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Should We Open Up Off-Shore Drilling?
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Offshore Oil Platform
President Bush and Presidential Candidate John McCain have both called for opening up off-shore areas for drilling. The democrats in congress and Presidential Candidate Barack Obama call for drilling restrictions to remain in place. Does opening up these areas to drilling make sense as a national energy policy?
First, let me state that I believe we must reduce our use of all fossil fuels. We can’t continue indefinitely to add carbon to our atmosphere due to global warming. Carbon is added to our atmosphere when we burn fossil fuels. The problem is that it will take the development of new technologies and a huge investment, $45 trillion by one IEA estimate, to replace our current energy infrastructure. That is more than three times our current Gross Domestic Product. New technologies will have to be developed. That is not going to happen in the next year or even the next several years.
A rational global warming policy would be to try to reduce the amount of carbon we put into our atmosphere each year, until some time in the future, we have eliminated carbon emissions. That might take 40 years or more to complete. 40 years would mean reducing carbon emissions by about 2.5% per year. That is a little faster than our energy production is currently growing and might be an achievable number.
The problem is that oil production world wide is not increasing as fast as demand. Some people think that we may be reaching a point of peak production, where oil production may actually start to fall. We certainly have reached a point where we are not discovering as much oil each year as we consume. That fact is a strong indicator that oil production will eventually start to fall. It actually is worse for us in that producing countries are becoming large oil consumers themselves. Even if they can maintain production, oil exports will start to fall. We may be in the situation where the supply of oil from domestic production and imports starts falling by 4 or 5% per year. Does that hurt? Consider that our oil consumption has only fallen about 2% as gasoline prices passed $4.00 per gallon.
I do not expect Americans to stop driving their cars tomorrow, give up air conditioning or heat, or stop producing all of the goods and services that we consume. The answer to the problem is to start substituting clean or cleaner energy for the energy we produce that has the largest emissions of carbon dioxide. Solar and Wind Power come to mind as environmentally clean, but we only produce about 1% of our electricity from these sources. While these sources of power are growing, they are not going to even equal our increased energy use, much less start replacing existing fossil fuel use for at least the next decade. These sources also do not provide fuel to power your car.
Fossil fuels are going to be an important part of our fuel supply for a very long time. What we should do is start substituting our cleanest fossil fuels for the fuels that emit the most carbon dioxide for the energy produced. Natural Gas is our cleanest fossil fuel. Coal, oil-shale, tar sands, heavy oil emits the most carbon dioxide for the amount of energy produced. Crude oil is in-between in carbon dioxide emissions. It would make sense to use our cleanest fuels while discouraging use of our dirtiest fuels. For example, by substituting natural gas for coal in our electric plants, we could dramatically reduce our carbon emissions.
Developing light oil reserves would be less polluting and less expensive than trying to develop oil shale or coal to liquid fuel conversions. To me it makes sense to develop our off-shore oil and gas reserves as a bridge to developing new technologies and cleaner fuel sources.
The economic impact of not developing these resources is very substantial. We are currently importing about 12 million barrels of oil per day (including petroleum products.) That is over $500 billion per year. Our trade deficit is currently running about $60 billion per month, or about $720 billion per year. It is a big reason the value of our dollar is falling and inflation is rising. There are an estimated 11 billion barrels of oil in ANWR and another 18 billion barrels off-shore. That oil, at $130 per barrel is worth $3.8 trillion dollars. That is money that would stay in this country, creating American jobs and producing a very large amount of tax revenue for the US Government. Producing this oil would clearly reduce our oil imports and stimulate our economy.
The alternative is to not produce this oil. That would drive up our cost of energy long term. Our economy would suffer from higher energy prices. Products that we could make for export may be produced in other countries, which like
Just being against all energy development is NOT the way to solve our global warming and energy problems. I believe that we need a rational approach that will meet our energy needs with the cleanest fuel we can get with our current infrastructure, while providing tax incentives and policy directives to create a cleaner energy infrastructure in the future.
