There has been a lot of talk recently about lifting the moratorium on oil drilling in the Outer Continental Shelf. Hearing about proposals like this always leaves me a little stunned because we have been speeding down this road for the past eight years (and let’s face it, a lot longer than that) and gas prices are still skyrocketing. These tired ideas will have no immediate effect on gasoline prices and negligible benefit in the future.
The fact of the matter is, drilling requires long lead times. The Energy Information Administration (EIA) recently estimated that if the ban on drilling in the Arctic National Wildlife Reserve were lifted, oil production would not start for a full decade. Not a sound strategy for relieving pain at the pump today.
And beginning production is not a great goal either. Oil producers will not achieve maximum production until long after production begins. For the Arctic Reserve, EIA expects that if the ban is lifted in 2008, maximum production will occur in 2027. To that extent the argument for drilling grossly overstates the supposed relief that will result.
Not surprisingly, the advocates of more drilling have been conspicuously silent on the benefit that consumers might enjoy. That is because they will be small if there are any at all. Again, the EIA’s recent Arctic Reserve analysis suggests that in 2025 as production approaches its maximum, consumers will see a 3.3 cent per gallon reduction.[1] To be fair, others like Bill Scher point out that there is nearly twice the amount of oil off shore than in the Arctic Reserve. If we assume double the benefit for drilling offshore, we still get only a 6.6 cent per gallon reduction.
We should not open up pristine areas for a drop in the bucket when we have proven ways at our fingertips to save gas through efficiency and shift our focus on moving beyond oil.
The government’s own data illustrates that we simply cannot drill our way out of this problem. Instead, we need to make our transportation sector smarter and more efficient. Greater vehicle efficiency and rail and bus transit investments will not only take pressure off of world oil markets, they will also lower gas bills, which is what really matters to households.
Drilling advocates' conclusion that drilling is the best solution suggests highly pessimistic assumptions about American ingenuity and spirit.
[1] Based on comparison of motor gasoline price between Energy Information Administration Reference case and mean Arctic Reserve Case. See “Petroleum Product Price”, table 12 at: http://www.eia.doe.gov/oiaf/servicerpt/anwr/index.html