The Wonk Room

Lifting Offshore Moratorium Is Boon To Big Oil And No One Else»

Today’s speech by President Bush calling for America to drill its way out of its energy crisis is, in the words of Sen. Harry Reid (D-NV), replete with the “failed policies of yesterday” designed to “pad the pockets of Big Oil.”

There are two central facts about fossil fuel use President Bush carefully avoided when he called on Congress to increase the supply of oil accessible to his industry cohorts:

– The United States has only 2% of the world’s proven oil reserves, but consumes 24% of the world’s oil production. There’s simply no way for us to drill our way to energy independence or eliminate what Bush calls our “addiction” to oil. [EIA 1/29/07, 6/9/08]

– The energy future Big Oil and Bush desire involves burning up the planet. The American Petroleum Institute is promoting an increase in oil demand of 45% by 2030, which would lead to global warming 8.9 to 11°F above pre-industrial levels — guaranteeing global catastrophe. Bush’s “rational, balanced” approach to global warming is in line with this scenario. [CAPAF 4/16/08, 4/25/08]

Bush’s justification for ending the federal moratorium on Outer Continental Shelf drilling that was signed into law by President Reagan and extended by President George H.W. Bush after the Exxon Valdez relies on misleading and false statements. In the Rose Garden today, Bush 43 said:

So my administration has repeatedly called on Congress to expand domestic oil production. Unfortunately, Democrats on Capitol Hill have rejected virtually every proposal — and now Americans are paying the price at the pump for this obstruction.

Congress — which was under Republican control for most of the Bush presidency — is not blocking drilling. The number of off- and on-shore drilling permits has exploded in recent years, going from 3,802 five years ago to 7,561 in 2007. Between 1999 and 2007, the number of drilling permits issued for development of public lands increased by more than 361%.

In fact, Congress and this administration have already opened the floodgates for more oil and gas drilling in the years to come. Since 2002, the number of permits issued has greatly outstripped the number of new wells drilled. In the last four years, the Bureau of Land Management has issued 28,776 permits to drill on public land; yet, in that same time, 18,954 wells were actually drilled. That means that companies have stockpiled nearly 10,000 extra permits to drill that they are not using to increase domestic production.

Furthermore, less than a quarter of offshore acreage open to drilling is being used. Only 10.5 million of the 44 million leased acres are currently producing oil or gas.

The vast majority of federal oil and gas resources offshore are already available for development. According to the Minerals Management Service, of all the oil (85.9 billion barrels) and gas (419.9 trillion cubic feet) believed to exist on the Outer Continental Shelf, 82% of the natural gas and 79% of the oil is located in areas that are currently open for leasing (such as areas in the Gulf of Mexico and off the Alaska coast).

This has nothing to do with lowering fuel costs for Americans in the short, medium, or long term. The auto industry, for example, can change its production mix to more efficient cars within six weeks, and can roll out new production models in three years. But it takes ten years for newly leased oil fields to start producing oil, and around twenty years to reach peak production.

Lifting the offshore drilling moratorium is worth (maybe) 4 cents a gallon — in 10 to 20 years. This uses generous estimates, assuming that all the recoverable oil is drilled and reaches peak production by 2025, and that the impact on the price of a barrel of oil is at the high end of estimates ($1.50 per barrel or $.0375 per gallon of gas). If the oil is extracted at its maximum rate, it would all be gone in five years.

In fact, it is conservative and industry obstruction that is making Americans pay at the pump — from the repeated filibusters of renewable energy and energy efficiency incentives to years of obstructing improved fuel economy standards.

UPDATE: At Climate Progress, Joe Romm notes that the 2007 Annual Energy Outlook from the U.S. Energy Information Administration found:

The projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.

And in 2030, “any impact on average wellhead prices is expected to be insignificant.”