A congressional subcommittee struck down an important bill, which could have opened up reserves worth billions of barrels of oil and trillions of cubic feet of natural gas, on Wednesday, Cramer said.
The measure would allow drilling between 50 miles and 200 miles off the U.S. coastline. Estimates for the reserves there were as high as 8.5 billion barrels of oil and 29 trillion cubic feet of natural gas, in addition to potential undiscovered resources of 86 billion barrels of oil and 420 trillion cubic feet of gas.
Needless to say, Cramer’s a bit perplexed. Especially since increased supply is the only way to bring oil prices down from almost $137 a barrel. American consumers need that. So do American businesses. And not just the users of oil, but those service companies involved with bringing it to market. The measure would have been a boon to Transocean , FMC Technologies, National Oilwell Varco and Schlumberger. Not to mention, Cramer’s favorite nat-gas names: Apache, Anadarko, Chesapeake, Devon and others.
Rep. John Peterson, a Republican from Pennsylvania, had high hopes for the bill. He was “surprised” it didn’t pass, he told Cramer today. “There’s a lot of members of the committee that were learning toward voting for it,” Peterson said. “There were some who had voted for it in the past.” But in the end “Pelosi power” prevailed, the congressman continued, referring to Democratic majority leader Nancy Pelosi of California.
“She has great control of her caucus,” Peterson said. “And when they decide not to vote for something, they all vote no. I was disappointed in that.”
The bill has two more chances to pass. While it did not make it past the Subcommittee on Interior and the Environment, the full Appropriations committee still has a chance to push the bill through next Wednesday. Then there’s the floor of the House.
“It’ll be interesting to see if all the Democrats will follow her lead there,” Peterson said.
What’s at stake here? America’s dependence on foreign oil.
“We’re really lagging. We’re not producing,” Peterson said. “We are now 67% dependent on foreign [oil]. And every time we vote not to produce energy, we are now more dependent on foreign. And those same people say, ‘We must wean ourselves away from foreign dependence.’ Well, we’re going to be 80% foreign dependent if their policies prevail.”
The outer continental shelf was blocked off from drilling 27 years ago. With oil and gas prices so low then, it might have made sense. But with the price per barrel for oil near $137 now, it’s “foolish policy,” Peterson said. U.S. companies could be forced to send business overseas where prices are as low as a tenth of what they pay here. Case in point: Dow Chemical. Back in 2002, that company paid $8 billion a year for natural gas. Now Dow is paying $8 billion a quarter.
Another factor worth mentioning: The U.S. used to hold 8 million to 10 million barrels of oil for emergencies. “That’s not there today,” Peterson said. So if a major hurricane strikes, a oil-producing country topples or terrorists attack the supply system, “we’re talking $200 tomorrow for prices for oil.”
Cramer’s call: “We cannot see lower prices until we do far more drilling. But the big places to drill are off limits. Rep. John Peterson makes sense. I think you should write your congressman and say that.”
Jim's charitable trust owns National Oilwell Varco.
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