A customer prepares to pump fuel on 17 July 2008 in Mill Valley, California. Photo: Getty Images
Most of the arguments against expanded offshore drilling focus on the time lag: even if Congress were to overturn the law tomorrow, it would be years -- perhaps decades -- before any oil is being pumped, assuming that the estimates of where and how much oil might be found are accurate. And Bush's own Department of Energy says it would be 2030 before "access to the Pacific, Atlantic, and eastern Gulf regions would ... have a significant impact on domestic crude oil and natural gas production or prices."
But there's another, real argument as to why this drilling will not help prices. And that's because there is no guarantee that the firms would sell the oil domestically. As Forbes pointed out earlier this month, oil exports are up 33% this year." (tip)
In the first four months of this year, our oil exports were equivalent to 9 percent of total refining capacity. Because facilities were running at only 85 percent of capacity during that period, the actual percentage of refined fuel is greater. Moreover, April's gasoline exports were the most for any April since 1945, "when America was sending fuel overseas to ease supply shortages in other countries during World War II.
A record 1.6 million barrels a day in U.S. refined petroleum products were exported during the first four months of this year, up 33 percent from 1.2 million barrels a day over the same period in 2007. Shipments this February topped 1.8 million barrels a day for the first time during any month, according to final numbers from the Energy Department...
U.S. gasoline exports to Canada skyrocketed to 41,000 barrels in January-April this year from 9,000 barrels in 2007.
So what is it, exactly, that we are exporting? According to Forbes, here are the data for April 2008:
- 387,000 barrels per day of diesel fuel, an almost seven-fold increase compared to April 2007;
- 202,000 barrels a day of gasoline; and
- 377,000 barrels per day of residual fuel exports, "up 10 percent from 344,000 barrels per day a year earlier."
If Congress were to be persuaded to lift the 27-year-old ban on offshore oil drilling on the coasts, they might couple it with something like the 1973 Trans-Alaska Pipeline Act, which required Alaska's petroleum to be shipped to US refineries rather than be sold to Japan. This is no guarantee that exports would be constrained, however. An export tax would probably be more effective.
In 1995 the Republican Congress lifted the ban on Alaskan exports, according to a 2005 CRS report (P.L. 104-58, signed by President Clinton in November 1995). At that time, according to the CRS report, net oil imports were 8.0 mbd; in 2005, net imports had increased to more than 12 mbd.
However, Alaska oil production peaked in 1988 at 2.0 mbd in 1988. By 1995, output was down to 1.5 mbd. In 2005, output was down to about 900,000 bd. In 2000, BP Amoco was the only firm still exporting crude from Alaska.
Finally, it's not as though there is demand for offshore oil drilling that is unfulfilled. From the Washington Post:
House Majority Leader Steny H. Hoyer (D-Md.) issued a release saying that there are already 68 million acres of public lands and waters open for drilling. The area is equal, he said, to Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Delaware and about two-thirds of Maryland, combined.
I've said it before and I'll say it again. We cannot drill our way out of this problem.
On The Web
- Executive Orders Signed By President Bush -- most current order available online today, 30 June 2008. Apparently, a memorandum lifting an existing executive order does not merit a link.
- This CNN map shows where offshore oil drilling is allowed today -- most of the Gulf of Mexico and all around Alaska. It also shows where waters would be opened for drilling should the Congressional ban be lifted: that's a huge area along both coastlines.