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. At one point during the last blogger conference call with representatives from the oil and gas industry (American Petroleum Institute-API), the conversation shifted to the amount of lead time needed from proposal to study, drill, and bring product to market and whether, in the face of promised new alternatives, it was even worth the bother to start. You know- with politicians like Al Gore promising a total shift away from carbon-based fuels within ten years… Additionally, many claim that the length of time means no short term drop in prices…
MR. MCQUAIN (Q and O): Well, I think that’s a red herring. And that’s what I’m trying to figure out how to get around. I mean, you know, the bottom line is had we started 10 years ago, ANWR would be online. You know, everyone knows that. But what they’re looking for is some specificity here on when somebody starts throwing dates around or when something is going to come online. What does that mean and how do they know?
MR. CAVANEY (API): But the one thing that you can probably feel pretty assured would have some impact on the market is if the government announced a policy change on access, broad policy change, that would affect the market right away, even though not an additional drop of oil would come out of the next day. But it would be reacted by those that watch the market. And then, the process that we just described, the multi-year process, would begin not only in just one circumstance, it would probably begin in multiple circumstances because people would now be able to access some of the attractive things they’ve had their eye on but couldn’t touch.
MR. STYLES (Energy Outlook): But can I just add an interjection here? And, you know, I’m not of a conspiratorial mindset at all, but I think that this issue is more significant because it relates to some of the misunderstanding that the surveys show about people’s expectations about how quickly renewable energy is going to ramp up. Because when you combine these two issues, the time lags to bring on oil from areas that are currently off-limits, whether it’s ANWR or other parts of the offshore or whatever, when you overlay that with an expectation that within 10 to 15 years, we’re going to be getting most of our energy from renewables anyway, it creates this sense among, I think legislators and the public, that it essentially means we don’t need this oil. It’s game over for the oil business. We’re on the threshold of the next big thing. You’re just too late with this.
MR. CAVANEY (API): No, let’s – I know that some people have that feeling. But let’s just – there are some retorts that you can come back on that. To bring almost all of those alternative energy sources on, they’re going to encounter some of the very same permitting problems and not-in-my-backyard problems that you encounter in the oil business.
For example, if you’re going to build wind farms, they’re typically – first of all, they’ve got to be permitted in remote areas, so they have to go through some of the same kind of problems that we do when we’re out in remote areas. But equally as important, they’ve got to get the energy from where it’s produced to where it’s going to be consumed, which means they need to get right-of-ways, first of all, granted. And then, they need to get the permits to go through that. So when we think of those alternative energies, we think of them like flipping a switch and it’s on and it happens. But they’re going to be on the same queue that we’re in, going through permitting, having to go back out to the public, and also running into some of the problems with the capacity to produce the equipment and the material that is needed to get them from here to there.
The nuclear industry is seeing this in spades. And also, we’re seeing that in many cases with some of the large utilities that are trying to do things, same kinds of issues we’ve just talked about.
MR. FELMY (API): And if I could just add one thing, I think you’re absolutely right, Geoff – I think it was Geoff – that the disconnect is really profound, because we hear constant discussions that we want to spend money on alternatives to help the gasoline market. Well, that’s a huge disconnect because most of the alternatives they’re talking about are electricity. We do not have a fleet of electric cars and we will not have a fleet of electric cars for a significant amount of time. And so, this whole argument is just a huge disconnect. And I share with you – I agree with you in terms of how can we bring this stuff on, and then Red’s points in terms of infrastructure of any type are a challenge.
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