To Drill Or Not To Drill?
With oil prices hitting $130 a barrel and gas averaging over $4 a gallon, energy is an issue weighing increasingly heavily on Americans’ minds. It’s also promising to play a major role in the upcoming elections.
Both John McCain and Barack Obama oppose drilling for oil in the Arctic National Wildlife Refuge (ANWR) — the most widely publicized and controversial location for proposed drilling.
But McCain yesterday signaled a slight shift on energy policy, announcing he would call for an end to the federal moratorium on offshore drilling in light of new economic realities.
“They have to be lifted so that states can make those decisions,” McCain said. “I’m not dictating to the states that they drill or they engage in oil exploration, I am saying that the moratoria should be lifted so that they have the opportunity to do so. By the way, I would also like to see perhaps additional incentives…in the form of tangible financial rewards if the states decide to lift those moratoria.”
He called America’s dependence on foreign oil a “dangerous” situation and argued that lifting the ban on offshore drilling could be “very helpful in the short term” to relieve pressure on consumers. (There are at least 8.5 billion barrels in proven oil reserves off the U.S.’s Pacific, Atlantic, and Gulf coasts.) McCain still advocates the development of clean alternative energy sources which will eventually replace America’s depedence on fossil fuels.
Obama’s stance on the issue is clear-cut:
“John McCain’s plan to simply drill our way out of our energy crisis is the same misguided approach backed by President Bush that has failed our families for too long and only serves to benefit the big oil companies…”
This morning, joined by the environmental group The Sierra Club, Obama added:
“Opening our coastlines to offshore drilling would take at least a decade to produce any oil at all, and the effect on gasoline prices would be negligible at best since America only has three percent of the world’s oil.”
The problem for Obama? Most Americans don’t seem to agree. A Rasmussen poll released today showed that 67 percent of Americans support offshore drilling, and 64 percent believe it will lower prices at the pump. Only 18 percent share Obama’s opposition to offshore drilling.
According to the Department of the Interior, the United States is sitting on an estimated 86 billion barrels of undiscovered oil reserves. There is an estimated 60 trillion cubic feet of untapped natural gas off American coasts.
And that’s not including the potentially jaw-dropping total if you factor in “oil shale” – a rock-like fossil fuel known as kerogen that can produce crude oil – which due to a recent breakthrough in technology is now economically viable.
The cost of extracting crude oil from oil shale was for decades thought to be cost-prohibitive. But thanks to a breakthrough in extraction technology — the product of more than twenty years of research — Royal Dutch Shell has found a way to produce crude oil from oil shale in a way that is allegedly both environmentally friendly and economical.
Using their in situ method, one surface acre of oil shale could produce 1 million barrels of oil — 10 times more than conventional mining. For a comparison, one acre of corn produces the equivalent of 5 to 7 barrels of oil in the form of ethanol. What’s more, Shell’s method would stay economical at prices as low as $30 a barrel.
According to its studies, Shell’s method could extract 1.5 - 2 trillion barrels of oil from oil shale deposits in the U.S. — four times Saudi Arabia’s proven reserves.
Like the U.S., Brazil is also sitting on top of huge reserves of oil. But unlike the U.S., Brazil is enthusiastically moving to exploit these resources. In November, Brazilians discovered oil deposits deep beneath the waters off their coast which are estimated to hold billions of barrels. In the past week, a second huge oil deposit – this one estimated to hold as much as 33 billion barrels — was found in the same spot, below the one discovered last year. Brazilian oil giant Petrobras is working feverishly to get production online, with the full support of the Brazilian government and legislature.
The political situation in the U.S. is, to say the least, a very different story. The Outer Continental Shelf Moratorium, passed in 1981, prohibited exploration for offshore natural gas and oil deposits. In 1990 — when gas was $1.25 a gallon – President H.W. Bush signed an order to keep offshore drilling off-limits, and President Clinton extended that moratorium until 2013. An effort in early 2006 to lift the ban passed the House but stalled in the Senate.
But that hasn’t stopped the Brazilians. Petrobras is looking into a joint venture with Cuba and Venezuela to drill off the coast of Florida, just inside Cuban waters. The U.S. Geological Survey has estimated that:
…the North Cuba basin could contain 4.6 billion barrels of oil, with a high-end potential of 9.3 billion barrels, and close to 1 trillion cubic feet of natural gas.
You could say that they’re going to…well, “drink our milkshake.”
The U.S. spends $600 billion a year importing oil from countries like Saudi Arabia, Russia, and Venezuela. Yet so far, the U.S. government has refused to allow drilling for the billions of barrels of oil that lie under American soil and off American coasts.
The Senate Appropriations Committee last month voted 15-14 to kill a bill that would have ended a one-year moratorium on enacting rules for oil shale development on federal lands (which is where the best oil shale is located). Without such rules, Shell’s new technology for extracting and processing oil shale can’t be used.
McCain is planning to provide further details about his proposal in a “major speech” on energy policy scheduled for later today. I plan to blog about McCain’s proposals in that speech, as well as Obama’s response.
Are Americans feeling sufficiently pinched by gas prices that McCain’s proposal to allow offshore drilling will sway their vote, or will Obama’s skepticism about the usefulness of such a change and concerns over environmental impact win the day?
That, in the end, is the question.
*UPDATE:
America produces only 5 million barrels a day — but consumes 20 million barrels, 1/4 the total consumed each day worldwide.
A little over 50 percent of the oil Americans consume comes from Canada, Mexico, and our own production. Nigeria and Venezuela are the next two largest exporters of oil to the U.S. The U.S. currently imports 18 percent of its oil from the Middle East (roughly 1.3 billion barrels a year). (Listing of top 15 countries that export oil to U.S. here)
Go to the web site, DRILL HERE, DRILL NOW, SAVE MONEY. You can sign the petition to start drilling for oil here in the US. Lets send those people in the desert back to hearding goats for a living.
It will be very interesting to see how fast Obama changes his mind. Failing to support this means he will lose the election. Gas prices will be the number one issue in this election. I wonder how long it will be before he denounces Al Gore and says, “I wasn’t there when he said all that radical stuff about drilling for our own oil.”
very well written. Lots of facts. This is THE definign issue of the election. Since I don’t know — could someone tell me how taxing oil companies would help solve this problem, but drilling for our own oil would not? It seems clearcut to me which is better, but maybe I am missing something.
The most interesting development noted is the oil shales. If this technology proves as promising as it looks, we are talking a major gold rush out in Colorado and the rest of the west, with minimal environmental backlash. ANWR would be a drop in the bucket with huge environmental consequences, and off-shore drilling may or may not help us.
Unfortunately, all of this exploration only prolongs the inevitable– sooner or later fossil fuels will become too scarce and too environmentally destructive to sustain a rapidly growing world. So instead of facing the truth in 2020, maybe we can put it off until 2050. Most of us baby boomers will be long gone by then. We are living on energy borrowed from the past- only solar, fission, fusion, geothermal, wind and water are forever…
John McCain is just making good sense, and serving the American people.
Barack Obama can pander to the tree-huggers all he wants. Meanwhile, Venezuela, Cuba, China and others are pumping oil right at the edge of our territorial waters, right out of the same pools that we should be tapping. It’s kind of like Texas “capture rights” to water from the Ogalalla aquifer. Whoever pumps it owns it. If we’re too dumb to take the oil, somebody else will take it.
You gotta hand it to Petrobras. As a matter of fact, we are handing it to them. That very competent Brazilian oil producer recently teamed up with a Japanese firm to drill in Utah. Are all of us Americans stupid? Well, maybe a few aren’t, those who have invested in Petrobras.
Will someone please answer the question I’ve asked many times? What should a gallon of gas cost? Really people, it’s only higher than it has been in the past. It’s hardly considered high compared to what others pay.
I just got back from China. Gas there is $2.94/gal after the conversions.
Worldwide pump prices:
http://www.msnbc.msn.com/id/12464789/
The cost of gasoline obviously depends on taxes in the locale and whether the fuel cost is being subsidized by the government. Most of Europe pays more than double what we pay in America for gasoline. Taxes on moderate incomes can be up to 70 percent (as in Sweden), and the sales tax on a new car can be 80 percent of the price of the car itself (as in Denmark, which is why most people ride bikes). Schooling and hospitalization are free.
In Saudi Arabia and Venezuela fuel is pretty cheap, but do you want to live there?
You pays your money and you takes your choice. I’ll take America and do a bit of car-pooling.
Have nothing to do with taxes senior citizen, but everything to do with the almighty dollar not being so mighty anymore.
“In November 2000, Iraq began selling its oil in euros. Iraq’s oil for food account at the UN was also in euros and Iraq later converted its $10 billion reserve fund at the UN to euros. Several other oil producing countries have also agreed to sell oil in euros-Iran, Libya, Venezuela, Russia, Indonesia, and Malaysia (soon to join this group). In July 2003, China announced that it would switch part of its dollar reserves into the world’s emerging “reserve currency” (the euro)”.
“The unprovoked “shock and awe” attack on Iraq was to serve several economic purposes: (1) Safeguard the U.S. economy by re-denominating Iraqi oil in U.S. dollars, instead of the euro, to try to lock the world back into dollar oil trading so the U.S. would remain the dominant world power-militarily and economically. (2) Send a clear message to other oil producers as to what will happen to them if they abandon the dollar matrix. (3) Place the second largest oil reserve under direct U.S. control. (4) Create a subject state where the U.S. can maintain a huge force to dominate the Middle East and its oil. (5) “Create a severe setback to the European Union and its euro, the only trading block and currency strong enough to attack U.S. dominance of the world through trade. (6) Free its forces (ultimately) so that it can begin operations against those countries that are trying to disengage themselves from U.S. dollar imperialism-such as Venezuela, where the U.S. has supported the attempted overthrow of a democratic government by a junta more friendly to U. S. business/oil interests”.
Full article below, and is the absolute truth. http://www.thirdworldtraveler.com/Iraq/Iraq_dollar_vs_euro.html
McCain is only pandering, it is going to take using every kind of technology possible in order for the U.S. to become energy independent.
Why are people so guilible? So many believe every lie that they are told without using their common sense. Connect the dots, will you!
The sad part of it all is that all those Democrats who voted for the war was in on it also. They knew it was for oil and the protection of the U.S. dollar value. It is just that at least now they are now willing to admit how wrong that they were. It is disingenuous for those in Congress who voted for the war to say that they believed the WMD lie. The WMD lie was intended only for the guilible public (people).
We must again become independent, supplying all our own goods, energy, etc.. However, we should stay away from nuclear energy, I certainly do not trust the competency of the imperfect man enough for that,not worth the possibility of a mistake made.
No solution will solve our problems immediately. But we can use half the gasoline we currently use in our automobiles with already available technology.
Evidently “D Walker” has found that elusive 100 mile per gallon carburetor that General Motors, Ford and Chrysler hid from the public years ago, in collusion with the oil companies.
Details of government actions and inaction over the last 35 years demonstrate that U.S. energy policy depends on the balance of power among the special interest groups controlling the political puppets in Washington. Environmental, automotive, petrobusiness, agribusiness, labor, and social engineering lobbyists and campaign contributors determine the legislation, regulation, taxation, and subsidies that control our energy supply and usage. The rapidly expanding economies of former communist societies are driving record worldwide energy demand. Meanwhile the U.S. move toward communism is shrinking the U.S. economy. When that perfect storm has driven energy prices high enough, U.S. consumers and voters will find our voice and overcome the energy apathy of the past three decades. Price will eventually drive increased domestic production, reduced demand, and new alternatives.