“When I’m president, there will be a whole lot more like this, not only here in the Gulf, but also off of our east and west coasts”, said McCain. “We need to drill offshore. We need to do it now. If I were president, I would call the members [of congress] back into session and tell them get back to work.”

He also attacked his rival Senator Obama, who “opposes new drilling. He said it won’t solve our problem and that it’s quote ‘not real’. He’s wrong, and the American people know it.”

The Democrats have countered by painting McCain and Republicans as a lackey of Big Oil, especially Exxon. They have launched a spoof website, entitled Exxonmccain.Com, which comes complete with buttons and bumper stickers. There you can watch videos of “McCain is a puppet for the oil industry” and “Exxon John.”

Tell us which video you like best…

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“It’s a crisis of leadership, a crisis of strategy and a crisis of what the future looks like for the supermajors” Jaffe adds. “They are like a deer caught in headlights. They know they have to move, but they can’t decide where to go.”

In a comprehensive article, today’s NYT looks at the declining influence of the international oil majors: companies like BP, Shell and Exxon.

The issue is not so much the fact that we have reached peak oil, but that the last remaining oil reserves are increasingly in the hands of state oil companies so outside the control of the oil majors.

Where they do have assets, in countries such as Venezuela and Russia, the companies are being forced to renegotiate contracts with recently emboldened national oil companies. The result is that the oil majors may be awash with cash, but they are not awash with oil.

As late as the 1970s, Western corporations controlled well over half of the world’s oil production. These companies — Exxon Mobil, BP, Royal Dutch Shell, Chevron, ConocoPhillips, Total of France and Eni of Italy — now produce just 13 percent.

“It has become really, really difficult to grow production,” Paul Horsnell, an analyst at Barclays Capital tells the NYT. “International companies have a portfolio of assets in areas of significant decline and no frontier discoveries to make up for that.”

Today’s 10 largest holders of petroleum reserves are all state-owned companies, like Russia’s Gazprom and Iran’s national oil company. “There is still a lot of oil to develop out there, which is why we don’t call this geological peak oil, especially in places like Venezuela, Russia, Iran and Iraq,” said Arjun Murti, an energy analyst at Goldman Sachs. “What we have now is geopolitical peak oil.”

The bottom line is that the oil majors are in real trouble.

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So when a host of international oil companies started discussions over short-term technical contracts in Iraq, they hoped that they would curry favour with the country for the greater prize that lay ahead: exploiting the country’s oil reserves.

Iraq wanted to sign six no-bid, short-term support contracts worth about $500 million each, but most if not all of these look like not progressing as both sides squabble over terms.

“It appears that on present form (the Iraqi government) probably won’t proceed with most of these or all of them”, Charles Ries, coordinator for Iraq’s economic transition at the U.S. embassy in Baghdad, has told reporters. (Notice its an America involved in the negotiations!).

Ries continued: “But I think that some of the companies are open to continued discussions even on relationship grounds, and some of the companies … don’t think it’s worth their time”.

Ries said the foreign firms were “lukewarm” about short-term contracts which “were never going to be hugely lucrative,” but they had been pursuing them in the hope of building a relationship with Iraq’s oil Ministry, and being seen in a good light for the larger development contracts.

Because even though the short-term contracts may not be signed, next up for discussion will be the much longer-term exploitation contracts, which will cause a feeding frenzy amongst the foreign companies. The prize is so big, you can expect huge back-room arm-twisting and secret deals… and don’t be surprised if the Americans and British come out on top.

Come on, you know who gets the spoils of war …

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Let’s quickly look at Britain. In 2005, polling by the authoritative polling company MORI found that 44 per cent of the British were very concerned about climate change. In 2008, that figure had dropped to 30 per cent.

In part informal focus group research suggests that the public is confused over the issue and the prominent voice still given to the skeptics, no more so that in the highly-misleading and factually-inaccurate polemic, the Great Global Warming Swindle.

The producer of that programme Martin Durkin continues to spout his sceptic-nonsense about how climate change is a myth etc. Well maybe Durkin should talk to the birds as well as new research has found that climate change is making British birds lay their eggs earlier in the year.

New analysis of 30,000 nests shows that birds such as the chaffinch and the robin are laying their eggs about a week earlier than in the 1960s. A similar pattern has been seen for other species, such as blue tits, great tits and swallows. Maybe the skeptics should ask themselves, how can birds alter their egg-laying patters and migratory routes because of something that doesn’t exist.

Answers please…

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There is an old saying in the world’s financial institutions that “nothing cures high prices like high prices,” and it certainly seems as true today as in the 1970s.

According to the OECD, oil demand in Western countries is set for its biggest fall in 25 years as the global economic slowdown intensifies and consumers respond to high prices.

In America, for example, the Transportation Department announced this week that Americans drove 4.7 per cent, or 12.2 billion, fewer miles in June compared with a year earlier. That’s a lot of gasoline saved. More significantly, it was the eighth consecutive monthly fall.

As consumers all over respond by driving less, and downsizing their cars world oil consumption is now growing at a significantly lower pace than had been imagined a year ago.

Moreover the Olympics is also having an effect on world oil prices as China’s decision to shut down large swaths of its industry during the Olympics to help to cut air pollution will also reduce oil demand.

So Americans can thank Michael Phelps not just for winning so many gold medals, but, also for in part reducing what they pay at the pump.

The only problem for consumers is that it won’t last. Whilst the coming recession will keep prices low for a while, all the indications are for the long-term going to be up.

Governments should also learn the lessons of the high oil prices over the Summer and be bold about disinvestment programmes out of oil, heavily promoting renewables and efficiency instead. Because what goes down, goes back up…

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Moreover, how do you reconcile trying to be green whilst exploiting tar sands? Even more bizarrely why would you try and even claim that exploiting this dirty, energy intensive fuel is in any way sustainable?

Shell tried it and has been found guilty of misleading the public. The British Advertising Standards Authority (ASA) has ruled that the company should not have used the word “sustainable” over its tar sands project. The ASA ruled that the advert had breached rules on substantiation, truthfulness and its environmental claims.

Back in February the Financial Times ran an advert by Shel to accompany its financial results, claiming that: “We invest today’s profits in tomorrow’s solutions.” The oil company explained it was harnessing its technical expertise “to unlock the potential of the vast Canadian oil sands deposits”, but then added: “Continued investment in technology is one of the key ways we are able to address this challenge, and continue to secure a profitable and sustainable future.”

The oil giant was challenged by WWF. David Norman, the WWF’s director of campaigns, said: “The ASA’s decision to uphold WWF’s complaint sends a strong signal to business and industry that greenwash is unacceptable.” Celebrating its victory, WWF today launched an ad campaign outside London’s Waterloo station stating “Shell can’t hide the environmental impact of their oil sand projects”.

I wonder what Shell is going to say about tar sands now?

err.. its dirty and polluting… somehow I doubt it.

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But this is no movie, this is reality. Everyday, even though they are meant to be sunning themselves on a beach somewhere, a handful of Republican congressmen are making pro-oil speeches to the empty cavernous House of Representatives.

The Republicans have been hounding the Democratic Speaker Nancy Pelosi for weeks over her refusal to allow a vote on new domestic oil drilling. The oil companies must be amazed that their political pals are so keen to help them they have even ditched their holidays.

Now the GOP is even plotting to shutdown the federal government next month if it cannot force a vote on offshore oil drilling. In retaliation the Democrats are now bashing the Republicans with ads linking them to oil companies.

However, U.S. House Speaker Nanci Pelosi seems to be cracking under the pressure. On yesterday’s CNN Pelosi said she would be open to a vote, if it was part of a broader debate on energy policy. “They have this thing that says drill offshore in the protected areas,” she said. “We can do that. We can have a vote on that.”

In the meantime back in a darkened room in Washington strange prayers are still being said to appease the oil gods…

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Prices have risen again as the conflict between Russia and Georgia raised concerns that Caspian supplies, especially through the Baku-Tblisi-Ceyhan pipeline, may be disrupted. But forget any short-term fluctuations, the big crunch could just be around the corner. And it has nothing to do with peak oil.

One of the questions that analysts have been asking over the last few years as the oil majors have raked in record profits, is why have they not invested more in finding reserves of oil or gas, or even in renewables rather than put it in the bank or give it back to their shareholders.

Now Chatham House, the influential British think-tank, argues that because of inadequate investment by both international and national oil companies, there will be a serious oil supply crunch, which could see the price of oil spiral to over $200 in the next few years. This spike could “have serious policy implications with long-lasting effects on the global energy picture”.

As the report notes: “Most conventional forecasts expect a very large increase in the production of liquid fuels. However, these forecasts simply assume this will be forthcoming.” Not so. It argues that, although the oil may be there, “below-ground oil resources will not be converted into producing capacity”. The only event that will stop this happening is a collapse in the demand for oil and this is unlikely.

The Chatham House report author, Paul Stevens, who is himself a consultant to the oil industry and governments, argues that more government intervention into the market may be the answer. “Governments must intervene to a much greater extent than they have so far been willing to do this Century”, he argues.

Although the history of government intervention in the energy markets is not a good one, the combined risk of catastrophic climate change, and a forth-coming energy crunch should be enough for a radical energy plan. It should include not facilitating getting oil out of the ground, but keeping it there. Plain and simple.

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This answer made sense to me initially, and its certainly no shocker to think of the environmental community as somewhat ineffective, but actually, it turns out not to be true.  A great overview of the issue just posted by the Yale Forum backs up a poll from last week conducted by The Wilderness Society.

It turns out that its really all about how you ask the question.  If the choice is between investing in clean energy (wind, solar, tire gauges) and offshore drilling, then clean energy wins coming and going (76% to 19% in the TWS poll).

So the real question, again, is why has the mainstream media so uncritically reported the polls in which drilling is presented as the only option to lower gas prices - despite the fact that there is no way drilling will have any significant impact on the price of gas.

And I suppose, its still worth asking why the Obama campaign has given proponents of drilling a leg up, by conceding even a little.

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This just in from the Public Campaign Action Fund via the Washington Post: Oil and gas industry executives and employees donated $1.1 million to McCain last month — three-quarters of which came after his June 16 speech calling for an end to the ban — compared with $116,000 in March, $283,000 in April and $208,000 in May.

McCain reversed his previous opposition to offshore drilling immediately before  a series of fundraisers with energy industry executives, and the day after the speech he raised $1.3 million at a private luncheon and reception at the San Antonio Country Club, according to local news accounts.

“The timing was significant,” said David Donnelly, the national campaigns director of the Public Campaign Action Fund, a nonpartisan campaign finance reform group that conducted the analysis of McCain’s oil industry contributions. “This is a case study of how a candidate can change a policy position in the interest of raising money.”

Be sure to check out Follow the Oil Money’s Vote Tracker to reveal the relationship between your representative’s votes on key issues and how much oil money they have received since 2000.

Note: Our online database does not yet include the June “surge” in McCain’s oil money.

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