Friday, June 27, 2008

To Drill, or Not to Drill

You have likely heard the phrase “we can’t drill our way out of high oil prices” more than any human being deserves. No one seriously suggests that drilling for domestic oil reserves is a short-term solution to high gasoline prices, but the fact remains that more crude oil on the market is the solution to high gasoline prices.

Ultimately, we will solve the parallel problems of high oil prices, our dependence on foreign oil, and environmental concerns by developing non-petroleum-based “clean” energy and more efficient vehicles, but like domestic drilling, clean energy sources and more efficient vehicles aren’t quick fixes; they will take years to implement at a level that will make a difference.

We need to move ahead with both initiatives: Focus resources on clean energy sources and start drilling now. Even though it will take some time before new drilling begins to yield substantial results, we should start drilling as quickly as possible to increase the amount of domestic oil. The oil industry says is possible to reap benefits from some reserves in a year or two, while the most ardent opponents claim it will take 10 years. Either way, the news that the United States is starting a determined effort to harvest its own oil reserves will, if nothing else, put OPEC and other oil producing countries on notice, and that will yield positive results, perhaps even a reduction in the price of oil. At worst we will add to the oil supply more quickly than if we continue to sit on our thumbs, as the Democrat-controlled Congress and the environmental lobby want us to do, and like we have done because of them for the last two decades.

Until we can make the transition to other types of energy, we need to produce as much of our own oil as possible as soon a possible. More crude oil is the critical element in solving the problem of high gasoline prices.

Increasing the domestic supply by five or ten percent a few years from now cannot help but improve the demand-supply situation, which is what is driving up prices.

Americans have grown increasingly dependent upon government to solve their problems for them, and one of the questions that Americans are asking the two presumptive nominees for President is: What are you going to do about the price of gasoline? Democrat Barack Obama opposes drilling for domestic oil, and proposes measures centered on the environment. Republican John McCain also is sensitive to environmental concerns, but understands that we must start drilling our own oil, even though he is opposed to drilling in Alaska’s Arctic National Wildlife Refuge (ANWR), although he may yield to public demands on that issue.

According to a recent survey, just less than 60 percent of the American people agree that we should be drilling to recover our oil reserves, and this figure represents not only a majority of all those polled, but also a majority of each of four sub-groups: Democrats, Republicans, liberals and conservatives. Now, if Congress will only listen to the will of the people and lift the ban so that oil companies can drill in the Gulf, off the coasts and in ANWR, we will have access to substantial amounts of oil.

By far the most promising source of domestic oil, however, can be found in shale deposits in the Rocky Mountains. But here, too, as with other domestic reserves, Congress has prohibited drilling. One large deposit in the Green River Basin that stretches through Colorado, Utah, and Wyoming is estimated to hold 800 billion barrels of oil, as much as the U.S. imports in a century.

The current prohibitions on domestic drilling are based upon environmental concerns, however, we cannot let unfounded fears of environmental doom prevent us from acting in our own best interest. Technology and drilling techniques have improved greatly over the years, and there hasn’t been an oil-related accident for a long time, even when hurricanes Katrina and Rita pounded drilling rigs in the Gulf of Mexico three years ago. Furthermore, concerns over damage to or destruction of the pristine nature of ANWR are overblown. ANWR is a place where nobody goes and that nobody sees, which is not to suggest that it should not be protected. But when you consider that it is an area about the size of South Carolina—a little more than 19 million acres—and the size of the drilling site is only about 2,000 acres, even if there was environmental damage it would be contained in a tiny fraction of the total of ANWR. A pretty good analogy is that the size of the drilling site compared to the entire vastness of ANWR is like a postage stamp in the middle of a football field, about .0001 percent of all of ANWR. From this small footprint we could produce around 10 billion barrels of oil.

Opening ANWR and the Outer Continental Shelf to drilling for domestic reserves will put much more oil on the world market, helping to meet the growing demand. Opponents of drilling, however, say that before oil companies drill in other areas where known reserves exist that they should be developing more of the 42 million acres of federal lands and the 38 million acres offshore that are already under lease. But such an argument assumes that there is oil in the leased acreage, and that is tremendously uncertain. The truth is that many of those acres under lease have no oil on them, and the only way oil companies know there is oil is to drill and hope they find some. They understandably want to put their resources where there is the greatest chance of finding oil, and everyone who uses petroleum products ought to share that desire.

Congress ought to have the good sense to get out of the way and let the experts, the oil companies, decide where the best chances of finding oil lie, and let them go after it. Political considerations will no doubt carry more weight than common sense, however.

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