Implicit in much coverage of the offshore drilling debate is that such oil has the potential to lower gasoline prices. The L.A. Times‘ report (3/30/10) on the Obama administration’s new offshore drilling plan provided this context:
The announcement will come in the run-up to summer driving season, as gasoline prices have begun a national march toward $3 a gallon, and beyond that in California…. Energy companies and conservatives have clamored for increased drilling since gasoline prices spiked during the 2008 presidential campaign.
Like virtually all offshore-drilling coverage (CEPR, 9/08), the L.A. Times doesn’t note that drilling in coastal areas will have only the most minimal impact on the price of gasoline–and even that trivial impact would be a decade away. According to the federal Energy Information Administration, considered the authoritative source on energy, opening up the entire continental shelf of the lower 48 states would have virtually no effect on all on crude prices: “Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.” This information ought to be included in every report on offshore drilling.
See Extra! Update: “Failing to Do the Math on Oil: Support for Offshore Drilling Increases Following Media Misinformation” (8/08) by Hannah Dreier.
Offshore Drilling Reports Are Just Gas ?
Gas is about all that American Politicians are good for anyway.
Are the costs of coastal cleanup of inevitable spills and leakage included in the costs of retail gasoline?
If are dependence on foreign oil were really a problem, the politicians would have doubled gasoline taxes by now. Of course, this assumes our representatives are problem solvers and not corporation zombies.
Also, a key reason behind opening up our coastlines to offshore drilling is supposedly to make us less dependent on foreign oil. Yet US oil companies are currently exporting record amounts of gasoline and diesel fuel to other countries. What’s to stop them from continuing to do so?
So what would more offshore drilling do?
â┚¬Ã‚¢ Damage our beaches: Current Gulf of Mexico drilling projects have wiped out more wetlands than exist between New Jersey and Maine. The massive roads, pipelines and processing facilities needed to support new drilling would hurt local communities that depend on natural resources for tourism, fishing and recreation.
â┚¬Ã‚¢ Hurt marine life: Drilling creates huge quantities of toxic and radioactive pollutants — some of which make their way into the seafood we eat. Offshore wells pump known carcinogens into the air and require seismic surveys that can harm whales and fish — including several endangered species.
â┚¬Ã‚¢ Pollute our seas: Oil spills remain a substantial risk from offshore drilling. Between 1981 and 2005, 187 large oil spills dumped more than 2,100 gallons each into the Gulf of Mexico. Hurricanes Katrina and Rita alone caused 125 spills emitting 685,000 gallons. Oil is toxic for most marine species.
The Government’s own Energy Information Administration points out that this oil won’t be available for decades and the total quantity is an “insignificant” drop in the bucket on the world oil market.2
2 eia(dot)doe(dot)gov/oiaf/aeo/otheranalysis/ongr.html
Right now, America contains more operating drilling rigs than the entire rest of the world. Of the 44 million acres currently leased for oil and gas development, more than 30 million acres have not been used by the oil and gas industry.
If the total quantity of oil available from new wells is “insignificant” who benefits from drilling them?
Why should we risk endangering more coastline and living things?
Why are we exporting any oil when we are energy dependent?
The cost of thorough clean-up of oil spills should be subtracted from CEO pay, not added to the cost of products for consumers or taken from dividends paid to share holders. Do share holders have the opportunity to vote on CEO pay and bonuses?
Traditionally, every summer the demand for two things increases: gasoline and soda pop. But in the summer, as the demand for gasoline increases, the price of gasoline increases at the same time, while the price of soda pop declines. So much for the “law of supply and demand.” But why is this true? The answer lies in what American oil companies learned from OPEC several decades ago — that they could make higher profits by producing less.
Oil companies have been paying on leases for the right to drill for oil all over the U.S., but haven’t done so. Why not? Why pay for rights that you have no intention of using? Because they are preventing possible competitors from drilling there, extracting oil and consequently reducing prices.
If the government is unwilling to force the oil monopolies in the U.S. to break up into smaller companies, then the answer to the problem might be to stop giving “big oil” tax breaks and give those tax breaks only to new oil companies to encourage more competition, more production and more innovation.
Leo Toribio
Pittsburgh, PA