has become. As policymakers become increasingly uncertain about the data they are receiving, it is wise to take a step back and add a measure of additional caution before making costly policy decisions.