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Should Oil Companies Decamp the U.S.?

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By madamebutterfly1
June 2, 2009

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Here is a interesting rhetorical question that was posed by the Oil and Gas Journal regarding the future of US based Oil and Gas companies ... How much of the nightmare forming in Washington, DC, must come to pass before companies begin to decamp? After all, as the OGJ points out, the Oil and Gas Industry is global, and Oil and Gas companies in the U.S. "don't have to stay where they are."

As any observant reader probably has noticed, the US government's attitude toward our Industry since Barrack Obama and the Democrats took over power in the past 4 months is one that tolerates the oil and gas business only as a source of funding for economic and social reform. And even the courts are taking the Que from the new political milieu. The political environment has turned sour, and this is hazardous to the health of the industry.

In February, for example, Interior Secretary Salazar nixed 77 high bids from a sale of leases in Utah in December. Then he delayed a 5-year program for leasing of the Outer Continental Shelf. Then he canceled research/development work for a pilot plant in Colorado.

And in the courts the experience has not been salutary, either. The U.S. Court of appeals for the District of Colombia struck down ("vacated" in legalese) the current OCS leasing program, claiming that the NOOA--National Oceanic and Atmospheric Administration-- did not do a good enough job in assessing the environmental impact in deep water areas off Alaska.

The Federal budget, proposed by Obama, would stick it to the oil and gas industry to the tune of $50 billion over the next 10 years. And I could go on.

That is just, as the Oil and Gas Journal calls it, a "sample of things to come."

Madame Butterfly

p.s. Of course, I have not even mentioned the issue of "cap-and-trade" and what that may do to the refining sector. Other similarly devastating issues deal with federal controls on drilling and frac fluids --this is what some of my friends tell me. The measure, as I understand it, is being reviewed by the EPA and supported by key lawmakers, are environmentally unnecessary and are threatening not only to drilling in general but to development of unconventional gas resources -- which have been one of the reasons why we have had such a great supply of gas beyond what had been predicted in the recent past, and what has kept the cost of Natural Gas relatively low.

Again, imagine this unprecedented set of political setbacks and economic threats, not to say Hostility toward the industry, have developed in just the past 4 months. One would have to wonder how bad things will get in the next 4 years, now that we have seen a sample of this new administration's thinking. And might this not trigger an exodus similar to that of Halliburton's if the climate continues to deteriorate?