American - the Land of Never Addressing Anything Until its a Full Blown Emergency

Folks, if you think this food and energy thing is bad, just wait 10-15 years out when we actually have to address Medicare and Medicaid. [May 23: David Walker on CNBC this Morning] Would the fixes be painful now? Yes. Will they be many more times painful in a decade's time? Yes. But until the wheels begin to fall off, we won't address it because its politically inconvenient....

Case in point - now we have both McCain and Bush calling for offshore drilling.... hmm, interesting concept; sounds very good to get on this bandwagon at crude $135 instead of say crude $40. (these are people who are STILL fighting off solar and wind subsidies even these past few weeks, while coming to the public and saying we feel your empathy about higher prices - hypocrites) Much better to get on our knees and kiss the behind of Saudi Princes I say ...

• President Bush urged Congress on Wednesday to end a federal ban on offshore oil drilling and open a portion of the Arctic National Wildlife Refuge for oil exploration, asserting that those steps and others would lower gasoline prices and “strengthen our national security.”
• Mr. Bush sought to take full political advantage of soaring fuel prices by portraying Republican lawmakers as imaginative and forward-looking and the Democratic majority in Congress as obstructionists on energy policy. (lol - sick really, from the administration who developed energy policy behind closed doors with oil company CEOs, and would not allow the minutes to be released)
• Mr. Bush said. “Now that their opposition has helped drive gas prices to record levels, I ask them to reconsider their positions. If Congressional leaders leave for the Fourth of July recess without taking action, they will need to explain why $4-a-gallon gasoline is not enough incentive for them to act.” (hurry up January 2009, hurry up)
• The president’s move to end the ban on offshore drilling reverses his longstanding position on the issue. (oh, was that in the speech? I thought it was the Democrats opposition that caused all the issues? Shouldn't he have started the speech with 'My own opposition has helped contribute to these issues...')
  
• The party’s presumptive presidential nominee, Senator John McCain of Arizona, used a speech in Houston on Tuesday to say he now favors offshore drilling, an announcement that infuriated environmentalists who had long viewed him as an ally. Florida’s Republican governor, Charlie Crist, immediately joined Mr. McCain, saying that he, too, now wants an end to the ban.

Now before I go any further, let me make it clear to newer readers I don't favor either party - they both are full of (unflattering term here) interspersed with a few good souls who get lost in the morass. Please drill away but please could we have a friggin solar subsidy so we can move from 10 years behind Germany to say... 8? Manhattan Project for Energy? Wind farms? Solar farms? Nuclear? Geothermal? Stop boondoggles of ethanol? Please? Sell to Republicans as a "national security issue" and sell to Democrats as an "environmental issue". Please? Work together to solve anything in this country? Try?

Anyhow, the problem when you are a decade behind a problem, is the rest of the world with progressive governments has moved on. See there is a global competition for resources - even man made resources - say oil rigs to do said offshore drilling. Even Mighty Petrobras (PBR) is stalling on some projects due to a lack of deep sea oil rigs [May 15: Petrobras Hordes the World's Deep Sea Water Drillers] So we are going to show up out of the blue and like magic drillers will be available to us. Got it! And oh yeah, it's going to take 5 to 7 years to really ramp up any serious production if we started today. And we won't be starting today - we will argue about it for another election cycle. So look for meaningful results... in a decade. As opposed to if we started a decade ago - and we'd be bearing the fruits now (right Brazil?) Meanwhile, we'll all suffer from the charade that is the political system. NYTimes weighs in on the deep sea oil driller shortage:

• As President Bush considers repealing a ban on drilling off most of the coast of the United States, a shortage of ships used for such drilling promises to impede any rapid turnaround in oil exploration. Slow growth in oil supplies has been a major factor in the spike in oil and gasoline prices.
• In recent years, a global shortage of drill-ships has created a critical bottleneck, frustrating energy company executives and constraining their ability to exploit known reserves or find new ones, at a time of soaring demand.
• The world’s drill-ships are booked solid for the next five years. Some oil companies have been forced to postpone exploration while waiting for a drilling rig, executives and analysts said.
• Demand is so high that shipbuilders, the biggest of whom are in Asia, have raised prices since last year by as much as $100 million a vessel to about half a billion dollars. (ouch - remember the steel shortage we talk about every week as well; costs through the roof to build anything to do with steel)
• “The crunch on rigs is everywhere,” said Alberto Guimaraes, a senior executive in charge of developments in the Gulf of Mexico at Petrobras, the Brazilian oil company that has discovered some of the most promising offshore oil but has been unable to get at it.
• As a result, drilling costs for some of the newest deepwater rigs in the Gulf of Mexico — the nation’s top source of domestic oil and natural gas supplies — have reached about $600,000 a day, compared with $150,000 a day in 2002.
• Already, 16 new drill-ships are scheduled to be delivered to oil companies this year — more than double the number delivered over the last six years combined. In fact, 75 ultra-deepwater rigs should be delivered from 2008 to 2011, according to ODS-Petrodata, a firm that tracks drilling rigs.
• Robert L. Long, the chief executive office of Transocean, the world’s largest drilling company, said he has nine deepwater rigs under construction, eight of which are already under contract for periods ranging from four to seven years once they leave the shipyards. He expects to receive the ships between the beginning of 2009 and the end of 2010.
• Transocean believes the deepwater market will continue to be constrained until at least 2012. Over three-quarters of the drill-ships currently under construction have already been contracted to oil companies eager to benefit from triple-digit oil prices, Mr. Long said.
• Petrobras, whose full name is Petróleo Brasileiro, is expected to drive much of the growth in the booming new market. The company has outlined an aggressive program to increase its drilling capacity, and plans to contract or build 69 deepwater drill-ships by 2017.
• Petrobras has only three rigs capable of drilling in waters that exceed 6,500 feet, like the sites of the new fields
• But drilling constraints are not the only problem facing international oil companies, which are seeking to expand at a furious pace after a decade of underinvestment in the 1990s. They have also had to contend with a doubling of development costs across the industry in the last five years, more acute competition for energy resources, shortages in steel, engineering and manufacturing capacity, and pressures posed by an aging work force.
• Most new orders for drill-ships have gone to Asian shipyards. Companies in Singapore and China have benefited, but South Korea’s big three shipbuilders — Samsung Heavy Industries, Daewoo Shipbuilding and Marine Engineering and Hyundai Heavy Industries — have gotten the bulk of orders for the most complex and expensive types of vessels. (sounds like some good investments if we could get to them) “The market for offshore exploration is now the hottest sector in the global shipbuilding industry,” said Lee Jae-kyu, shipbuilding analyst at Mirae Asset Securities in Seoul.
• A big challenge in deep-sea drilling is to stay over the same spot on the sea floor even as the vessel is buffeted by strong winds, currents and waves. Because water depths can reach up to 10,000 feet, far too deep for traditional rigs that are moored to the seafloor, ships like the West Polaris rely on high-speed computers that use global-positioning satellites to control an array of six swiveling propellers on the hull’s bottom.
• Last month, Samsung announced it had received a $942 million contract to build an even hardier type of drill-ship made specifically for Arctic conditions. The vessel, ordered by Stena Offshore, a Swedish company, will have a hull strong enough to break through ice, withstand 50-foot waves and insulate the men and machinery inside from outside temperatures as low as 40 degrees below zero. Samsung’s sales of all types of offshore drilling vessels jumped to $7.8 billion last year, up from $1.5 billion in 2005.

So again, in about 2 years after the haggling is done we are going to waltz into this market and say 'hello, we are ready to deep sea drill - who has some ships for us?" :) Ah, America.

As consumers we hate shortages - but as investors we love shortages... 2012 eh? Sort of the same timeline for the potash shortage. We're still looking at you kids - Diamond Offshore Drilling (DO), Transocean (RIG), Pride International (PDE), et al. Oh yeh, our stealth deep sea oil driller? DryShips (DRYS) [May 22: DryShips - Earnings Growth Continues & Potential Deep Sea Oil Drilling Play]

[May 2: Restarting Pride International as Takeover Bait]
[May 7: More Energy Sector Earnings - Transocean (RIG)]

Long Petrobras, Pride International, DryShips in fund; no personal position