Drill, Baby, Drill Fails: Obama Presides Over Record Growth in Oil Rigs, Still Gets Blamed by GOP for High Oil Prices

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"Drill, Baby, Drill Fails: Obama Presides Over Record Growth in Oil Rigs, Still Gets Blamed by GOP for High Oil Prices"

The Chart of the Month comes from the Wall Street Journal:

“The figure reflects a huge surge in U.S. oil drilling, up nearly 60% in the past year and the highest total since at least 1987, when oil services company  Baker Hughes Inc. began keeping track,” notes the WSJ.

Poor Barack Obama, he opens up the country to a drilling spree — and naturally progressives are pissed because, well, we care about things like clean air, clean water, and a livable climate.

But conservatives are strangely ungrateful, too!  They blame Obama’s supposed anti-drilling policies.  So Mitt Romney said earlier this year, “People are hurting, gasoline’s expensive and the policies of this administration that have focused solely on green technologies are not keeping the cost of gasoline down.”

Darn you Barack Obama for only quadrupling the number of oil drilling rigs in the US!

The fact is oil prices soared despite both record drilling and the highest domestic oil production levels in almost a decade.  It should be obvious that yet more drilling can’t have any significant impact on oil prices — particularly since the U.S. Energy Information Administration has been making that precise point for years now (see EIA: Full offshore drilling will not lower gasoline prices at all in 2020 and only 3 cents in 2030!).

Here is an update from a chart we did earlier this year of U.S. oil production using EIA data, including the first 6 months of this year:

The only thing that can protect Americans from the inevitably increasing oil shocks of Peak Oil is an aggressive strategy to reduce the country’s oil consumption and intensity (oil/GDP), including a steady increase the fuel efficiency of our vehicles — policies that conservatives have fought for decades, but that Obama has made a reality.

Where is the drilling?  The WSJ reports:

The drilling boom is being driven by a variety of factors. New technologies have allowed companies to tap vast new oil reserves in places like North Dakota, Texas and, most recently, Ohio. High oil prices are making once-unprofitable fields more tempting….

All that drilling is helping to boost U.S. oil production. The U.S. pumped 3.9 million barrels a day from onshore fields in March, up 5.9% from a year earlier and the most in nearly a decade.

And yet gasoline prices remains stuck at much higher levels than a year ago.  Where is the love from the oil companies?

The EIA’s 2009 report, “Impact of Limitations on Access to Oil and Natural Gas Resources in the Federal Outer Continental Shelf” analyzed the difference between full offshore drilling (Reference Case) and restriction to offshore drilling (OCS limited case).  In 2020, there is no impact on gasoline prices (right hand column).  In 2030, US gasoline prices would be three cents a gallon lower.  Woohoo!

I have previously written about the trivial impact of opening the OCS further to drilling.  The oil companies already have access to some 30 billion barrels of offshore oil they have only begun to develop (see “The cruel offshore-drilling hoax“).

If you are concerned about the impact of high oil prices from Middle East instability, the only viable long-term strategy is one aimed at ending our addiction to this climate-destroying fossil fuel.  Even the once staid and conservative International Energy Agency understands that (see World’s top energy economist warns peak oil threatens recovery, urges immediate action: “We have to leave oil before oil leaves us”).  Obama has, thankfully, started to take aggressive action in this area, raising new car fuel efficiency standard to 35.5 mpg by 2016 — and then 54.5 mpg by 2025 — the biggest steps the U.S. government has ever proposed to cut oil use.

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9 Responses to Drill, Baby, Drill Fails: Obama Presides Over Record Growth in Oil Rigs, Still Gets Blamed by GOP for High Oil Prices

  1. Great research and framing. Thanks Joe.

    Another interesting point is why the Bush/Cheney years were marked by ever declining oil production in the good old USA? This happened at the same time oil companies like Exxon spent rising profits on share buyback instead of exploration causing their total oil production to decline as well.

    Does big oil and their Grand Oil Party really want increased production? Or do they want increased oil profits? In the new economic world of peaking oil, increasing production isn’t the way to maximize profit margins. Scarcity is.

    Maybe what big oil and GOBP really are upset with Obama about is that he called their bluff and is exposing the fact that increased production isn’t the solution.

    • Mulga Mumblebrain says:

      The biggest decision of the Bush/Cheney years was to play to the USA’s strength and attack, occupy and then loot the hydrocarbon riches of the Arab states. First Iraq, now Libya with who know’s who next. OK, it’s obvious-Iran.

      • Bush and Cheney didn’t really steal much hydrocarbon riches from Iraq. The amount of oil we get from Iraq is relatively low, and much of the oil is controlled by the Iraqi government. Additionally, we aren’t stealing from Libya. What we are doing is putting pressure on regimes to make sure they are oil friendly. We don’t need to literally take the oil – like the British used to – if we can get a government that is on our side in terms of selling us their oil.

  2. KyleVester says:

    If Romney were actually telling the truth, in that Obama’s focused on nothing but green tech, then Obama’s done an awfully terrible job at it.

  3. Roger Blanchard says:

    Most of the oil production increase in the U.S. over the last 3 years has been
    due to production increases in the deepwater Gulf of Mexico, North Dakota and
    Texas.

    In the Gulf of Mexico, production in the first 4 months of 2011 is now off 10.0%
    relative to the first 3 months of 2010. In Jan/Feb 2011, production averaged
    1.56 mb/d. In March it was down to 1.51 mb/d and in April it was down to 1.49
    mb/d.

    In terms of North Dakota, production was up in the
    last two years by over 30%/year. In 2011, production has stalled such that for
    the first 4 months of 2011, production was down by 0.79% relative to the last 3
    months of 2010. For the first 3 months of 2011 it was off by around 0.65%.

    Texas’ oil production in April remained at about what it was in March so that
    production in the first 4 months of 2011 was 0.39% higher than the last 3 months
    of 2010. For the first 3 months of 2011, I believe it was up 0.38%.

    The data suggest to me that the big increasing in these 3 regions during the last 3 years may be over, particularly for the deepwater Gulf of Mexico.

    The 30 Gb figure for the OCS is a highly inflated government figure of technically recoverable oil, not what will actually be producible.

    Roger Blanchard
    Sault Ste. Marie, MI

  4. Lewis Cleverdon says:

    Looking at the rig-count graph above it can be argued that while the Cheyney regime was looking to conserve US reserves against future needs and to exhaust other nations resources first, Obama has chosen to maximize home production – presumably as a shield against the barrage of blame that will hit whomsoever is president once global production-&-export starts falling away from global demand. – The DOD graph put that event at the end of next year, just as people are considering the presidential candidates . . . .

    Regards,

    Billhook

  5. Chad says:

    “Looking at the rig-count graph above it can be argued that while the Cheney regime was looking to conserve US reserves against future needs and to exhaust other nations resources first”

    Actually, this is what both a security hawk and a climate hawk would do….

    • Lewis Cleverdon says:

      Agreed.

      Barak has evidently chosen blame avoidance over prudent resources management, while his support of alternative fuels focusses on the high-tech dubious-viability high IPR-control cellulosic ethanol, at the expense of the long proven option of biomass-pyrolization for methanol, biodiesel, etc.

      That government support should be for US corporate profitability rather than for maximizing global sustainable fuel supplies seems characteristic of the present regime’s priorities.

      Regards,

      Lewis

  6. Barbara says:

    I dug into this issue of increased numbers of oil drilling rigs by asking my nephew, who has a small independent company that does fracturing for oil on old wells. It is not as simple as Romm paints the issue. According to him, the number of drilling rigs is up because of proposed government changes in the tax structure. “The majority of independents are currently on a “drilling spree” precisely to beat the clock on account of Sen. Reid stating that they would like to revoke the tax deduction for intangible drilling costs (IDC’s). ” My nephew provided an analysis of how the proposed new tax structure would put his small company out of business thereby putting more people out of work and reducing tax revenues rather than increasing them.