LIBERTY POST

Drill Like Brazil

Stimulus: Brazil, a leader in the use of biofuels such as ethanol and in the face of falling oil prices, still plans to spend huge sums to expand its offshore oil resources. Drilling rigs are infrastructure too.

With oil prices scraping the bottom of the barrel, pun intended, there wouldn't appear to be much incentive to pursue the development of new oil resources. And in tough economic times worldwide, the necessary investment required would appear to be prohibitive.

As the U.S. seeks to get its economy going by building roads, bridges and bicycle paths, Brazil has decided to create jobs and move toward energy independence by investing in its energy infrastructure and the liquid gold that lies just off its pristine beaches.

Brazil's state-owned energy giant, Petrobras, announced on Friday that it plans to spend $174.4 billion on developing its huge recent offshore oil finds through 2013. A $28.6 billion spending plan for this year will be financed in part on loans from Brazil's state development bank.

"This is not a rescue," Petrobras CEO Jose Sergio Gabrielli told reporters in Rio de Janeiro. "This is very different than what is happening in other countries. This is not a bailout."

No indeed. It's an investment that fosters energy independence, keeps Brazil's energy dollars at home and creates jobs.

"The volumes of investments will have an important macroeconomic impact in Brazil," said Gabrielli.

Such investments could have a similar beneficial impact on the American economy, and the irony is that the oil companies are willing to use their own money here if we let them. Yet, even more restrictions on U.S. domestic production are planned.

Thanks in part to a relentless pursuit of domestic energy resources to complement its ethanol production (an "all of the above" energy plan like that proposed by Republicans during the campaign), the Brazilian economy grew 5.8% in 2008 and is projected to expand 2.9% even in a tough 2009, according to the median estimate of 16 economists surveyed by Bloomberg.

If Brazil had copied our current energy policy, it wouldn't have discovered in November 2007 the Tupi field or in April 2008 the Carioca field in the deep-water Santos Basin off Brazil's southeastern coast.

Tupi is estimated to contain 5 billion to 8 billon barrels of crude, and Carioca may hold up to 33 billion — the third-largest oil field ever discovered and big enough to supply every refinery in the U.S. for six years.

These discoveries and others around the world show that oil has not peaked, and new technologies continue to expand reserves beyond the level of consumption. Other countries recognize the economic importance of domestic energy resources. We are in fact the only industrial country to put our reserves off-limits.

A study by ICF International, commissioned by the American Petroleum Institute, finds that by 2030 the domestic energy resources that Congress has placed off-limits in ANWR, in Rocky Mountain shale and in the Outer Continental Shelf could increase U.S. crude-oil production by 36%, generate more than $1.7 trillion in government revenue and create 160,000 jobs.

Now, that's what we and the Brazilians call a stimulus package.