June 17, 2008
American Public Support Oil Drilling In Off Limits Places

As I've said in the past: there's a price of oil and gasoline at which just about every limit on oil drilling will get lifted. People who argue for more drilling can save their breath. Market prices will persuade better than any argument - rational or otherwise. Most Americans want to lift some of the limits on drilling.

Now, voter anger over soaring gasoline prices is shoving this perennial dispute to the top of Washington's energy agenda. On the New York Mercantile Exchange, benchmark crude for July delivery fell $1.88 Friday to settle at $134.86, near its all-time high. Last Monday, the average retail price for a gallon of regular unleaded was $4.039, according to the Energy Information Administration.

A recent Gallup poll shows 57% of Americans support opening up new territories to drilling, while a Wall Street Journal-NBC News poll conducted this month shows 59% of Americans saying Congress should take the lead on responding to high gas prices.

Currently little drilling is allowed off of US coasts outside of the Gulf of Mexico and even parts of the Gulf of Mexico near Florida are off limits. Plus, the Alaska National Wildlife Reserve and some park areas in the lower 48 states are off limits as well. All those limits will be lifted when world oil production starts falling.

The Republicans are flipping on this issue and the Democrats are only about $30 or $40 dollars a barrel away from flipping too.

WASHINGTON — President Bush, reversing a longstanding position, will call on Congress on Wednesday to end a federal ban on offshore oil drilling, according to White House officials who say Mr. Bush now wants to work with states to determine where drilling should occur.

The move underscores how $4-a-gallon gas has become a major issue in the 2008 presidential campaign, and it comes as a growing number of Republicans are lining up in opposition to the federal ban.

The party’s presumptive presidential nominee, Senator John McCain of Arizona, used a speech in Houston on Tuesday to say he now favors offshore drilling, an announcement that infuriated environmentalists who have long viewed him as an ally. Florida’s governor, Charlie Crist, a Republican, immediately joined Mr. McCain, saying he, too, now wants an end to the ban.

The NIMBY environmentalists have done us a great service and we should thank them. They've managed to preserve some billions of barrels of oil for the coming years when we will need them far more than we did in the past. Granted, the amount of oil they saved is not enough to prevent the coming decline in world oil production. But that preserved oil will help make the adjustment to a post-oil economy less painful.

Update: Threats of a destroyed tourist economy from an oil spill miss the point that tourism runs on oil. How many flights to Florida are getting canceled as airliners cut back on flights and go bankrupt?

Sen. Bill Nelson (D-Fla.) decried McCain's stance. "He ought to know he'd ruin Florida's $65-billion tourism economy by allowing oil rigs off the coast."

Nelson ought to argue for a tax on offshore oil that will pay for a high speed electric rail line to Florida.

Share |      Randall Parker, 2008 June 17 10:03 PM  Energy Policy

Byron said at June 17, 2008 11:15 PM:

You want to know the REAL reason we are at the mercy of foreign (and hostile) oil producing countries? The Republicans. It has been their unswerving paid alligence to Big Oil and Coal and conspiracy to back-burner and trivialize clean and renewable energies like solar and wind every step of the way. It’s a scandal of the first order. We never should have been in this predicament. People have been calling for clean alternatives for decades now but Congress, in bed with Fat Cat CEOs, have done all they could to favor Oil and Coal by giving them huge subsidies and tax breaks while simultaneously roadblocking R&D into renewables. Why? Because de-centralized alternatives would mean no longer being dependent on a large central corporation to provide one’s energy needs. A population with their own solar panels or wind turbines etc. would OWN their energy and not have to continually pay for it and they simply couldn’t have that. Frankly, it’s just insane.

One would think that with the sudden spiking of gas prices recently, though, they would remember their supposed role of looking out for the American people and would realize that we should be investing in renewables - but you’d be wrong.

“Separately, Democrats also failed to get Republican support for a proposal to extend tax breaks for wind, solar and other alternative energy development, and for the promotion of energy efficiency and conservation. The tax breaks have either expired or are scheduled to end this year…. The oil companies could have avoided the tax if they invested the money in alternative energy projects or refinery expansion. It also would have rescinded oil company tax breaks — worth $17 billion over the next 10 years — with the revenue to be used for tax incentives to producers of wind, solar and other alternative energy sources as well as for energy conservation.”




When Bill Clinton tried to make it fairer again the Republicans put the breaks on anything that could lead to a switch away from dirty energy (oil, coal, nuclear).


paul said at June 18, 2008 5:47 AM:

Because tax breaks haven't been extended past this year, the world isn't running on solar and wind power instead of oil. Why I'd be filling my gas tank with solar power right now if the current tax breaks had been extended!

"One would think that with the sudden spiking of gas prices recently, though, they would remember their supposed role of looking out for the American people and would realize that we should be investing in renewables - but you’d be wrong."

Here's a little secret: there's absolutely nothing stopping you from investing in renewables. Just ask BP: http://www.ewire.com/display.cfm/Wire_ID/267

Jake said at June 18, 2008 8:34 AM:


Solar and wind have gotten subsidies for over 20 years. What has been accomplished with those subsidies? Virtually nothing. Those subsidies continue only because fat cat Democrats have money invested in these companies. These Democrats have gotten rich and the taxpayers received nothing. If solar and wind would have saved the world, it would have happened long before now.

The real reason we are energy deficient is the left has blocked nuclear power here and every where else for the last 40 years. The only exception is France where they get 80% of their power from nuclear. The left is the major cause of global warming in the world.
If you are voting for a Democrat, you are voting for the "end of the world". (as Al Gore puts it)

Nick G said at June 18, 2008 10:03 AM:

Does anyone know of a good source for research on the effect of off-shore drilling on coastal wildlife and tourism? What are the real tradeoffs??

Jake said at June 18, 2008 1:49 PM:

Nick G.

Norway, Denmark, the Netherlands, and the UK have been drilling off their coasts for years. Ill effects have been minimal.

Besides it is too late to stop it. China is drilling off the east coast of Florida and Mexico is drilling off the west coast of Florida. Last year Mexico made their biggest strike ever in the Gulf of Mexico.

Allan said at June 18, 2008 1:51 PM:

Byron ... please, this forum remains remarkably free of biased politics like your comment. Bill Clinton and the democrats controlled it all for the first two years of his presidency and they did nothing to set us on the path to energy independence. Both parties cater to special interests. It doesn't really matter which republocrat you vote for. I can't fill my gas tank up with solar or wind or even nuclear power until they provide me with an affordable and usable plug-in hybrid or an all electric.

As for drilling ... I support it.

In a Senate floor speech he gave on May 13th, 2008, Chuck Schumer (D-NY) insisted that:
"If Saudi Arabia were to increase its production by 1 million barrels per day that translates to a reduction of 20 percent to 25 percent in the world price of crude oil, and crude oil prices could fall by more than $25 dollar per barrel from its current level of $126 per barrel. In turn, that would lower the price of gasoline between 13 percent and 17 percent, or by more than 62 cents off the expected summer regular-grade price - offering much needed relief to struggling families."

Yet, not even a week before, on May 7, 2008, Schumer felt a likely similar increase from drilling in ANWR would "reduce the price of oil by a penny."

Schumer's daily magic number of 1 million barrels is the increase experts believe we would today be pumping through the Alyeska pipeline had Bill Clinton not vetoed ANWR drilling back in 1995. And even the most rabid anti-domestic-drilling Democrats can't take issue with that figure.

So then, the increase he demands of "Bush's friends," the Saudis - which he claims would reduce prices by up to 25 percent -- is the same amount he argued earlier this month would only "reduce the price of oil by a penny" were it coming from ANWR.

So, Schumer chastises those wanting to explore for more oil while getting them to admit an additional million barrels available per day would bring prices down significantly even though he believes the extra production if it came from ANWR would be totally irrelevant.

It doesn't take a Ph.D in economics to know that both figures can't be right.


Regarding the time to bring the oil to market. The often quoted 10 year estimate is based upon the current legal and environmental framework. Were Congress or maybe the President, to declare an emergency, oil could flow in 18-36 months, safely and in an environmentally sound manner, from the time an emergency were declared. They only need to build a pipeline to connect with the pipeline in the North Slope. Will it happen? No, the republoocrats care more about power rather than economics and the well-being of the country!

Nick said at June 18, 2008 3:09 PM:

"It doesn't take a Ph.D in economics to know that both figures can't be right."

I should think that a Saudi increase would be more helpful, because an American increase could be off-set instantly by a reduction in OPEC/Saudi production.

The real reason for domestic drilling is to reduce the enormous transfer of wealth from the US to oil exporting countries. I think that's a pretty good idea, but I don't know how to sell such an intangible notion, vs the welfare of polar bears.

Bryan Price said at June 18, 2008 5:18 PM:

Threats of a destroyed tourist economy from an oil spill miss the point that tourism runs on oil. How many flights to Florida are getting canceled as airliners cut back on flights and go bankrupt?

And you miss the point that Florida is a pretty big target for hurricanes. Hurricanes will take out the drilling platforms and the pipelines and the associated facilities on land. That is a matter of when, not if. And then there's the attendant drop in domestic production that will happen as well. And then tourism is killed off in Florida for a number of years, probably leading to the bankruptcy of the state, certainly billions of dollars spent (probably to no good effect) and the cries of "We (or Somebody) should have known better!". I can make that statement because I know just how stupid the lawmakers are in this state.

Norway, Denmark, the Netherlands, and the UK have been drilling off their coasts for years. Ill effects have been minimal.

They also don't have Category 5 hurricanes slamming into their rigs and their coasts.

the amount of oil that they saved is not enough to prevent the coming decline

This is a telling statement, because it points out the fact that if we do let the drilling happen, the output will be insignificant even in the near term. One million barrels a day is 5% of our current daily usage. A 1/6 drop in price? Call me skeptical on that call.

If we started letting the oil companies drill today, the soonest one drop of that oil would actually hit a gas tank is 10 years.

The oil companies currently have something like ten thousand leases that they are not progressing on currently. Are we going to see this go up to 100 thousand?


Another telling comment:

Douglas Holtz-Eakin, a senior adviser to McCain's campaign, acknowledged in a conference call to reporters that new offshore drilling would have no immediate effect on supplies or prices.

But he added: "There is an important element in signaling to world oil markets that we are serious."

A Republican adviser being honest? Refreshing!

Bill Clinton and the democrats controlled it all for the first two years of his presidency and they did nothing to set us on the path to energy independence.

The former oil man, President Bush, who had six years of Republican majority in Congress has done nothing as well. And he's supposedly an expert at this.

I don't see drilling as a panacea for the US. As I see it, such action is too little and too late. We need alternative energy sources, and we need them pretty quickly.

Randall Parker said at June 18, 2008 6:16 PM:


Why not cut out the middle man and just blame SATAN! You can still then say that the Republican Party is secretly the church of Lucifer.


There's a natural genetic tribal tendency to say "Hurray for our side" and down with the other side. I find it intellectually productive to try to suppress that tendency.

As for solar energy funding and all that: We had a window 10-20 years ago to push alternative energy sources harder using government policies. You can find posts I wrote 5 years ago calling for a Manhattan Project on non-fossil fuels energy sources. But at this point I think it is too late for government policies to speed up photovoltaics research and development or wind for that matter. The many VC-funded start-ups and big corps that are invested in solar and wind will do better than research money given to academic scientists in getting costs down.

I'm not as sure on batteries. Maybe government research funding can still help. I can't tell how fast batteries are progressing. Nick G is optimistic on this. I hope he's right.

Bryan Price,

More drilling can reduce the downward slope in oil production. Even if we open the gates to more drilling now the prices are going so high in the next few years that the additional drilling will not suppress the effect that the price signal is having on people's thinking. There's no point to holding off the drilling any longer. We need that oil 5-10 years from now when world oil production is in sharp decline and the alternatives are not all ready yet.

I think the people who oppose more drilling just don't get how bad things are going to get post-peak. We are still on the production plateau with oil at $130+ per barrel. Imagine what it'll be like when world production is declining 4+% per year and net exports are declining 6% per year. This spells lower living standards. This means far more expensive food, transportation, and assorted materials made and transported using oil.

I realize that people want to score status points by saying their side was right all along. But the people who called Peak Oil right were not partisan activists. They were petroleum geologists and petroleum engineers who worked in much maligned oil industry.

simon said at June 18, 2008 6:17 PM:

Risk of Drilling is very low and largely correctable. Price of oil will ease and provide more time to develop alternatives. Net drilling is a good decision

Matt said at June 18, 2008 7:04 PM:

Drilling is not a good decision! It is a terrible idea, and here's why. The majority of our domestic oil production from the nature preserve in Alaska is sold to the highest bidder for top dollar, namely Japan. New drilling and new oil found on US soil will be exported faster than you can blink an eye. There will be no benefit to the American consumer - ever. And it will also delay the implementation of alternative energies that much longer.

The government and the oil companies are in bed with each other. Look at the timing for this - waiting until we, the people are weak and vulnerable looking desperately for a solution to our energy problem. This is not a fix. It is at best a temporary solution until that oil runs out too - and at what expense? The destruction of thousands of square miles of coastal seabeds. The outpouring of carcinogenic pollutants used in the drilling process and oil separation process from these rigs onto our shores - an irreplacable commodity. These chemicals are highly toxic, and can easily enter our drinking water supplies, and can easily contribute to genetic damage increasing the risk of cancer if implemented on a large scale. Future generations will look at us in disbelief at how we could just wreck the planet with impunity. As a young man in my mid-20's I do not want to be left with a disintegrating environemt when you people in your 50's are done extracting ever last drop of that damned oil from the ground.

As a scientist working at a national laboratory for the DOE (Department of Energy), I can tell you the advances in solar and alternative energies are remarkable. They are ready now!!!! The question is why we do not implement them. Because, oil companies want our money and will do anyhting to stay in business longer, cause they know when their black gold runs out, they will be left holding the d*cks in their hands. Google the Tesla sports car. It is not a hybrid - it uses no gas. None. 0-60 in under 5 seconds. Just charge its battery every 210 miles with an optional solar panel you install on your garage, shed, roof whatever.

It is not worth ripping up our coasts for this stuff. Please use alternative energies and buy higher mpg cars.

If we had never implemented the SUV, we would still have $2/gallon gasoline.

Randall Parker said at June 18, 2008 7:05 PM:

The people who pose as morally superior on energy usage would be more convincing if they walked their talk:

NASHVILLE - In the year since Al Gore took steps to make his home more energy-efficient, the former Vice President’s home energy use surged more than 10%, according to the Tennessee Center for Policy Research.

“A man’s commitment to his beliefs is best measured by what he does behind the closed doors of his own home,” said Drew Johnson, President of the Tennessee Center for Policy Research. “Al Gore is a hypocrite and a fraud when it comes to his commitment to the environment, judging by his home energy consumption.”

In the past year, Gore’s home burned through 213,210 kilowatt-hours (kWh) of electricity, enough to power 232 average American households for a month.

At a US average cost of about 10.6 cents per kwh that is $22,600 worth of electricity. Fortunately a lot of people have bought his books about saving the environment or paid to hear his speeches about saving the environment. Otherwise he might not be able to afford his electric bill on this one residence of his. And how many residences does he own anyway?

Bryan Price said at June 19, 2008 7:56 AM:

Randall Parker

The real fact is that by whenever we get the oil of of the ground at ANWR, the amount compared to the rest of the global output is puny. The EIA is projecting a maximum production of 780,000 barrels per day.

It looks that at best, all ANWR will do is pump one barrel of oil for every barrel that won't be produced elsewhere.

FWIW, as far as drilling in Florida, I say hell no. The risks involved with hurricanes outweigh the positives. As I said, it's a matter of when, not a matter of if.

ANWR, I'm agnostic on. I still believe that it's putting a band-aid on when you've cut major artery. It might help you live a minute or two longer, but you're still going to bleed out. We definitely need more than a band-aid.

Randall Parker said at June 19, 2008 9:10 PM:

Bryan Price,

ANWR output will be a much higher percentage of world oil output when world output has dropped in half.

ANWR output will be an even far higher percentage of oil available to Americans to buy. Exported oil will decline more rapidly than produced oil. We are already seeing this with Mexico and Venezuela. Mexico will stop exporting oil by 2015. Ditto Iran.

Also, ANWR is in US borders. We have a huge unsupportable trade deficit. The oil we import means we are either going to sell ownership of our industries abroad or will need to export more of what we make and keep less of what we make for ourselves. Our living standards will be lower as a result.

Brett Bellmore said at June 20, 2008 2:41 PM:

ANWR isn't the only untapped source of petroleum on US territory. Individually each of those sources might be "small potatoes" on a global scale, but not when you put them all together.

It's like saying, "One step won't get you across the room", and using it as an excuse not to take ANY of the steps needed to accomplish it.

Bryan Price said at June 21, 2008 4:26 PM:

Randal Parker,

ANWR output will be a much higher percentage of world oil output when world output has dropped in half.

Gaze into your crystal ball and tell me when that's going to happen. From the rush, it sounds like in 10 years. Meanwhile, look at a demand curve for oil for just the US. It's not pretty. And the ramp up in the curves for India and China already looks much worse. If the world output is cut in half, there will be no 1st world countries. Maybe Saudi Arabia will be able to remain a 1st world country. And that's just because of their reserves. If their aren't exaggerated.

We have a huge unsupportable trade deficit. … Our living standards will be lower as a result.

You're preaching to the choir there. I would submit that result is going on now.

Brett Bellmore,

According to my glorious freshman senator, Mel Martinez, the area is 2,000 acres, the size of a football field. I really hope that is an editing screwup of the local paper, but if he did write that as is, he's truly an idiot.

The small potatoes might help, but I think instead of putting all this effort into just expanding those small potatoes, we should be working a hell of a lot harder to reduce our use of oil.

At this point, I'm drill in ANWR if you really think it's going to do any good. I don't see it changing things either way, and we absolutely have to change things. Opening up ANWR, the continental coasts and everything else isn't going to change anything.

Randall Parker said at June 21, 2008 4:57 PM:

Bryan Price,

See figure 17 here for a range of projected exports for the top 5 oil exporters as calculated by Jeffrey Brown and Khebab. If we take the midpoint in that range then oil exports by the biggest oil producers will drop in half by about 2019. Ouch.

Given this huge decline in oil available for import I think ANWR and offshore oil could make a big difference in how severe the pain becomes.

We obviously need to do many other things in response to the decline in available oil.

As for no 1st world country: The US was a first world country at half current per capita oil consumption. It still will be. But the adjustment will cause massive layoffs and bankruptcies and declines in living standards.

Nick G said at June 23, 2008 9:36 AM:

"The US was a first world country at half current per capita oil consumption. It still will be. But the adjustment will cause massive layoffs and bankruptcies and declines in living standards."

A quibble: I think the transfer of wealth problem is much more important than the reduction in oil consumption, per se. A reduction in oil consumption would be relatively trivial over a sufficiently long period for substitutes (say, from ICE to PHEV/EV) - the shorter the period, the greater the disruption of change.

But, the transfer of wealth is big. At the very least it creates enormous debt, and transfer of ownership of assets, such as corporate stock. If the recycling of petrodollars isn't handled well (and so far it's been mediocre - CDO's were one such instrument of recycling), then there is real potential for financial disruption.

vicki said at July 14, 2008 5:29 PM:

We need to be drilling our own oil! Wake up congress!! Please vote your congressmen and senators out if they don't allow us to drill! Most of us don't have lots of money for gas!!

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