Offshore Drilling Comes Up Empty

[Dardedar]

Offshore Drilling Comes Up Empty

By Bill Scher

June 17th, 2008 - 10:34am ET

As Sen. John McCain gears up to give a speech in Houston, repeating his call to lift the moratorium on most drilling off America's shores, MSNBC's First Read suggests, "McCain’s call for lifting the ban could ... be seen as a pragmatic, short-term solution to high energy costs that could play well in places like Michigan..."

Pragmatic, short-term solution? Only if the media doesn't report on how little oil is off our coasts and how long it would take to get it into people's gas tanks.

Last month, I noted that President Bush's push to drill in the Arctic National Wildlife Refuge -- where an estimated 10 billion barrels of oil lie -- would only reduce the price of crude oil per barrel by about 50 cents, 17 years from now, according to Bush's own Energy Department. My colleague Isaiah just pointed me to a new Department of Energy analysis, adjusting that estimate to 75 cents.

The price of crude oil per barrel has jumped 100 dollars in the Bush Era, leading prices at the pump to more than double. Shaving the crude oil price 75 cents by 2025 amounts to no savings at the gas station.

That's what we would get for ANWR's 10 billion barrels. What about the moratorium areas off continental America's coastlines?

McCain's speech today estimates that there 21 billion barrels in the moratorium areas. That seems a touch high. The Energy Department put it at 18 billion a few years ago. Popular Mechanics reports an estimate of 19 billion.

Regardless, it's about double of what's estimated in ANWR.

So, if lifting the moratorium on most offshore drilling has double the impact on price as lifting the ANWR ban would, that's only $1.50 off the price of crude per barrel. Combined with ANWR, it's $2.25.

Again, by 2025. Again, little to no impact on the price at the pump, today or tomorrow.

Not pragmatic. Not short-term. There is simply not enough oil.

UPDATE: Just to put a fine point on it, lowering the price of crude oil per barrel by $1 is roughly equal to a reduction in price at the pump of 2.5 cents per gallon. So lifting all of the above moratoriums, lowering the price of crude by $2.25 per barrel, would lower the price at the pump by less than 6 cents by 2025.

Meaningless, after prices have skyrocketed more than $3 a gallon between Dec. 2001 and today.

Article has a dozen links referencing the author's claims

DAR
I think these guesstimates a decade or two out are wild guesses at best. But there is good reason to think the price of oil would be very little effected by the US's insignificant reserves (which would take a decade to get to and even longer to extract). We will be getting to it, no doubt, but it's not a solution.

[tmiller51]

Here's a nice graph showing how relatively little oil offshore drilling will get us:



Tim

[Dardedar]

DAR
Nice chart. But what is not clear to me is why their current usage is so low. Perhaps they are referring to a specific most commonly used type of oil, or only oil that is most commonly used for automotive purposes? Everywhere I look I consistently see current US oil usage at over 20 million barrels a day. Your chart shows about 15 million per day. I don't see any sources showing that. For instance here.

And here:

The United States especially, which consumes roughly 21 million barrels of the stuff a day,...

And here:

Currently, the United States consumes about 20 million barrels of oil per day.

etc.

[tmiller51]

Darrel,

Thanks, something does look wrong as you pointed out. The EIA which the graph sites as a source also puts 2005 consumption at 20.8 million barrels per day. Link

I think I've traced the source of the graph to www.architecture2030.org. Since the source site is about architecture, I think maybe they excluded transportation use or something, I'm not sure. I emailed the post author the question, we'll see if he writes me back.

Tim

[tmiller51]

Darrel,

I got a response back from my email already:

EIA - Table 11. Liquid Fuels Supply and Disposition, June 2009.

Year 2005
Crude Oil Supply: 15.23 mb/d -
Other Supply (Ethanol, Biodiesel, Natural Gas Plant Liquids, etc.): 5.59 mb/d

For the graph, only crude oil supply is plotted.

For the estimate of 0.2 mb/d of OCS production in 2030 see: http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html

Hope this clarifies the numbers.
Architecture 2030

Here's EIA Table 11

So they only counted unrefined crude oil in the graph. It's interesting that the email example for "other supply" is (Ethanol, Biodiesel, Natural Gas Plant Liquids) when actually the largest component of "other supply" is "net product imports" which is nearly all petroleum based.

So the 20.8 million barrels per day figure is actually a lot closer if you're looking at US fossil fuel consumption, make that 20.5 if you subtract the ethanol.

Tim

[Dardedar]

It's interesting that the email example for "other supply" is (Ethanol, Biodiesel, Natural Gas Plant Liquids) when actually the largest component of "other supply" is "net product imports" which is nearly all petroleum based.

So the 20.8 million barrels per day figure is actually a lot closer if you're looking at US fossil fuel consumption, make that 20.5 if you subtract the ethanol.

DAR
So 2 million barrels of what should be "foreign oil" gets hidden as "other supply?" I wonder why. That's curious.

I wonder. The US military uses a fantastic amount of oil. As much or more than many decent sized countries. Much of this would be on military bases around the world. I wonder if this may be the special "other category?"

D.

[tmiller51]

Well I'm not sure why they didn't include it in the graph but the EIA has it in a separate category because it's not considered crude oil after it's been refined or partially refined. I read a while ago that we've been importing more refined gasoline in recent years--I think that would be in the Net Product Imports category somewhere.

I'm not sure if what the US military buys outside of the US even gets captured here.

Tim