Offshore Drilling: They’re Lying. September 17, 2008Posted by Jamie Friedland in Congress, Offshore Drilling, Politics.
Tags: ANWR, Drill, drill baby drill, Gas, Gas Prices, House of Representatives, OCS, Offshore Drilling, Oil, Oil Companies
Yesterday the House of Representatives passed the “Comprehensive American Energy Security & Consumer Protection Act.” This bill has a lot of good policies in it, such as renewable tax credit extensions, repealing oil company subsidies, and establishing a national renewable energy standard. It also compromises a lot (read: bad policies). The most notable of these is the opening of the outer continental shelf (OCS) to oil companies. In light of this development, I have decided to write my long overdue post on offshore drilling.
Over the last few months, offshore drilling has been all over the media, largely is response to a major propaganda push by the GOP. Republicans would have you believe that science is a political debate, but there are some things that just cannot be spun. In this post, I will attempt to clearly explain why this gimmick will not help our country both to help clear up any uncertainties and, with any luck, to arm you with the facts to help explain this to people you know. Because we need to talk about this – the Republicans certainly are. And they’re winning. So we begin:
1) Domestic drilling cannot lower oil prices. We, the US, represent 25% of world oil demand and <3% of the world’s supply (EIA International Energy Outlook 2004). Oil prices are determined on the global market, and we produce so little that we simply can’t affect prices from the supply side. Gas price fluctuations in response to regional disruptions in refining capabilities (such as we see in the wake of hurricanes) are an exception, but they just raise prices even higher and cannot drop prices below the floor set by the global market. And since OPEC is a cartel, even if we were miraculously able to significantly affect prices, OPEC could just reduce their supply to negate that effect.
2) Drilling won’t lower gas prices. Even if we were to tap all of our resources, including OCS and the Arctic National Wildlife Refuge (ANWR), according to Bush’s own EIA and EPA, drilling would not have a significant impact on prices. We’re talking gas prices lowered by about 4-6 cents/gallon in 2030.
If you listen to what Bush, Gingrich, McConnell, Boehner, and now McCain/Palin, are actually saying, they even admit that increasing supply can’t bring down oil prices. They are saying things like “the market signal will ease pressure on gas prices.” What that translates to is “drilling won’t bring down prices, but we’re hoping people are stupid enough to believe that it will and stop speculating oil futures so high.” Which won’t work for long if at all. They are choosing their words carefully, but even the biggest drilling advocates tacitly admit this is a political gimmick.
3) Drilling is a long-term proposition. This is not at all a short-term idea (I refuse to use the word ‘solution’ in this context). Even if we opened ANWR and the continental shelf tomorrow, oil wouldn’t begin to flow for 10 years and maximum production wouldn’t be achieved until 2027. Only THEN could we get our prices lowered by less than 6 cents/gallon.
4) We don’t have nationalized oil companies. In many other countries, oil companies are government-run. A country taps its own resources and distributes them as the government sees fit. That, for better or for worse, does not happen here. “Our” oil companies are giant, private companies that span the globe and act in the interest of their stockholders. Just because American companies get oil does not mean we do. Does anyone else find it suspicious that the oil companies tell us we just need to increase supply in the same year that American petroleum exports reached a record high?
Industry front groups try to set up cost-benefit analyses to show us how much money we save/earn by drilling domestically, but the American people (who do not own stock in Exxon) don’t benefit from US oil company profits. We still pay the same money for the same gas. I’m not endorsing foreign oil, I’m just saying that US oil companies are not our saviors or even our friends. They are just companies trying to make as much money as they can.
5) Big Oil profits from our suffering. With soaring gas prices in recent years, the oil companies have been posting record profits while the American public has struggled. The fanatical support oil companies enjoy from the rank and file Republican is sadly ironic as these companies profit at the expense of regular people. While they do contribute handsomely to campaigns, these companies do nothing for the everyday people who champion their cause. It really is a testament to the expertise with which the GOP and industry advertising/lobbyists manipulate the public. And to add insult to injury, the Big 5 are spending most of their profits on buying back their own stock. They are spending under 4% of their profits on exploration for new oil and even less on research and development.
This makes me pretty angry, but I’ve had people tell me “well, they’re private companies making a profit. Good for them.” Just because I am a Democrat does not mean I automatically begrudge businesses for their success. This is different for one fundamental reason: the oil industry is very heavily subsidized. Oil companies receive millions and millions of taxpayer dollars and tax breaks each year. If they are going to continue to be supported by the American people, they must act on our behalf. Their expenditures clearly indicate that they do not.
6) They can increase supply without offshore drilling. There is plenty of oil available to oil companies even without this new bill. There are millions of acres across the country currently available for purchase or not being utilized. Furthermore, there is a great deal of oil still sitting in the ground beneath tapped wells. Conventional drilling techniques by no means empty a reservoir; there are numerous Enhanced Oil Recovery (EOC) techniques that could help us get more oil out of our existing wells right now (for example by injecting steam into the ground to increase pressure in the well and draw oil out of the surrounding rocks). But the industry rarely employs them. Some of these techniques could even sequester carbon underground (click the EOC link above) and help us fight global warming even while we make the most of our current drilling infrastructure. If the oil companies really wanted to increase supply they could; this is a last ditch land grab before Bush leaves office.
So there it is: offshore drilling is not the answer. It just isn’t. There is no substantive debate on the issue. In fact, more drilling isn’t even part of the solution. The “All of the Above” scam the GOP is pushing is terrible for so many reasons it would require its own post. So what IS the solution? A comprehensive strategy of clean energy in conjunction with increased efficiency and conservation. It may not be sexy, but that’s what we have to do. The Natural Resources Defense Council outlines the plan in this fact sheet and the graph below shows how such a plan could actually help us in the short term and dwarf the “benefits” of increased drilling in the long term.