Tuesday, August 5, 2008

The Argument For Offshore Drilling



The New York Sun's Liz Peek: The Argument for Offshore Drilling. (Hat tip: Bill)

Last Friday, the confrontation on this issue turned the House of Representatives into a circus. The Democrats voted to adjourn the session for the August recess, but Republicans refused to depart, continuing to call for a vote on offshore drilling even as the leadership turned off the lights and microphones, plunging the chamber into darkness. C-SPAN, bereft of power, didn't cover the fracas, which went on for several hours. Really, is it any wonder that Congress's approval ratings are so dismal?

Ms. Pelosi's disdain for offshore drilling (and for the American people, it would seem), stems from her view that granting oil companies the opportunity to explore for oil on federal lands is tantamount to a giveaway. She also seems to feel that the effort would, in any event, prove futile.

As to the first concern, it is a puzzle. Who else is going to drill for oil on our offshore lands? Are we to punish the oil industry for reaping huge profits by not allowing them to reinvest in domestic prospects? Is it really better to encourage them to take their cash flow overseas and look for oil in foreign countries than to seek reserves here? Would we rather invite oil companies backed by President Chavez or Prime Minister Putin to drill offshore in America?

Moving on, let us look at the opportunity that exists offshore. The American Petroleum Institute says that because of the leasing ban, the oil industry has not been able to use current technology to estimate reserves on the 85% of the lower 48 outer continental shelves that have been off limits. The U.S. Minerals Management Service estimates that these lands contain 18 billion barrels of oil and 76.5 trillion cubic feet of natural gas. (Including Alaska, the figure jumps to 86 billion barrels of oil and 420 trillion cubic feet of natural gas, representing 60% of the oil and 40% of the natural gas yet to be discovered.)

The API reckons the lower 48 figure to be conservative, since over time initial estimates of recoverable reserves have tended to be understated, and to increase as technology improves. For instance, reserves at Prudhoe Bay in Alaska were initially thought to be 7 to 9 billion barrels; by the end of 2005 the region had produced 15 billion barrels.

6 comments:

Jaxon said...

I just ran across this interesting article "Drill Here, Drill Now," that delivered a number of interesting points about offshore drilling. One interesting fact is that 620,500 barrels of oil ooze organically from North America's ocean floors each year, compared to the average 6,555 barrels that oil companies have spilled annually since 1998. It's an interesting article and i suggest you read it.

Anaconda said...

WHY SHOULD AMERICA WANT TO PRODUCE OFFSHORE OIL?

Regardless of what some people are saying, today, the economic law of supply and demand has not been repealed:

Increase supply and the price goes down.

And in this case, demonstrate America is serious about tapping its own domestic oil supplies, and price expectations go down.

America will use oil, whether from domestic or foreign sources, so why would America want to perpetuate or increase the power of foreign governments that don't have America's best interests at heart.

Until oil is actually produced, whether it takes five years or ten years, oil companies don't make any money -- not a cent -- oil companies only make money by producing oil.

Offshore drilling would create more room for "new players" to get into the oil producing business.

More businsses producing oil is the best thing that can happen to the oil business, at least in terms of competition and what's best for the American People & Economy.

You know why?

Because, then, if one business holds back oil production in an effort to raise prices, another business will "step in" and produce oil to take advantage of the current oil price, thus causing the price to stablize. And the first company, which chose to initially lose money by holding back oil production in expectation of getting a "payback" by producing at a later higher price, loses out.

No, with healthy competition the incentive is to produce and sell all you can at any given point in time, because if they don't -- somebody else will.

Limited supplies are the mother's milk for near-monopolies because it allows supply and price manipulation.

Opening up the offshore encourages more competition and increases supplies.

And lowers oil prices, which helps create a stronger overall American economy.

Isn't the goal of a stronger overall American economy the point of exploiting America's natural resources?

If it isn't, it should be... It should be.

Anaconda said...

Thanks, Jaxon.

The article is right on point.

OilIsMastery said...

Thanks for the link jaxon...=)

john a. bailo said...

Here's what I don't understand. The Greens are always talking about "local production". Well, isn't offshore local enough? Doesn't it limit transportation of oil...making it less likely to spill in the ocean? Seems like cutting off your nose to spite your face!

louis said...

All this hullabaloo about who is right and who is wrong, the fact remains that offshore oil drilling and drilling the Marcellas shale is destroying our planet. Miamilou.